Common Types of Crypto Scam and How to Avoid Them: Part 2
9 mins read
Welcome to part two of our series on cryptocurrency scams. In our previous installment, we delved into the world of fake ICOs, phishing etc. Today, we will cover a few more scams like fake USDTs, ponzi schemes, and pump-and-dumps, highlighting how these deceptive practices have evolved with the rise of cryptocurrencies and how you can better protect yourself. Sending Fake USDTs There’s a new type of scam involving fake USDT (Tether) tokens these days. These scams typically involve deceptive tactics where malicious actors convince users to manually add fake tokens to their wallets by providing a fraudulent contract address. This scam is executed through various social engineering techniques, often involving fake websites or apps that appear legitimate. Here are some red flags to watch out for: Someone asks you to manually add a token using a contract address Always verify the contract address on trusted platforms like CoinMarketCap before adding any tokens to your wallet. Verifying the authenticity of a token's contract address on CoinMarketCap helps ensure that you are not adding a fake token to your wallet. Additionally, if a token lacks an icon on blockchain explorers, this is another indicator of potential fraud, particularly for more well-known tokens. Lack of verification on reputable platforms Legitimate tokens will have their contract addresses and details verified on reputable platforms like CoinMarketCap. If a token's details cannot be verified on such platforms, it is a strong indicator of fraud. Always cross-check the token's information on multiple trusted sources to ensure its authenticity. In 2024, fake representatives mimicking The Financial Commission (FINACOM) were caught distributing fake USDT to defraud consumers. Unfortunately, the victims were scammed twice. Initially, they are deceived by brokers who convince them to invest in fake tokens. Subsequently, a second layer of scammers posing as representatives from a fake Financial Commission (FINACOM) contacted the victims, promising to help recover their lost assets. These fake FINACOM agents ultimately provided the victims with more fake USDT, compounding their losses and making recovery even more challenging. Ponzi and Pyramid Schemes Ponzi and pyramid schemes have long been used to defraud investors, and with the rise of cryptocurrency, these deceptive practices have found a new arena to exploit. These schemes promise high returns with little to no risk, using funds from new participants to pay off earlier investors, creating an illusion of profitability. However, they are unsustainable and inevitably collapse, leading to significant financial losses for most participants. A Ponzi scheme is an investment scam where returns are paid to earlier investors using the capital of newer investors rather than from profit earned. The scheme requires a constant influx of new investments to keep it afloat. As soon as the flow of new money stops, the scheme collapses, and most investors lose their money. Pyramid schemes involve recruiting participants to make an initial investment and then recruit others to do the same. Each new recruit’s investment is used to pay those who recruited them, creating a pyramid structure. The scheme relies on a continual recruitment of new members to sustain itself. Like Ponzi schemes, pyramid schemes collapse when recruitment slows, leaving the majority of participants with losses. Here is how they operate: Promise of Guaranteed Returns Both Ponzi and pyramid schemes lure investors with the promise of high, guaranteed returns. They often claim to have exclusive investment strategies or technologies that ensure consistent profits, which are typically unrealistic and unsustainable. Legitimate investments come with risk and cannot guarantee high returns. Heavy Emphasis on Recruiting New Participants In pyramid schemes, the primary focus is on recruiting new members rather than selling a legitimate product or service. Participants are incentivized to bring in new investors, often with the promise of commissions or bonuses for each new recruit. Legitimate investments focus on the product or service, not on recruiting new participants. Lack of a Legitimate Underlying Business Model These schemes lack a genuine business model or product to generate profits. Instead, they rely entirely on the influx of new investments to fund payouts to earlier participants. If the investment opportunity lacks clear, transparent information about how profits are generated or if the details about the team and the business model are vague, it’s a sign of a potential scam. One of the most notorious examples of a cryptocurrency Ponzi scheme is BitConnect. Launched in 2016, BitConnect promised investors substantial daily returns through its proprietary trading software, which it claimed could generate profits regardless of market conditions. The platform encouraged users to reinvest their earnings and recruit new members, offering referral bonuses as incentives. BitConnect’s promises of high returns and aggressive recruitment tactics attracted a large number of investors. At its peak, BitConnect’s market capitalization exceeded $2.5 billion. However, in January 2018, the platform abruptly shut down after receiving cease-and-desist orders from regulatory authorities. The collapse revealed that BitConnect had no legitimate means of generating profits and was instead paying returns using the capital from new investors. The scheme’s downfall led to massive financial losses for many participants. Pump and Dump Schemes Pump and dump schemes are manipulative practices used to artificially inflate the price of a cryptocurrency through misleading statements, hype, and coordinated buying, only to sell off holdings at the peak, leaving other investors with losses. These schemes exploit the volatility of the cryptocurrency market and can lead to significant financial losses for unsuspecting investors. Pump and dump schemes have been around for decades in traditional stock markets but have found a fertile ground in the relatively unregulated cryptocurrency space. These schemes involve orchestrated efforts to drive up the price of a specific cryptocurrency, often a low-market-cap coin, to attract unsuspecting investors. Once the price has been artificially inflated (pumped), the organizers sell off (dump) their holdings, causing the price to crash and leaving other investors with worthless assets. The Mechanics of How These Schemes Work Step 1: Coordination and Hype Scammers often coordinate pump and dump schemes through private groups on social media platforms, messaging apps, or forums. They create a sense of urgency and excitement around a particular cryptocurrency, spreading positive but false information to attract investors. Step 2: Artificial Price Inflation The organizers begin by buying large amounts of the targeted cryptocurrency to drive up its price. This initial buying frenzy creates the illusion of increasing demand, encouraging others to invest out of fear of missing out (FOMO). Step 3: Spreading False Information To sustain the pump, scammers disseminate false or exaggerated claims about the cryptocurrency’s potential, upcoming partnerships, technological advancements, or endorsements. This misinformation is often spread through social media posts, forums, and even fake news articles. Step 4: Dumping the Holdings Once the price reaches a desired peak, the organizers sell off their holdings at the inflated prices. This sudden sell-off causes the price to plummet, leaving latecomers with significant losses as the market corrects itself. In 2018, Verge (XVG) experienced a significant price surge fueled by a pump and dump scheme. Promoters hyped the coin with false claims about upcoming partnerships and technological advancements. Once the price peaked, the organizers sold off their holdings, leading to a sharp decline in value. Final thoughts Navigating the world of cryptocurrencies requires vigilance and a keen awareness of potential scams. Keep an eye out for the scams mentioned above to better protect yourself and your investments. While a good crypto wallet won’t protect you from scams, it will protect you against hackers and other malicious actors! Do consider CoinWallet, an MPC-powered wallet designed to simplify and secure your crypto transactions. Click here (Android) or here (iOS) to download CoinWallet and take full control of your digital assets today!
What is Polygon (MATIC)?
6 mins read
Polygon, a cutting-edge blockchain platform, addresses critical challenges in the blockchain ecosystem, such as scalability, decentralization, and interoperability. Since its inception, Polygon has swiftly become a favored solution, largely due to its innovative multi-chain architecture and exceptional performance. In this article, we examine the specific features that distinguish Polygon, including its use of sidechains, Plasma framework, zk-Rollups, and Optimistic Rollups. We will also highlight notable case studies that showcase Polygon's real-world applications, from DeFi projects to gaming platforms. Polygon's Role in DeFi Growth: A Game-Changer for Decentralized Finance Polygon has emerged as a powerhouse within the DeFi sector, providing scalable and efficient solutions for decentralized applications (dApps). The network’s design addresses several of the limitations associated with Ethereum, offering a robust infrastructure to support DeFi projects. Scalability One of the primary challenges with Ethereum has been scalability. High gas fees and slower transaction times have hindered its capacity to support the growing DeFi ecosystem. Polygon addresses these issues with its Layer 2 scaling solutions, significantly reducing transaction costs and improving throughput without compromising security. This capability positions Polygon as a preferred choice for DeFi developers looking to build on a more efficient and cost-effective platform. Interoperability The interoperability of Polygon further enhances its role in the DeFi space. By seamlessly connecting with Ethereum and other blockchains, Polygon enables smooth asset transfers and cross-chain functionality. This interoperability is crucial for creating a cohesive and interconnected DeFi ecosystem, allowing liquidity and assets to move freely across different networks. Low Transaction Fees Moreover, Polygon’s low transaction fees and fast confirmation times make it an attractive choice for smaller transactions and micro-payments, which are often not feasible on Ethereum due to high costs. This opens up new possibilities for innovative financial services and products that rely on frequent, low-cost transactions. Understanding Polygon’s Impact: Transforming the Ethereum Network Polygon’s influence extends beyond just DeFi; it has a profound impact on the Ethereum network itself. By offering Layer 2 scaling solutions, Polygon alleviates congestion and enhances the overall performance of Ethereum. This contribution is critical as Ethereum continues to face scalability issues with its growing user base and application demands. Polygon’s Architecture Polygon’s architecture consists of several components, including sidechains, Plasma framework, zk-Rollups, and Optimistic Rollups. These technologies enable Polygon to process a high volume of transactions at lower costs while maintaining robust security measures. The Plasma framework: Allows for the creation of child chains that can handle a large number of transactions off-chain before submitting them to the Ethereum mainnet, thus relieving congestion and reducing fees. zk-Rollups: zk-Rollups bundle hundreds of transactions into a single batch, using zero-knowledge proofs to ensure that each transaction is valid. This method significantly enhances throughput while maintaining high security standards. Optimistic Rollups: Optimistic Rollups operate by assuming transactions are valid and only verifying them if a fraud proof is submitted, which reduces the computational load and further accelerates transaction speeds. By offloading transactions from the Ethereum mainnet to the Polygon network, Ethereum’s capacity is significantly increased, allowing for more efficient processing and reducing the burden on its infrastructure. Real-World Use Cases of Polygon Polygon’s success has sparked interest from institutional investors and enterprise-level projects. Its robust infrastructure and potential for scalability make it an appealing choice for large-scale applications seeking to leverage blockchain technology. This growing interest has led to its adoption in various real-world use cases, demonstrating its potential beyond just the DeFi space. Here are some notable examples: Gaming and NFTs: Polygon’s scalability and low fees make it an ideal platform for gaming and non-fungible token (NFT) projects. Games like Decentraland and Aavegotchi have integrated Polygon to enhance gameplay experiences and reduce transaction costs associated with in-game assets and NFTs. Payment Solutions: Polygon’s fast transaction speeds and minimal fees enable seamless payment solutions. Projects like EasyFi and Superfluid leverage Polygon to offer real-time, cost-effective transactions for various financial services. Supply Chain Management: Blockchain's transparency and immutability are advantageous for supply chain management. Projects like Trace Network utilize Polygon to create efficient, tamper-proof supply chain solutions that improve traceability and accountability. Polygon and MATIC Supported on CoinsDo CoinsDo is excited to announce that it now supports transactions on BSC and the related BNB token. This new integration means that CoinGet and CoinSend can now efficiently manage these assets, providing users with a seamless and secure digital asset management experience. If you're in the market for a reliable, secure, and cost-effective digital asset management system, reach out to us to learn how CoinsDo can empower your business.
What is Ripple (XRP)?
6 mins read
If you're new to the world of cryptocurrency, understanding Ripple can seem a bit daunting. However, Ripple is designed to be user-friendly and practical for both financial institutions and individual users. Here's a simplified rundown to help beginners get started: Essentially, Ripple is both a platform and a currency. The platform is a protocol that facilitates fast, low-cost international transactions, while the currency (XRP) is used to provide liquidity on the network. More specifically, Ripple operates as a real-time gross settlement system (RTGS), a remittance network, and a currency exchange platform. What distinguishes Ripple from other technologies is its unique consensus algorithm, which doesn't require the extensive computational power demanded by traditional blockchain mining. At its core, Ripple uses a distributed open-source protocol, which enables instant and low-cost international payments. It's engineered to support tokens representing fiat currency, cryptocurrency, commodities, or any other unit of value such as frequent flier miles or mobile minutes. Ripple explained: Breaking Down the Core Concepts and Features Ripple is designed primarily for global payments and aims to solve issues like slow transaction times and high costs associated with traditional banking systems. Here are some of the core concepts and features that define Ripple: Consensus Algorithm Unlike Bitcoin, which relies on Proof of Work (PoW), Ripple employs a unique consensus algorithm to validate transactions. The Ripple Transaction Protocol (RTXP) ensures extremely fast transaction times and a reliable system to verify the transferring of assets. RippleNet RippleNet is a network of institutional payment providers, such as banks and money services businesses, utilizing Ripple's technology to provide a frictionless experience to send money globally. RippleNet ensures that transactions are settled in mere seconds, as opposed to days with traditional banking systems. XRP Ledger The XRP Ledger is an open-source product created by Ripple. It is tailored for payments and is designed to handle thousands of transactions per second. Transactions are validated by a unique node list (UNL), which consists of trustworthy nodes selected by users of the network. Pathfinding Ripple’s payment network allows for a pathway or route to be found between the sender and recipient that entails the least-cost series of currency exchanges to complete the transaction. This feature is highly beneficial in situations where there is no direct currency pair. Interledger Protocol (ILP) ILP is a protocol used to connect different ledgers or payment networks. It allows for atomic swaps between ledgers and enables inter-network payments Real-World Use Cases: How Ripple and XRP are Employed Today While the concepts of Ripple and XRP may seem theoretical, they are actively being used in the real world with tangible benefits. Here are some interesting use cases of Ripple's technology: Santander's One Pay FX: The Spanish banking giant Santander uses Ripple's technology to power its One Pay FX service. This service allows for same-day international payments, providing transparency and reducing costs associated with such transactions. American Express and Ripple: American Express has teamed up with Ripple to enhance cross-border payments. Ripple's blockchain technology ensures quick processing times and enhances the overall efficiency of transactions. Axis Bank: The Indian bank Axis Bank uses Ripple to offer its customers cost-effective and timely cross-border payments. Potential Challenges and Criticisms: Addressing Concerns Surrounding Ripple and XRP Despite its numerous advantages, Ripple and XRP face certain challenges and criticisms that are worth considering. Let's take a closer look at some of these concerns: Centralization Issues One of the most significant criticisms of Ripple is its perceived centralization. Unlike Bitcoin, which is entirely decentralized, Ripple Labs controls the majority of XRP's supply. This raises concerns about potential manipulation and governance issues. Regulatory Uncertainty As with many cryptocurrencies, Ripple faces regulatory challenges. Various jurisdictions have different stances on how cryptocurrencies should be classified and regulated, which can affect Ripple’s operation and adoption globally. Competition from Other Cryptocurrencies Ripple isn’t the only player in the market aiming to revolutionize global payments. It faces stiff competition from other blockchain projects like Stellar and various traditional financial reforms that are improving their payment systems. Legal Challenges Ripple Labs has encountered legal challenges, such as lawsuits claiming that XRP should be classified as a security. These legal issues can hamper its growth and affect its acceptance in traditional financial markets. XRP is now Supported on CoinsDo CoinsDo is excited to announce that it now supports transactions on Ripple and the related XRP token. This new integration means that CoinGet and CoinSend can now efficiently manage these assets, providing users with a seamless and secure digital asset management experience. If you're in the market for a reliable, secure, and cost-effective digital asset management system, reach out to us to learn how CoinsDo can empower your business.
What is Avalanche?
6 mins read
Avalanche, a groundbreaking blockchain platform, has been designed to tackle some of the most significant challenges in the blockchain space: scalability, decentralization, and interoperability. Launched in 2020 by Ava Labs, Avalanche has rapidly gained traction due to its innovative architecture and high performance. This article explores the unique features of Avalanche, presents notable case studies, and explains how our platform supports transactions with Avalanche's AVAX tokens. Key Features of Avalanche Unique Consensus Mechanism Avalanche employs a novel consensus protocol that combines aspects of Proof-of-Stake (PoS) and Byzantine Fault Tolerance (BFT). This mechanism, known for its efficiency and speed, allows Avalanche to process up to 6,500 transactions per second (TPS) with sub-second finality, making it one of the fastest blockchain platforms available. The consensus protocol operates through repeated random subsampling, ensuring decisions are made swiftly and securely. Three Built-In Blockchains: Avalanche's architecture includes three integrated chains, each serving specific functions: X-Chain (Exchange Chain): Manages asset creation and exchange. C-Chain (Contract Chain): Supports smart contracts compatible with the Ethereum Virtual Machine (EVM). P-Chain (Platform Chain): Coordinates validators and subnets, facilitating the creation and management of custom blockchains. This tri-chain structure ensures that each blockchain is optimized for its intended tasks, enhancing overall network performance. Subnets Avalanche allows developers to create customized subnets, which are independent blockchains that can have their own rules and governance structures. These subnets are validated by a subset of Avalanche validators, providing flexibility and scalability for various applications. This feature is similar to Polkadot's parachains but offers more customization options. Interoperability Avalanche is designed to be highly interoperable with other blockchain networks. Its C-Chain's compatibility with EVM and support for Solidity smart contracts allow for seamless integration with Ethereum-based applications. Additionally, Avalanche has its own bridge for facilitating cross-chain asset transfers, enhancing its utility in a multi-chain ecosystem. Low Fees and Sustainability Avalanche offers significantly lower transaction fees compared to Ethereum, making it an attractive platform for developers and users alike. Furthermore, its PoS consensus mechanism is energy-efficient, reducing the environmental impact of blockchain operations. Developer-Friendly Ecosystem Avalanche provides a robust set of tools and resources for developers. The platform supports various programming languages beyond Solidity, including Rust, Go, and TypeScript. This flexibility allows developers to create a wide range of decentralized applications (dApps) and blockchain solutions. Avalanche's EVM compatibility also ensures that existing Ethereum dApps can be easily migrated to the Avalanche network. Governance and Tokenomics AVAX, the native token of Avalanche, is integral to the platform’s governance and economic model. AVAX holders can stake their tokens to participate in network validation and governance, earning rewards for their contributions. The token has a capped supply of 720 million, with transaction fees being burned to reduce the total supply over time, fostering a deflationary economic model. Avalanche Case Study: Trader Joe Trader Joe is a leading decentralized trading platform built on the Avalanche blockchain, offering a comprehensive suite of DeFi services. Launched in June 2021, Trader Joe quickly became a prominent player in the Avalanche ecosystem, providing users with a seamless and efficient platform for trading, lending, borrowing, and yield farming. Since its launch, Trader Joe has seen exponential growth, both in terms of user base and total value locked (TVL). The platform's success is a testament to the effectiveness of Avalanche's scalable infrastructure, which supports high-volume transactions without the prohibitive costs seen on other blockchains like Ethereum. Trader Joe has achieved substantial TVL, indicating high user trust and engagement. This metric reflects the amount of capital deposited in the platform’s smart contracts, underpinning its liquidity and operational capacity. The platform has also attracted a broad user base, benefiting from Avalanche’s expanding ecosystem and the strategic initiatives by Ava Labs to promote DeFi on Avalanche. Avalanche is now Supported on CoinsDo CoinsDo is excited to announce that it now supports transactions on the Avalanche blockchain and the related AVAX token. This new integration means that CoinGet and CoinSend can now efficiently manage these assets, providing users with a seamless and secure digital asset management experience. If you're in the market for a reliable, secure, and cost-effective digital asset management system, reach out to us to learn how CoinsDo can empower your business.
Monthly Crypto Roundup by CoinsDo: June 2024
5 mins read
Welcome to CoinsDo’s Monthly Crypto Roundup for June 2024. This month has been bustling with activity, from significant market movements to regulatory developments and intriguing technological advancements. In this roundup, we’ll explore the key highlights, market trends, and notable events that shaped the crypto landscape in June. Crypto Market Trend Bitcoin (BTC) experienced significant volatility in June 2024, briefly falling below $60,000 for the first time since early May. This drop was driven by growing bearish sentiment among investors, reflecting broader concerns about regulatory crackdowns and macroeconomic uncertainties. Despite the dip, Bitcoin managed to recover slightly, hovering around the $61,000 mark by the end of the month. Ethereum (ETH) also faced fluctuations but remained relatively stable compared to Bitcoin. The recent approval of spot Ethereum ETFs provided some upward momentum, with ETH prices consolidating around $1,800. Investors remain optimistic about Ethereum's long-term potential, particularly given its pivotal role in decentralized finance (DeFi) and the growing interest in blockchain-based applications. The recent volatility in Bitcoin and Ethereum prices highlights the ongoing uncertainty in the crypto market. While regulatory concerns and macroeconomic factors continue to influence market sentiment, the approval of Ethereum ETFs suggests a growing institutional interest that could provide more stability and long-term growth potential for both BTC and ETH. Crypto Hacks and Scams June 2024 witnessed several high-profile crypto scams and hacks, resulting in significant losses. Among the most significant events were: Kraken hack: A zero-day vulnerability was exploited, leading to the loss of $3 million Uwu Lend: On-chain data revealed that a single wallet managed to siphon various tokens worth $19.3 million via an exploit. These incidents highlight the persistent risks in the crypto space and the need for robust security measures, which is what CoinsDo provides for crypto institutions with our MPC-powered solutions AI-Related Scams On the Rise A rising trend in the crypto market is AI-related scams, where fake CEOs are created using AI to deceive investors. These sophisticated scams exploit the general interest in AI to create and popularize fraudulent schemes. The increasing use of AI in scams underscores the need for advanced detection and preventive measures in the crypto community. Key Events Blockchain Expo North America The Blockchain Expo North America took place on June 5-6, 2024, at the Santa Clara Convention Center in California. This event brought together industry leaders, developers, investors, and policymakers to discuss the latest advancements and trends in blockchain technology. Key topics included DeFi complexities, NFT innovations, and regulatory challenges. The Expo provided valuable insights into the future of blockchain, highlighting its potential to transform various industries. Finance 2.0 - Crypto Conference in Zurich On June 25, 2024, the Finance 2.0 - Crypto Assets Conference was held in Zurich, Switzerland. This event focused on the integration of crypto assets into traditional finance, with a significant emphasis on the approval and impact of Bitcoin Spot ETFs. Leading asset managers and financial experts discussed how these ETFs are reshaping the market and driving higher daily trading volumes than traditional gold ETFs. The conference also addressed sustainability and regulatory issues within the crypto space. Technological Innovations Arkham Intelligence and On-Chain Surveillance Arkham Intelligence has been at the forefront of on-chain surveillance technology, significantly advancing the capabilities of tracking and analyzing blockchain transactions. Their innovative platform, now valued at over $1 billion, has introduced the Arkham (ARKM) token, which plays a crucial role in enhancing transparency and security within the crypto ecosystem. Learn more about Arkham Intelligence here. If you want to dive deeper, read this detailed analysis. We believe that the success of Arkham Intelligence's on-chain surveillance mechanism could be transformative for the entire blockchain industry. By providing robust tools to track and analyze transactions, it improves transparency and security, which are critical for gaining institutional trust and broader adoption. This innovation might drive further advancements in regulatory compliance and anti-fraud measures across different blockchain networks. Conclusion June 2024 has been a dynamic month for the cryptocurrency world, marked by significant market movements, regulatory developments, and technological advancements. As we move forward, staying informed and adaptable will be crucial for navigating the ever-evolving crypto landscape. Stay tuned for more updates in next month’s roundup.