How to Detect Scam coins in 13 Ways
Initially written for a now-defunct cryptocurrency media website.
I am not a fan of shitcoins.
These are mostly altcoins or cryptocurrencies with an underlying motive, either a pump and dump scheme or a way for those in power to earn a profit off of deceived investors. Marketing themselves as the next bitcoin to reach $20,000, or a new blockchain platform like Ethereum only to disappear at the last minute, scam coins are not for anyone.
Tired of getting ripped off? Unsure if itâs a hit or shit? Look no further, your friendly neighbourhood crypto friend is here! Here are some of the ways to tell if a coin is a scam:
They suck at marketing.
If the coin only has 1 or 2 marketing channels (ie. Facebook ads, Twitter, and one landing page), itâs a red flag. If they rarely ever give updates as to what they are doing, or if they are not putting any effort in interacting with fans, how do you know if theyâre a scam or not?
All their team members are anonymous
Whoâs the CEO of the team? Whoâs in charge of the developers? Do they even show their faces? There have been cases of fake profiles filling up the various positions of a cryptocurrency company. If the team is not transparent enough to show their experiences and background, itâs kind of difficult to trust your capital with them right?
There is no whitepaper.
Nothing. Zilch. Nada. Do you want to know what they will do with your money? Nope, thereâs nothing to show this. A website that merely introduces the coin but does not lead you to their technical whitepaper already breeds suspicion.
There is a whitepaper, but itâs shit.
Did you know that you can get someone to write a $100 whitepaper for you? This can result in an otherwise pointless whitepaper, which can be a waste of time for potential investors. That means any scam can make a document to fake legitimacy. For you upcoming coin teams, make sure your whitepaper covers everything! For investors, make sure you read it thoroughly!
Their website is not protected.
If you look in the address bar of your browser, you might notice that every link starts off with either âhttpâ or âhttpsâ. If this new coinâs website is missing an âsâ in their link, it is not protected. Donât try to pay for anything that isnât SECURE!
Their website has HTTPS, but itâs free.
This one can be challenged as it depends on which stage the team is currently at. Most folks start off with the free Cloudflare HTTPS service, before moving on to premium (read: paid) services to serve their needs. You donât want your coins to leak after all!
The website is poorly designed.
When youâve looked at enough websites, you start to see recurring themes, free ones. Google âfree website themesâ and you can sense a pattern, as nearly all of them look the same. If a coin dev team canât afford to pay for a premium theme filled with proper designs, effective copy and detailed information, do you think they can handle an ICO? Play it safe guys, investment carries risk.
There hasnât been a long build-up.
A new coin just came out of nowhere! Do they have a large following? Have they been in development for several years? Or did the ads just start on a friday night? Try and look back at the coinâs timeline: if all this supposed hype just started recently, how can you tell if itâs legitimate?
It doesnât solve a justified issue.
Most effective cryptocurrenciies are made for a purpose. If it is an issue they are tackling, like the movement of privatised medical data for example, you can see the value they are trying to bring to the table. But, if itâs just a coin that is marketed everywhere to drive the price up, it can be just as easy for someone to do a pump and dump scheme and ruin your day!
If thereâs nothing in the Roadmap.
Do they have a road map? Is it detailed? What kind of services? Barely anything, just promises of getting rich? Roadmaps are a way to visualise a coinâs purpose: if there is no roadmap, there is not telling what they will do with your money. You canât invest into thin air!
There is a lack of transparency.
For some investors, they want to see the code and technology behind this upcoming coin: what blockchain platform is it based on? Where are the devs getting their experience from? Are they answering user questions properly, or are there secrets?
Coins are pre-mined.
We already have pre-mined coins, and we are doing a tokensale to fund our development. Wait a second. Pre-mined coins are coins that are sent to one address prior to releasing the rest for the public. They can easily drop pre-mined coins to abuse the price. When this abuse happens, the reasons for it are mostly associated with pump and dump schemes. Check the technical documentation so as to check where all the coins are going!
Thereâs not enough technical lingo.
The whitepaper tends to house a ton of technical details: time of transactions, incentives and proof concept for example. If the majority of the text they provide you is for marketing purposes, thatâs not a good sign. You want to rest assure that the coin will go a long way: looking at the technical aspects is a good indicator of that. Without any, weâre at a loss.
What else should we consider if itâs a scam? Does it look like a pyramid scheme? Comment below, would love to see what you think!
Footnotes
- https://www.shauncheon.com/2017/08/how-to-detect-scamcoin-how-to-detect.html
- https://steemit.com/cryptocurrency/@jaimewilliam/can-i-detect-a-shitcoin-when-for-you-is-a-shitcoin
- https://steemit.com/shitcoin/@stellabelle/a-guide-for-newbies-what-is-a-shitcoin
- https://hackernoon.com/mastering-shitcoins-the-poor-mans-guide-to-getting-crypto-rich-2e469b762ba9
- https://medium.com/@muneeb/5-star-system-6c27a0eb4a1c
- https://www.blackhatworld.com/seo/pump-and-dumps-noobs-guide.943871/
- https://bitcointalk.org/index.php?topic=547778.0