Cryptoacademy Season 3 week 6- Homework post for@yohan2on: Crypto scams and how to avoid them

Hey there my fellow students,
I read the lecture presented by professor @yohan2on which talked about crypto scams and this is my homework post. Here, I would talk about crypto scams, its types, what it has done to the crypto space and the need for regulations in the crypto space... Join me.

1.) Crypto scams

According to the Merriam-Webster English dictionary, a scam is a fraudulent or deceptive act or operation. In terms of the crypto space, a scam is deceptive operation carried out by malicious nodes in a Blockchain network with the aim of ripping people off their money or coins. Cryptocurrency still being in a developing stage has evolved a lot faster than expected and has created a lot of life changing opportunities for people around the globe. It's been wonderful these past few years but as we would have it, there are always people who try to cheat the system and try to claim undeserved rewards instead of going about it the normal way. Due to human nature and the evolution of technology, Crypto scams are of various types and come through different means. These include:

• Social media Scams: I put this first on the list because in my country, this is the most common. I even almost fell for this scam once. Crypto scams through social media are done through fake Airdrops. By this, I mean that people would falsely alert an occurring airdrop and deceive people that participate in to thinking that they gained coins but to withdraw the coins, they have to deposit a certain amount of crypto. When people deposit their crypto, they won't be able to get any coins and also won't be able to get their money back

• Fake Crypto: Yes, you read that right, fake cryptocurrency. Some people have devised means in which they can create fake coins and use them like theyre regular coins. Some may ask, "since it's digital, how would you know its counterfeit?". Simple, counterfeit coins don't last long and disappear after some time in a wallet. By this time they scammers have already sold them to others leaving them with nothing.

• Site cloning: This is another very common one. It is when scammers are able to clone a website to deceive people to think it's the original site. The aim of this is to get people to login and input their private keys in the site and then they can hack into their wallets and get all their coins.

There are other types of crypto scams like pump and dump schemes, fake apps, e-mail scams, etc but I would stop explanations here due to the word limit given.

A famous crypto scam.

There have been lots and lots of crypto scams over the years that have stolen billions of dollars. One of these scams was the famous Bitconnect.

Source
Bitconnect was, should we say a combination of a business/investment opportunity(Ponzi) and a pump and dump scheme. It was established on February of 2016 as a multilevel investment business that operated on a Proof-of-Stake system. How it worked was that people got 100%+ ROI for every plan they subscribed to.

Source
These were the services the bitconnect scam promised to offer.

To lure people to this platform, a pump in the price of bitconnect coin occurred which made it go from less than a dollar to about $473 in just about year.
About $3.5billion was lost in this scam. It was branded a scam when the site stopped working and then the price of bitconnect coin drop down back to about $0.71. The man behind this was an indian, Divyersh Darji, who was later caught and apprehended in 2018.

Here are some references to give a more comprehensive explanation of the project:
Reference
Reference
Reference

2.) To What Extent Has Crypto scams Affected The Crypto space.

As I said before, the invention of digital currency and its development in the past few years has been wonderful, but it could be better. Cryptocurrency and it's acceptance around the world has not in any way reached it's climax because of the amount of scam activities done in it's space.

Crypto scams have actually gone a very long way in affecting the space in the sense that many people have lost trust in it. A lot of investors and traders prefer to invest their money into stocks and real estate properties but can never even dream of putting their money into cryptocurrency due to the fear of losing their money to scammers.

Besides affecting the minds of the investors, crypto scams have lead to a lot of tight regulations in some sites and organisation's which were not to be. Now some operations in some apps and organisations are not as smooth as intended to be.

For me, crypto scams have affected the crypto space at a very terrifying level.

3.) Will Regulations in Crypto add any value to the Crypto space?

There is only one answer to this and it is YES!!! and why not? Regulations in cryptocurrency doings would go a long way in bringing back value to the crypto space.

The major part of the crypto space that dearly needs regulation is the investment sector. The amount of money being lost daily die to scams is enormous and very tragic. Many people have even committed suicide all because they put probably their life savings and all their hope into a scam and then lost their money. Sadly, the way scam sites are operated andthe way people invest can only be controlled by them due to the fact that Blockchain technology is decentralized but people can be enlightened on how to go about in the crypto space.

Conclusion
Crypto scams have really affected the cryptospace negatively which has lead to the bad image to cryptocurrency. These scams come in different forms and capture people's different forms of interest. Regulations can be and should be implemented to stop these malicious acts. I personally have encountered scams in cryptocurrency but luckily for me, I never fell for any and I also wanted to know more about the crypto space and as God would have it, I found steemit🤗.

Beautiful lecture by prof @yohan2on, I await your next nuggets of knowledge.