Don’t fall for another BitConnect — key steps to take before you invest in cryptocurrency

BitConnect has exited the cryptocurrency market. It’s volatility software was able to guarantee up to 40% interest every month and 0.25% daily interest back for your investment if you invest over $10,010. Based on these claims, BitConnect was saying for your $10,010 investment, you will gain $25.025 per day ($750.75 every 30 days) just from the daily interest rate guarantee. Then, take into consideration their vaguely defined “proprietary software” that guarantees returns (and never have any losses in its trading algorithm, regardless of market behavior) and you’ve got yourself a major red flag.

Generally speaking, if it’s too good to be true, it probably is.

Identifying Ponzi Schemes

At the very center of every classic Ponzi scheme are two things: an investment with (allegedly) a remarkably high return, and a story about just why the extraordinary returns can be so easily achieved.

When any time of investment promises a guaranteed compounded monthly return (in this case, almost up to 40% return a month), you can pretty much guarantee you are in trouble.

Here are several key signs you might be in a scheme:

  1. You never receive any real collateral for your investment (or in this case, cryptocurrency), just a promise that you will earn money back
  2. The guaranteed return of your investment is way too good to be true (should be noted that Charles Ponzi (original con-artist) promised 50 percent and sometimes even 100 percent rates of return) — sound familiar for BitConnect?
  3. You’re told a complicated yet convincing reason about why the returns are so strong (in this case, a “proprietary trading algorithm”)

How to Protect Yourself in the Future

It’s very unfortunate that there are individuals out there who would take advantage of others but there are ways to protect yourself in the future!

These are some steps to take before you invest:

  1. Do your due diligence by researching the individual offering you the product and the company too — do they seem reputable? Do they have history of success? Are they truly who they say they are? Especially in the cryptocurrency world where people are hiding behind aliases.
  2. Ask yourself — what are you getting in return for your money? Are you getting any type of collateral for your money?
  3. Finally, please don’t let your greed cloud your good judgment. If alarm bells are going off in your head, don’t ignore them — listen to yourself & find something else to invest in.

Preventing the Next Major Mt. Gox

Many people learned the hard way with the recent BitConnect fraud and to help prevent that, I’ve compiled a list of what appears to be other Ponzi/Pyramid schemes that already exist in the cryptocurrency world so you can protect yourself (and your friends) from fraud:

  1. Binary Coin (https://binarycoin.io/) — here is what Binary Coin promises:

    Sound familiar?
  2. Bitfinite (https://www.bitfinite.co/) — they are guaranteeing even high returns than BitConnect…
  3. EthConnect (https://ethconnect.com/) — guaranteeing up to 45% return, with 0.2% daily return

  4. Gold Reward (https://goldreward.io/) — now guaranteeing up to 45% PER MONTH

And the list goes on…

Exacoin
Falcon Coin
Ficoin
Forzacoin
Goldgate
Hextracoin
Ideacoin
Knox Coin
Lendconnect
LoopX
Martcoin
Moneroconnect
Monetize Coin
Monyx
Neoconnect
Pagarex
Regalcoin
Secular Coin
TEX Coin
Western Coin

The ridiculous thing is…these are just the ones I’ve found through a quick Google search in relation to cryptocurrency lending platforms.

I hope this list will help some of you in the future. Protect yourselves out there in the wild west of cryptocurrency!

 

This was originally published on Medium.com.