Are Cryptocurrencies A Scam?
Trading cryptocurrencies, as one of the sources of income, is experiencing a boom in popularity today. Having appeared on the Internet, digital currencies entailed a real chain reaction. Literally anybody is aware of their fantastic potential. Almost the whole world community, most governments are concerned about the uncontrolled growth of the popularity of crypto assets. Well, you already know what crypto assets are and how to earn them, but you’d like to learn the whole truth about it. For instance, many people are eager to find out whether cryptocurrencies are a scam, another pyramid or something like this. We’ll try to answer this question here below.
How do cryptocurrencies work?
In order to find out whether it’s another fraud or not, one should clearly realize the very principle of crypto currencies as assets.
The basis for the functioning of the digital currency system is the technology of the blockchain. That’s a way of storing information without placing it in one particular place, when the data is distributed among all participants of the system (on computers all over the world), automatically updated and available at any time to any user. It’s a continuous successive chain of information blocks, which is normally stored and processed independently on many computers (Wikipedia).
Such a complex network is distributed among all participants, and all computers that produce coins become participants in the system. There is no main center here, to which everything would be subordinated. Digital currencies are redistributed across the network, between market participants. This allows you to pass banks, exclude the influence of the state, avoid commissions for transfers and other expenses and difficulties. Users get full freedom of action with cryptocurrencies, they have no obligations to the network, and their money can’t be frozen, so you can do anything with them and whenever you wish.
The anonymity of such assets allows you to create a large number of bitcoin-addresses without reference to any information. If the user intentionally does not specify his data, then no one will ever know that a specific bitcoin address belongs to him. For anonymity, one bit-address is usually used for one transaction. Due to the transparency of operations the history of all transactions is stored in the system. These transactions can’t be canceled. Money back is impossible too. I can only be done by the recipient.
The issue of coins depends on the work of millions of computers using a program for calculating mathematical algorithms, it only takes place in digital form and anyone can issue this asset. Having appeared not so long ago, cryptocurrencies are currently a real free money, devoid of the complexities and limitations inherent in standard money. Well, it has become an antagonist of a centralized system where everything is dictated by the state, the economy, but not always by the interests of citizens.
Advantages of earning on cryptocurrencies
- Lack of control: The exchange rate of digital currencies is not controlled at all, it is not affected by the economy of the state, the welfare of the world.
- High security of cryptocurrencies. It can’t be faked or hacked.
- A wide range of crypto exchanges for work.
- High volatility and unlimited income: Digital currencies are extremely dynamic, their exchange rate is constantly growing, it stirs people’s consciousness.
- Simple money making: Tracking the market trends it’s easy to increase your capital regardless of the market direction.
Disadvantages of cryptocurrencies
- Absence of 100% guarantee of safety of users wallets.
- Risks of hacking crypto exchanges and loss of funds.
- Lack of centralized regulatory bodies.
- The unclear future status of cryptocurrencies, a high likelihood of a ban to use of digital currunces.
- High volatility.
- It’s impossible to cancel the transaction if it is wrong or you have changed your mind about sending coins.
- Risks of loss of capital if access to the wallet is lost.
Myths about cryptocurrencies
The growing popularity of digital currencies has led not only to the great involvement of Internet users in this market, but also to the fact that today there are a lot of myths about digital coins that mislead users. Let’s talk about these myths.
Myth 1. Cryptocurrencies are another financial pyramid
This is one common myth among those who do not understand the very essence of digital currencies. Do you really consider cryptocurrencies to be a pyramid? It’s worth starting with how the pyramid is structured. It implies the investment of funds for the purpose of profit. The benefit for honorable “old” investors is ensured by attracting new members to the system. However, having attracted new participants to the system, the pyramid usually experiences difficulties. It closes, all money is frozen and they can’t be used until sometime or even forever. The principle of crypto assets is completely different from the pyramid. No one freezes money, funds are available to the trader at the crypto exchange at any time. For the transfer of funds, as well as for inviting new participants into the system there aren’t any bonuses. As follows from this, digital currencies can’ be a pyramid.
Myth 2. Cryptocurrencies are required for black markets
Of course, some cryptocurrencies became popular after participating in illegal trade and dirty schemes. However, today cryptocurrencies, and bitcoin in particular can be considered to be an active part of our offline life. With the help of digital assets you can buy a car, an apartment, a yacht. You can also use them to pay in restaurants and cafes. As follows from this, cryptocurrencies aren’t meant for black markets.
Myth 3. Cryptocurrencies are another bubble
It’s a very common myth found on the web. However, using the concept of “bubble” in relation to digital currencies, folks often forget about what is included in it. In this case, a bubble refers to assets that have any value, and which, thanks to the news background, rise in value. Can we say so about crypto assets? The growth in the price of cryptocurrencies is affected only by demand: the higher it is, the higher the cost will be. So, we can conclude that cryptocurrencies can’t be a bubble.
Myth 4. Cryptocurrencies aren’t backed by true assets
As we know, since 1971 the gold standard has been canceled, now all the world’s currencies are not backed by anything of real value (if only by their GDP). In this regard, digital currencies don’t differ from conventional ones. They aren’t backed just like traditional currencies.
We repeat once again – it’s not a scam!
The network has enough materials that digital currencies are a pure scam. Is it true? Let’s make it clear. First, for mining virtual assets, one has to bear serious costs: to purchase and update professional equipment, to pay for electricity and maintenance of the servers. Usually scammers aren’t aware of all pitfalls and peculiarities of advanced technology. They’re reluctant to waste time developing innovative services and supporting a team of top specialists. Their primary goal is to collect money and run away.
Secondly, there’s a buzz about cryptocurrencies in all popular media and the Internet now. In Japan, bitocoin was recognized as the official currency of the country (since April 1 of this year). So all developed countries have to think about it and adapting their laws accordingly. The Russian government keeps considering developing their own cryptocurrency, while the president of Kazakhstan proposed to join forces to create such a global digital currency that would save the world from currency speculation. Apparently, the society accepts digital currencies, at least people start recognizing the prospects for the development of digital money. If all of this were a scam, it would have been uncovered and it would not have been able to get such a spread and such great attention from the world community.
Thirdly, there are quite successful stories of traders on the web that have achieved high earnings via crypto trading. There are also negative reviews of traders, but without it one can’t imagine the functioning of any financial market (binary options trading, forex trading, for example). In case of a fraud, we would undoubtedly see a huge amount of negativity, complaints from traders to brokers as well as crypto exchanges.
Fourth, cryptocurrencies are actively shifting from the digital world to the real one. Digital money successfully debuts offline and today we have an excellent opportunity to observe it. Now you can pay with digital currencies in the USA, Russia, Japan, Europe (take advantage of the special interactive service coinmap.org to get a full list of countries where you can pay with bitcoins). Digital currencies are accepted for payment on websites, in shops, restaurants, cafes, even as donations in the Temple of John the Theologian in the American city of Goshen.
In what cases can cryptocurrencies be a scam?
Cryptocurrencies have a mind-blowing dynamics than fraudsters are ready to use it. They offer non-existent currencies, they do not give the opportunity to withdraw funds, cheat and so on. We will tell you about typical examples of deception that are common in the crypto market:
Today users get in the dirty hands of scammers, investing money, seemingly, being on a popular web resource they know. Victims see the same design, texts, navigation, etc., but then it turns out that their money got stolen the trader was left with nothing. For example, it took place when the investor lost bitcoins, working on a fake website, disguised as a popular platform ShapeShift.io (continue to site).
Such fake websites often emulate reputable ones, including BitStamp image, Blockchain.info, and so on. By creating an exact copy of a popular web resource, scammers can do more than just take away money from inattentive users – they also steal their passwords. Therefore, it is worth checking whether the name of the website you are working with is correctly written in the address bar of your browser.
On the Internet people often get messages from individuals who are ready to sell bitcoins or accept payment with cryptocurrencies. There’s a high probability that it’s a fraudster who will disappear as soon as you transfer money to him. Such scammers are real psychologists, they are able to gain the trust of their victims. They’re even capable of hiding behind famous personalities in the bitcoin community. They can send you fake documents, etc.
Another wide spread fraudulent scheme involves advertising for scam resources, which uses links to phishing (Wikipedia) or fake websites. They promise attractive bonuses, 400% return on investment; announcements of allegedly recommended sellers who are willing to sell you a digital currency that does not really exist (here, they offer non-existing positive customer testimonials, values below market prices and so on). Additionally, you can come across announcements for the sale of non-existent equipment for mining. In order not to fall into the hands of a scammer, study current scam lists, the identity of the seller, suspicious websites and email addresses. Too profitable proposals, too many good promises, for example, triple benefits – that’s what should alert you.
Scammers associated with pyramids are excellent psychologists who are ready to promise you the maximum benefit. Often pyramids hide under a beautiful site that promises a high profit (for example, 200-400% per annum). Additionally, if you always come across folks who are trying to lure you to such resources, they’re certainly a pyramid. There are many options for pyramids on the Internet, but more often they offer income for storing cryptocurrencies (sometimes your money is frozen for a certain period of time), for using services for mining. To avoid problems with these pyramids, approach with great caution each tempting offer.
Phishing websites and links
In order to take money from traders, scammers create malicious websites. Very often the externally familiar site turns out to be fraudulent. When the victim visits it, she or he ends up with losing personal data, passwords and what’s more – money. Not to lose your data under phishing attacks, carefully look at the name of the web resource in the address bar of the browser, see if the connection is protected by the SSL-certificate, click on the links of only the verified users.
Deceptive schemes in applications, plug-ins
From this moment fraud can be found in applications and plug-ins. For example, It happened to the Localbitcoin application, which was available in the Android application store:
Another fraudulent stuff was the add-on for Chrome browser – BitcoinWisdom Ads Remover, which sent funds to the fraudster’s wallet. How could you avoid such problems? You shouldn’t blindly believe the high ratings and a lot of positive feedback about a particular application. Before installing the program, contact the developer and find out if he or she is the author of the application. Look the information up on the Internet, maybe someone has already worked with it.
How to make money on cryptocurrencies: what should I remember?
Crypto trading is not merely buying cheaper and selling more expensive. That’s far more complicated and you should keep it in mind:
- The market of cryptocurrencies is not only growing rapidly, but it’s also very volatile. After a rapid growth their rate can suddenly fall, often leading to panic.
- Large speculators operate in the crypto market, causing artificial leaps or drops in the value of digital coins.
- Do not forget about politics. In May this year, the popularity of bitcoin grew due to political scandals in the US. Additionally, the digital currency gained attention during the period of early parliamentary elections in Great Britain.
- Apart from high potential profitability crypto trading also suggests huge risks, so you should be very careful.
- Only thorough analysis of the popularity of the cryptocurrency, its prospects, the factors that influence the dynamics of the value will help to earn decently.
To earn a decent income on cyptocurrencies and avoid losses, it is worth remembering these facts.
Do cryptocurrencies have prospects?
Of course, like others you also want to be aware of the future of crypto assets. When will this bubble finally burst? The collapse of digital currencies was predicted several times. Such assets were often labeled as a pyramid. The media urged the Internet community to forget about it, and developers – to engage in more promising projects. Nevertheless, crypto assets managed to withstand all the tests and today they keep amazing with volatility and high growth. The buzz continues along with endless disputes as for whether we need digital currencies and what will happen if we are officially allowed to use it.
Showing up on the Internet, crypto assets started actively moving into the real world. Everybody is eager to learn what will happen to them next. Some folks consider digital coins to be the future of the world’s financial system. Others argue that it’s another bubble. However, as always reality is somewhere in the middle. Some are assured that both cryptocurrencies and the blockchain technology those solutions that deserve attention, while others are confident that cryptocurrencies are going to become a reality when the development of technologies reaches critical levels. It might be a sort of compromise: some cryptocurrencies will disappear, while others will get along with the world system. For example, Bitcoin (continue to site) and Ethereum (continue to site) are capable of replacing world currencies.
Perhaps, cryptocurrencies as supranational money, which the world’s states can’t regualate, should be a nice solution for all, facilitating work with transfers and payments. However, it is worth considering all that is happening, because today we are all moving to the digital world and understand its advantages. Therefore, cryptocurrencies, as an integral part of the virtual world, are simply necessary for the convenience of calculations.
Today, a number of countries consider crypto assets to be promising. These are Australia, New Zealand, Germany, Singapore. On the other hand there’re countries that have banned the use of digital currencies: Bolivia, Ecuador. Russian legislation bodies should prepare a draft document, in which much will be clarified regarding cryptocurrencies in this country.
Summarizing the value of all mentioned above we can say that the future of cryptocurrencies is quite promising, and today we observe a number of trends have already outlined its further development. Here we can point out to ongoing discussion of legalization of cryptocurrencies in the world, including Russia, its active exit from the online zone to offline, the constant growth of those interested in buying cryptocurrencies, etc. Like other technologies, cryptocurrencies are forced to pass its development through problems, critical moods in the society. However, despite the fact that someone does not trust it, and somebody sees the future in it, today the value of digital currencies is tacking on, investors are investing heavily in the development of this industry. Of course, cryptocurrencies aren’t perfet, blockchain needs improvements, but anyway it’s impossible to say «no» to digital currencies, as it would be naive and short-sighted.
Are crypto brokers fraudsters?
An important stage in the development of cryptocurrencies is the emergence of brokers, dealing with such specific assets. They make it possible to earn money by trading in digital coins. Today, crypto trading is offered by Forex brokers and brokers of binary options. As a rule, these are well-known companies : (Alpari, Grand Capital, 24option (continue to site), InstaForex (continue to site), HYCM (continue to site), Forex Club (continue to site), etc. Exploiting a constantly growing popularity of digital currencies, they offer them as assets.
Can these companies be considered fraudsters? In fact, you should know that trading is impossible without scammers and they will always be. Remember that fraudulent companies are created to deceive traders. It’s important for such “brokers-divorces” to get your money and escape with them. The fast-growing and incredibly dynamic crypto market also attracts scammers who are ready for everything for the sake of deception. Your task in this situation is to identify a reliable company and work with it, without fear of entrusting your personal capital to them.
How to choose a trustworthy crypto broker?
It’s quite posible to find a reliable broker of crypto assets. The main thing is not to rush into the choice and not rush at the tempting offers of companies. In this part of the article we will tell you how to choose a reliable broker of cryptocurrencies:
- You need to study the license of the broker (forex brokers, brokers of binary options). Licenses are provided on official websites by all serious brokers.
- You need to study the reputation of the crypto broker, its work experience, activity of the position. This information is available on the websites of those companies.
- You should study the opinions of various traders about trading in this particular digital asset.
- Try trading on the demo account of the broker. A demo account is not a useless online toy, it is an important tool of the trader, which helps to understand how serious the broker’s intentions are, whether the terminal works properly or not, and whether the service is of high quality, etc.
- Learn the bonuses of brokers, including bonuses on a demo account. The matter is that bonuses are also one of the important tools of the trader, which will help to determine how honest the broker is with you. First, study the conditions of work with the bonus, the possibility of withdrawing funds, the conditions for working out the bonus. Next, you can start trading the bonus and try to withdraw funds.
- Try real trading with a broker by transferring to the account the minimum possible deposit.
It’s worth doing such a serious job to be sure of the real intentions of the broker. However, things often go wrong. A naive trader chooses the most advantageous offer from a broker to work without worrying about the fact that a scammer can hide behind beautiful words and high profitability. We recommend to more seriously approach choosing crypto brokers if you want to save your nerves and money.
The whole truth about cryptocurrencies
The whole truth about the crypto currency is that it is one of the most popular and fast-growing markets with high volatility and decent incomes. You can count on a decent profitability from this market, but it’s up to you to properly understand how to make money on these assets. You need to be able to make informed decisions, using all trading terminal tools (charts, terminals, indicators, robots for automatic trading, orders, etc.), monitoring the growth dynamics of digital currencies.