How Do People Scam With Cryptocurrency

How do people scam with cryptocurrency

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Most of the hype surrounding cryptocurrency relates to getting rich quick. It’s doubtful you will get rich at all with cryptocurrency. If you break even, you’ll be lucky. Follow me to see the Devil in the details.

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Is Cryptocurrency a Scam?

Cryptocurrency may be the ideal vehicle to quickly and effortlessly turn your cash into someone else’s.

If you buy into the cryptocurrency hysteria, you will probably lose. Anytime you follow the crowd, you are going in the wrong direction. Remember, scammers use confusion to snare their victims. If you don’t understand it, don’t put your money in it.

Two Faces of Cryptocurrency.

It’s important to understand that cryptocurrency has two parts.

How do people scam with cryptocurrency

The technology that supports it and the snippet of code that is the actual cryptocurrency. Underlying and supporting cryptocurrency is blockchain technology. Blockchain technology is in its infancy and still evolving.

However, it offers a means of self-authenticating some transactions.

The self-authenticating aspect of the technology may have a revolutionary impact on the internet.

The Pump and Dump

Much of the praise you hear in the media about cryptocurrency is really about the blockchain technology, not about the crypto itself. This article is about cryptocurrency, the snippet of code, and not the blockchain technology that supports it.

Ultimate Currency?

Cryptocurrency is presented as a currency that bypasses banks and is said to liberate us all from the throes of centralized banking.

The fans of cryptocurrency praise it as the ultimate currency of free people, but no government in the world recognizes cryptocurrency as a legitimate currency. It’s too volatile to serve as currency and you can’t buy anything with it.

It’s just a snippet of code

The truth is, cryptocurrency is not currency and it is not an investment.

Cryptocurrency has no intrinsic value. Nothing backs it and it serves no purpose that can’t be better served by genuine currency.

We live in the Information Age. Unfortunately, the information we receive is often intentionally misleading and opposing powers assault us with conflicting information.

Is Cryptocurrency a Scam?

It is more accurate to say we live in the age of Information Wars.

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Most of what we hear through the media is designed to influence our behavior and thoughts. It is essential to understand the role of the media in fueling the cryptocurrency hysteria. The only value cryptocurrency has is the value the media gives it.

What is Cryptocurrency?

Cryptocurrency is nothing more than a snippet of digital code.

Unlike gold, real estate, commodities and corporate stock, cryptocurrencies have no underlying value. The market for cryptocurrencies is artificial.

With real assets like gold, real estate, commodities and corporate stock, you can mathematically determine their value based on fundamentals and market demand.

How do you determine the value of a digital code snippet?

Cryptocurrency is not a currency.

Contrary to popular belief, cryptocurrency is not a currency. No country in the world accepts cryptocurrency as a currency.

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No major financial institution accepts cryptocurrency either. Since its inception, financial institutions have actively avoided cryptocurrency.

To make matters worse for cryptocurrencies, you cannot directly buy anything with it.

The rare business that appears to accept cryptocurrency is actually using a third party to exchange cryptocurrency for real currency, typically either dollars or Euros.

The purchase transaction is done in the accepted currency of that country, NOT with cryptocurrency.

Using cryptocurrency to buy stuff makes an otherwise simple transaction unbelievably complicated. Why would anyone want to do that?

Cryptocurrency Has No Intrinsic Value.

Intrinsic value is the value inherently contained in the asset.

How do people scam with cryptocurrency

That value can be determined by how well it solves a fundamental problem. If you found a hundred-dollar bill on the sidewalk you would know it’s valuable. You don’t need anyone to tell you.

During a natural disaster, food and water will have high intrinsic value.

Gold has intrinsic value because it is naturally dazzling, has multiple industrial applications and has historically served as a store of wealth.

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The US Dollar has intrinsic value because it has the backing of the United States Government. Also, the US dollar is the only currency you can use to pay your taxes in the United States.

Cigarettes have intrinsic value in prison and under many other circumstances as well. They can be traded for goods or smoked.

In contrast to real assets that have genuine intrinsic value, cryptocurrency does not solve anything.

It’s just a snippet of digital code. Its value is based only on media hype. Because the value of cryptocurrency is determined by the buzz in the media, the ‘Theory of the Greater Fool’ drives the cryptocurrency market.

Theory of the Greater Fool.

The Theory of the Greater Fool comes into play when the price of an asset is NOT established by its intrinsic value. Instead, the price is determined by the irrational expectation of market participants.

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In these kinds of markets, a buyer will purchase an asset for a foolishly high price because they expect they can sell it to a greater fool at still a higher price.”(Source)

If you want to make money buying and selling cryptocurrency, you must find someone who will pay a higher price than you paid. It may be impossible to find a greater fool if you cannot influence the price.

Is Cryptocurrency a Ponzi Scheme?

“Cryptocurrency prices have shot up, not because of underlying value but because of misinformation, concentrated market power, hoarding, opaque and unregulated exchanges, insufficient trade reporting, elevated marketing hype and greater opportunities for market manipulation.” Mark T.

Williams, Former Federal Reserve Bank Examiner, as quoted in ‘Bitcon.’

Careful study reveals that most cryptocurrencies are owned by a very small group of people.

Jeffrey Robinson, in his book “Bitcon,” refers to this select group of cryptocurrency owners at the “aristocracy.”

The more media buzz the cryptocurrency aristocracy can generate about cryptocurrency, the higher and faster the price rises as investors clamor to buy, buy, buy. It’s a scammer’s paradise.

The Cryptocurrency Pump and Dump.

Cryptocurrency is a high-tech, super streamlined variation of Charles Ponzi’s original scheme.

What is Cryptocurrency?

Ponzi’s scheme revolved around him as the central figure. Under the pretense of investing people’s money and paying back a high return, Ponzi actually just took people’s money.

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To create the illusion of paying returns, he gave the original investors a fraction of the money he took from new investors.

Ponzi used real money. Cryptocurrencies use snippets of code and leverage the internet to capture a global market.

Plus, they add a critical twist, the ‘Pump and Dump.’

A single cryptocurrency aristocrat can initiate the pump and dump.

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The wealth generated by this strategy can be staggering.

Here’s how the crypto pump and dump works; the cryptocurrency aristocrat creates media buzz-generating irrational exuberance for the crypto of choice.

Hysterical new investors rush to buy the chosen crypto, pumping the price higher and higher. The aristocrat dumps his crypto on the new investors at the higher price.

The crypto aristocrat then lets the media buzz cool. The price naturally falls, because there is no intrinsic value in cryptocurrency to keep the price stable. When the price has fallen enough, the aristocrat buys back his crypto at the much lower price.

The aristocrat can repeat the pump and dump for as long as people respond to the media hype.

Because the crypto aristocracy controls the perceived value of cryptocurrencies, they can create wealth out of nothing. The small investor cannot influence the cryptocurrency market.

The small investor can only react to the market controlled by others.

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I’m convinced that the pump and dump scenario is the reason cryptocurrencies were created. Cryptocurrencies give a few people the unimaginable power to create wealth on demand.

Why Cryptocurrency Will Fail.

Any nation must control its economy. Years, perhaps centuries, of political power, laws, bureaucracies, and contracts have evolved to assure governmental control over all trade within a nation’s borders and between nations.

Control over the economy is made absolute by a monopoly of force carried out by the police and military.

Cryptocurrency, a snippet of digital code without any intrinsic value, cannot compete.

How do people scam with cryptocurrency

If by chance, a cryptocurrency ever threatens the status quo, it will be destroyed.

I imagine that long before there is a showdown with governmental agencies, cryptocurrencies will die of disinterest. Eventually, the masses will recognize the old pump and dump scheme and refuse to play.

That’s when cryptocurrency will die. It will die because it’s just a snippet of digital code with no intrinsic value.

How do people scam with cryptocurrency

It serves no constructive purpose and nothing backs it.

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If you found this article helpful or have experience with cryptocurrency, please leave a comment below.

Thank you.