Hello Steemians!
"Earn today! make your money work for you! Jump on the Digital currency train and earn upto 15% each month!"
You may have read or heard similar statements on your facebook feed or whatsapp groups. Spoilers! 99% of people involved with such schemes end up loosing their money.
First lets take a look at PONZI or MLM schemes. These are not new. They feed on networking of common people.
In simple terms, The scheme runners take X amount of money from a person, give out say 100 percent of it to the referrer, and hand out 15 % back to that person in that month.
Although there are provisions to withdraw your funds, who would want to take out their money which gives them much more than what banks give out in interest?
Until the day arrives when the scheme collapses, and you are left with your upline, or referrer, who is as clueless as you are and you realise that there is no hope of recovery and you had no idea who ran the scheme in the first place.
The leaders in so called schemes get some share of the loot as they try to calm down their team members and that is that.
examples : QNET, Amway (the outrageous prices and inability to sell amway products makes it a loss for 80% of its partners)
Second, There is the crypto market boom that people keep talking about. So to make some money people are attracted to Scams such as
ETHTRADE and crappy ICO's.
ETHTRADE took advantage of the ethereum like name and first fooled investors and then ran away by digesting investor bitcoins and defecating shitty bullcoins and a consolation Ethereum Plus coins (yeah thats another shit altogether).
Later they cooled off leaders in countries like India and Thailand by giving them a chance at some other coin related scam.
Lets take a look at the red flags in some of these scams.
When some scheme claims to earn profits from trading on exchanges, it sounds legitimate, but some one who promises an X amount of percentage monthly, that is when you should look out for signs or crisis.
Check if the operation is traceable. usually we see websites registered under domain providers like GoDaddy with a renewable licence, with no email or telephone number to trace. To test the authenticity of an operation. Assume on day Zero (before investing, but after creating your account and getting ready to transfer), that you have already invested and now the website is shut down. Who would you contact and how much time effort and money will go into tracking your payment. Once that is established you can go ahead.
If its an ICO, always remember that if an ICO sells coin with prices like 100 to 1000 coins for 10 dollars it seems reasonable, others like 1 coin for 1 dollar or more is only a way to get your money and get you to sign a legal document saying that you are responsible to control the prices of your coin and 100000 bucks become 1000 bucks in a matter of hours as soon as it is listed on any exchange.
Supported exchanges in case of ICOs: Check out what exchanges will support this coin. Nova Exchange and Livecoin Exchanges are a redflag, read more on bitcointalk.
Outrageous promises like price will increase in two months by 400 percent! : Such claims are false as we all know that even though there are robust infrastructure and backing to coins like BNT, XRP etc still the price does not boost up like BTC.
These scams are on the rise because of investor naivety and ignorance. I am not listing down greed, as i feel greed, when channeled in a positive way leads to very good results for the individual as long as its not at others' expense.
Optimism in such cases is a very big factor and a pessimist has a much higher chance of not falling into such traps.
Best option and safest, is to store your investment in bitcoins over an exchange like bittrex(its about page is quite impressive)
or on the chain and try to trade with amounts that are manageable on any exchange.
Wishing you a good day and a bright crypto future.
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