How to identify a scam

Hello my fellow steemians!
I’m pretty young but full of desire to share my knowledge that I have on this revolutionary technology called blockchain and particularly on the income that you can make. I’m not a technician but I have some kind of predisposition on investments, thing that induced me to pick up nice projects and some good satisfactions.

Today we’re going to talk about scams, a pretty common matter in this world don’t you think?
This is my very first contribute on Steemit and I’ll try to help anyone wants to approach this exciting world of cryptocurrencies and ICO’s to identify a scam or more simply a fraud.

There could be various type of frauds but the more absolutely common fraud is the so called “Ponzi scheme”.
A “Ponzi Scheme” is a fraudulent system where those claim very high yield financed by the same investors money. A dog chasing its own tail in other words. The early investor will be financed by the last and so on. Until the creators of the fraud will magically disappear with all your precious money.
This kind of fraud is so common on the investments world that I personally found it a lot surfing the internet. Some of these frauds are even promoted on youtube channels of thousands of subscribers (“Bitclub Network” for example: a fake society of mining that has all the characteristics of the Ponzi scheme). Stay away from that!

For this reason I decided to write a small guide of simply and fast reading to understand which are the characteristics and the signals that could suggest we could be in front of a scam.
Be aware that this suggestions are just a try to help the investor to recognize in the most of the cases these kind of frauds, besides that, there are examples of perfectly camouflaged frauds on the real economy that even for a professional broker could be very hardly to recognize.
Just think at the many films or tv series produced as “The wolf of wall street” with Leonardo Di Caprio or “The Wizard of Lies” with Robert De Niro just to name two. This guide will help you to keep you away from the majority of this frauds, but the rest it has to come from your good sense.

1. To start, focus your attention on what legal form of the company is and where is located. The legal form of the company and the country where is located have to be perfectly clear on the website both for ICO’s and other forms of investments( for example a mining pool). The country could be very important because some communities as the European or the U.S.A have equally strong laws and penalties against that kind of frauds. That doesn’t mean that every company that are located on U.S.A or Europe are necessarily an honest company but I’d certainly avoid company located on fiscal paradise like Belize or Seychelles where the anti-fraud legislation and the protection of the consumer is without doubt not a priority.

2. Do a research to verify that this specific company really exist in that country and who are the CEO and the CTO. Use platforms as Linkedin or simply Google to verify the identity, the credibility and the skills of the CEO and the CTO. If these informations are not easy to find or are falsified ,faked or inflated to make people think they got a very big experience but in reality they’re just beginners, run away!

3. Other danger bell that you should be aware of, is a referencing system with a too much high bonus. A reference system allows to invite a friend into the platform or the investment earning something. Something indeed. Many exchange for example allow this opportunity guarantee a small percentage of the transactions that your friend will do. We talk about percentage of the volume from 0.1% to 5%. Percentage about 20% or even 50% could lead us think that there is something wrong. Be suspicious of company or website that promise you high yield for just bring other people inside the circle.

4. Other red flag to keep under surveillance is the incitement to invest now and immediately because it’s a very restricted offer in time and reserved to a small percentage of “chosen” people and in what we are be elected not understanding why and either how. The most important question to answer is “this project has a real intrinsic value or solve some kind of problematic in the world?” In the blockchains world is difficult to answer this question due the incapacity of the institutions to keep up the speed of this technological revolution especially in the legislative field. That’s why we have to move with caution.

5. The last suggestion that I want to share with you is to do some key word google research. Search “Name of the project” and “Scam” on Google may be you get aware of people in some forums or discussions that are already been frauded or observed problems to exit the investments for example. There will be plenty of good looking website and attractive videos on the project and on top of that, these will probably be your first results. Be patient and continue researching because people that run these frauds pay attention to cover the traces of the unfortunate investors. Usually one sad story is enough to eliminate the hoping for an easy gain.

I hope this post help you to do some more checks before put money in any projects.

Greetings and see you next time!