Scammer McScammerson
Or: How do you recognize a fraud? Joshua Unseth wrote a detailed article in Bitcoin Magazine, which should become a mandatory reading for anyone who is considering whether and how he invests his bitcoins. Stefan Rehm also translated this article with the kind permission of Bitcoin Magazine. Thank you for that!
In the course of the bit traders.BIZ announcement I thought it was really time to write about how to recognize fraud. I’ve been with Bitcoin forever now. You heard nothing from me, especially because I am an observer – which suits me best. But some time ago I emerged from my treasury into the public.
First of all a lot to me … I work in marketing. I presented large brands, small brands and everything in between. Today I work in my own security company, alarm grid. I am a marketing director and an enthusiastic bitcoiner. With these two activities, I am currently spending most of the time. Sometimes I jump into the spotlight, as recently at the Refresh Miami for mobile payments alongside a co -founder of “Square”. There I wore an absurd suit, a fly and a cap on which “EA $ y” stood. Such a costume gives me a kind of credibility that fits the Internet Monopoly® money that we invented and that we use.
In the meantime I have seen every fraud and walking: every ponzi trick, every so-called hack, and the good old professional thieves like Neo & Bee. Every time people are hewn, the same thing happens: those affected turn to Reddit, blar “foul”, complain that someone should have warned them. Then commentators post things like: “The happens to a person who believes [Insert something].“The remarkable thing is that after the fraud, everyone crawls and claims that the matter was strange from the start and he knew it immediately. It’s the same as when the Bitcoin rises and suddenly everyone comes out of their holes and say things like “I wanted to invest, but then I somehow didn’t do it after all.”
Such statements contradict my personal investment philosophy. But they indicate a way of thinking that is susceptible to fraud. Quite simply said: I am convinced that you shouldn’t invest in terms of it that you don’t understand. There are tons of information out there. Some of it is quite easy to understand, some not. There is a spectrum of recognizability that merges somewhere into the magical area of insider trade somewhere. If someone invests in something they understand, the returns are predictable. But if someone wants to earn money with incomprehensible things or even makes forecasts (for example on which day at what time the investment bank Bear Stearns will collapse), he deals with incomplete information. This is my opinion. I don’t believe in Oracle.
So if you have any questions what I think and why I think, ask me that in the comment area in the Bitcoin magazine. I will be happy to answer. Because I would like to share some simple principles with you that have preserved me from the beginning and over the years.
“If it is too good to be true …” What this sentence actually means.
You have definitely heard that before. But what does that mean if something is too good to be true? It’s pretty easy in the investment world. You have a few basics that you can use as a benchmark. One of the most important is the S&P 500. This has a very constant return of 10% over 30 years. It is a bit inconsistent and goes up and down with the market development. But at the same time their returns are consistent. There may be many criticisms of investments in the S&P 500, but as a yardstick it is pretty much the best we have.
So if someone says that they have an investment option for you: How can you know that it is “too good to be true”?
It is not a universal law, rather a span of imagination. But if the return is more than 10% or somewhere near 10% per year, the alarm bells shrill. Professional asset managers (no matter what you say) can hardly make it over long periods of time or via the S&P return.
If you’ve ever wondered how a ponzi trick, a snowball system looks exactly, take a look at one of the greatest examples of this kind. Madoff’s returns were around 15% per year. Many Bitcoin fraudsters promise between 15% and 20% a year or even every month. People warned of the Madoff snowball principle for years. Because in the real world a 15%yield is impossible. Nevertheless, the sum of the money collected was unprecedented by Madoff.
A very simple option against fraud is the simple rule of 72. You share the promised percentage by 72. The result is a good estimation value of how much money your investment brings in. In the case of Madoff, 72/15% P.A. = Doubling every 4.8 years. Between 15% and 20% per month, there is 72/15% or 72/20% per month = doubling every 4.8 months or. 3.6 months. If “real” investors become suspicious of their money every 4.8 years, many Bitcoiners put their money in products that promise 22 doubles in the same period. So Berney would have her investments of $ 1.000 transformed into $ 2000 in 5 years. In the same time, Bitcoin-Trader would have.BIZ – the recent obvious fraud – claims that they could get almost $ 2.1 billion for their $ 1000 investment in the five years. I don’t want to sprinkle defamation, but sometimes, if you only keep the numbers in mind, the frauds are unmistakable. Only for comparison if you are for $ 1.Buy 000 bitcoins at $ 0.20 and for $ 1.Would sell 000, they would have won $ 5 million. I think we all recognize that this growth is absurd (which is also a pretty good explanation for why financial institutions are so suspicious against Bitcoin).
The repayment is guaranteed?
Nobody can guarantee anything unless you invest without risk. Of course there are some examples of quasi-risk-elastic systems, but these use either weak points that are closed as soon as they are filled with a certain amount of money, or the profit span is only above inflation. Arbitrage business, i.e. using identical goods in different markets, falls under the former business. And because many bitcoiners believe that arbitrage is (almost) risk -free, invest their money in it. But: Bitcoin markets in particular recover a high risk. This means that investments there are exposed to a high systemic risk per se. Because Bitcoin arbitrage cannot be equated with arbitrage.
So if someone promises that they almost guaranteed to get high return on their money, it is probably fraud. What is a high return? Remember that a risk-free investment will probably bring a yield that lies around US inflation, i.e. 3%. An incredibly lucrative, risky investment brings about 10-12%. This perspective will help you get a look for the risk of a system.
Incidentally, the debates about inflation are carried out with false numbers. I can smell that. But read this debate somewhere else, this is not the right forum here.
Is your money bound?
Many facilities bind their money for a certain period of time. In the case of Bitcoin, many of them are ponzis. But there are also many plants in the “real world” where it is the same. For example, realestate investment trust (riding) look quite legitimate, but actually work like a snowball system. Often wealthy people invest in them because their financial advisors promise them great profits in them. The money cannot then be pulled out because it must remain invested in it for a certain period of time. To lock the money like this is a good way to let time pass. If legitimate investments lock up money, it is a fairly clear alarm signal.
Are you the blood sucker? Because someone has to be ..
It seems to me that it was the last cry of getting into the Bitcoin. Everyone buys mining rigs. People spend tons of money for equipment that they have read on the Internet that the bitcoins will flow like from the inexhaustible coin boxes in Super Mario Brothers. But that’s not how it works.
I believe in the efficiency of the markets. Do you remember what I said about recognizable and non-recognizable information? Money is not made by information that everyone knows. Why do mining companies sell their equipment if they could simply earn money by simply running them running? So stay nice on the carpet. You buy the equipment and you buy it because you think the price is so low that you can earn money with it.
When I heard about the sale of mining rigs for the first time, I immediately said: “People will not get their winnings for months.“And I was right. How could I know that? I knew that the money was earned with non-recognizable information. Do you know how to do an Asic? No? Then they will not be able to compete with others who can. So are the facts.
In every transaction there is a trade. It is based on the trust that the exchange crosses at the point where you get a certain value from the purchase, and the seller gets a similar value from payment for the product or service. When companies do something because they are good people who want to help others are rich they are on the wrong boat. Then only the sellers will get great value, but they themselves go out empty -handed.
Opportunities do not arise by chance, but are created
Remember I am an entrepreneur. I am a little biased. But I want to tell you how I have enlarged my little investments. I went to work every day, worked 18 hours a day for two years a day, lost friendships and other important relationships, lost contact with my family, listened to watching away and playing video games. Sometimes I sleep in my car and then go back to the office and continue working. Sure, some entrepreneurs have a little easier, but I think that if you read something about the good (without wanting to compare me with these), most of the similar stories. For those who have no enthusiasm, it is terrible to be an entrepreneur. It’s not fun.
What would you say if I told you that you could handle all this grief and pain and get rich? This idea appeals to us, the idea that we can earn all money or open up opportunities without having to give something for it. But to create a value, something has to be sacrificed. In the Bitcoin system it is energy. In a way, much more metaphorical than it should be, this is one of the great philosophical problems that I have with the proof of ownership in decentralized systems. In order for values to be created, someone has to sacrifice something.
If someone says that they offer them the opportunity to earn immeasurable wealth and that they just have to lean back and enjoy the journey, this is a fraud in 99 out of 100 cases. These are not real odds. My guess is that the probability is higher.
The best fraudsters are often cheated by themselves. Many of them are really good people
The reason for this article was that I was a little noise around the Bitcoin Trader last week at the coin in Kingdom in Florida.Biz people made. I let everyone know that it was a snowball system and I repeated it every time I saw one of their representatives at the general meeting table with someone in conversation. I went there and just informed that this is an obvious ponzi. What was my proof? Math does not lie. The two representatives were probably really good people. Both said they had a lot of money in Bitcoin traders. So I suspect that you are in a pretty bad position today.
The truth is: everyone can be cheated. We are all susceptible. Many early Bitcoiners have been fooled and betrayed several times. The two representatives on the coins in Kingdom stood for something that is an obvious fraud. Why did they refuse to recognize this brazenly? I wish I knew it.
I see such open fraud in this community all the time. But mostly these people don’t walk around and try to cheat people. Some of them-Trendon Shavers aka Pirate operated a brazen-direct ponzi. But there are frauds that good people don’t really know that they do them. For example, I would say that a lot of crypto coins based on people’s cults fall into this category. Just because someone is nice or competent did not mean that they don’t cheat.
Always be vigilant. Always be skeptical. And not be nice to be careful. Make them public. A lot of people don’t know what she gets into when she invests in bitcoins. And if there is a good opportunity for us to know, it wouldn’t be better if we could browse the fraudsters right from the start?
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