Crypto With Confidence: 7 Rules to Identify Scamcoins and Shitcoins

Feb 07, 2018 at 17:41 // News
CoinIdol Hunting Scamcoins

Thousands of cryptocurrencies are floating on the market at the moment, and tens more go live every day. The vast majority of them will be worthless in a few years, when the “Crypto Nova” that is exploding now is more mature and the process of “Natural Selection” has taken its course, killing all those cryptocurrencies that didn’t serve any purpose or were plain scams. Many are in a dying process already now, and many of those that aren’t, are just living off trading traffic or good marketing.

But how can a cryptocurrency investor, usually a private individual with limited resources and time, know where to put his money? This new column by CoinIdol.com aims directly to help in this task, exposing the weak points and shady practices of the myriad of altcoins out there.

Smelling The Rotten

A cryptocurrency can be a bad investment for several reasons.

The coin could simply be worthless technically speaking because it doesn’t add anything that could elevate it in the competition over the current cryptocurrency ecosystem (in cryptojargon these are called shitcoins, and there are plenty).

Or, the project behind the coin is vaporware because it’s too large to be realized with a team of too few people without sufficient funds and investors.

Or, the project is simply and clearly a scamcoin: a facade site with few references, an inconsistent project, or even worse, a completely worthless token marketed as a revolution. It is worth noting that even well-known altcoins out there are not as solid as they seem. They can be good for trading, thanks to their fluctuation in price, but they are not a good long-term investment option.

Finding the issues

There is no single point of failure to look at as a sure sign that a cryptocurrency is worthless or a scam: it’s a real detective job, and it can require minutes to hours to reach a sure conclusion. A good practice each investor should follow is to examine any asset before investing, before throwing money into something unknown, but this too often doesn’t happen.

In this first issue of the column, we are going to list a number of signs that should immediately ring alarm bells when spotted. This will help the reader to better identify where to put his hard earned money.

1 - Poor Looking Website

One of the most common signs to look for is a poor website.
Even though every now and then you can find a cryptocurrency with good technological content that is introduced by a poor website, usually due to a small team or even a single person behind its development, much more often a poor website is proof of the inconsistency of the project.

Many cryptocurrencies have amateur dedicated websites, few pages and poor text. The text may also appear in what is known as Engrish if the developers don’t know the English language very well.

You can cut off from your asset panorama a large number of cryptocurrencies by just taking a good look at their websites.

2 - Meager Blog

A poor looking website is often a good indicator but a deeper investigation is always due. Some websites look good but fail with a slightly deeper exam. For example, one of the first pages to check is the blog: by checking it out you can immediately spot a discontinued project.

A blog with very few updates is suspect as well. It means that either the blog is not updated due to lack of meaningful events, or that the project is proceeding excessively slowly in an environment that is literally boiling at this time, and where the first to reach fame has a huge advantage over the competition. 

3 - Missing References

Some websites include news websites logos as references for press releases. You can find news sites logos like Wired or CNN or Telegraph laying at the bottom of the main page. But very often they don’t have any link attached. 

A simple search on the news website usually spells off the trick: if you go to the CNN website and search for the coin name and nothing pops up, that’s a fake reference. Try a few more: if they are all missing, you know you are dealing with liars.

If you are dealing with liars, you know their coin has no real content and no future.

4 - Fake Partnerships

In some cases, cryptocurrency websites may rely on fake partnerships to increase the feeling of importance of their project. Building a network requires more effort, but considering the huge amount of money a cryptocurrency can procure, that’s worth it.

Partnerships surely make a project look important, and revealing the inconsistency of the network is somewhat more difficult and takes more time than the previously listed checks.

A good example of this is OneCoin: the recently bashed “cryptocurrency” has built a network of websites and projects that are still active today, after Ruja Ignatova, the founder, was arrested in November 2017. She’s now hiding and spending the money people “invested”.

OneCoin built a large and well-done network of websites that could deceive even the most trained eye: OneCoin, OneLife, OneWorld, OneAcademy are all part of the network. In the past, AurumCoin (a supposed cryptocurrency linked to real gold) website was also linked to OneCoin.

The OneCoin and AurumCoin websites were in much worse conditions than what they are now and the scam could be spotted very easily: a collection of self-referencing links were all over their pages. Now everything is cleaner and more believable, but inconsistencies can still be found. We’ll go back for an in-depth examination of OneCoin in one of the future issues of this column.

5 - False Statements

Some members of development teams often release interviews and statements on how their project is proceeding, expanding and finding its route through society, granting a use to their cryptocurrency or blockchain platform.

False statements can be found on the blog or in interviews released on Youtube or other websites. Spotting false statements on a blog can be quick and easy, but watching hours of interviews on Youtube is not. That’s why when looking for false statements the shortest route is usually found at point 6.

6 - People’s Complaints

Other people’s complaints can also be a good way to spot a scammy or inconsistent cryptocurrency. Simple searches like “is coinxxx a scam” can lead to interesting articles and examinations already undertaken by other people that were burned in their investment or that simply have some more knowledge of the subject than the average person.

7 - Poor White Paper / Project Design

The white paper is the most important element in a project... so why is white paper only at number 7 on this list? Because reading (and understanding) a white paper is not for everyone: cryptocurrencies are a very complex topic that involves many disciplines (coding, economic, analysis, and more), and understanding the dynamics of what a cryptocurrency or a project based on blockchain technology could offer is no easy task at all.

Still, in some cases, having a look at the whitepaper of a project can quickly clear every doubt... or raise some. In some cases, it’s easy to spot a white paper full of unrealistic expectations, incompetence, or a plain scam setting.

This is all for the first issue of this column. In the next edition, we will begin to examine the cryptocurrencies one by one. Get ready for some good surprises!