How Crypto Scammers Are Evolving
As cryptocurrencies started picking up traction so did the scammers who started making miscellaneous projects to steal public funds. With the growth of cryptocurrencies came new users unfamiliar with the platform were the easiest target for these scammers.
Stage 1: Fake Crypto Coins
The very first wave of these scams was the cryptocurrencies themselves the scammers started cloning the cryptocurrencies and they study selling those cryptocurrencies directly to the users assuring them that they will surpass even Bitcoin and ethereum.
People started buying these crypto coins and they had no idea how the cryptocurrencies worked but since they were assured by these scammers that these coins are the next big thing the people got manipulated and they invested in scammers’ crypto coins.
Scammers made a lot of money and these coins disappeared after a month or so leaving the public confused and creating some negative overview about the cryptocurrencies in their mind.
Stage 2: Ponzi Schemes
Things started to fly out when some scammers converted the traditional Ponzi schemes into solidity code, inspired by famous schemes of the 90s and 2000s the schemes got really good attention as they worked on chain marketing.
People started working as an affiliate and eventually, they spread these Ponzi schemes all over the world getting the money in and generating some percentage profit from themselves.
These scammers made a lot of money from these schemes because it was decentralized and moving money was automated while in traditional Ponzi schemes moving the cash is the biggest hurdle so the blockchain solve the biggest issue for the scammers everything was digital and the scammer was making money every time a new recruit join the system.
Stage 3: Fake Projects
With the boom of decentralized finance, people were amazed at how well these DEFI apps performed. DEFI Apps open the new door for finance-based applications and everything was taking over.
While many famous projects like AAVE & Compound Finance came during this phase and they set up new standards for the crypto industry there was still awari majority of projects that were created by scammers with the sole intention of stealing users money
Scammers were busy creating projects that will look real on paper but actually, the whole aim of these projects was to have enough money in the system so that they can close the project anytime they want and run away with the money.
Stage 4: Presale Startups
With the wave of new projects coming each day so does came a wave of investment almost all of these projects were raising money from the public by showing them a white paper and the idea. People will fund these projects using their own money and in turn, they’ll get some of the project tokens these tokens worked as a member and they gave the user a reward for being connected with the project.
But then came along these scammers, they will do everything, they will show you the white paper, idea, website. People went on reading their white paper and participating in their presale but as soon as the presell was completed and the funds were raised, instead of building the project these scammers just take the money and shut down the website.
This was very common and people really fell for these scams as these projects will spend a lot of money in marketing and pay the guys for doing the videos so that they can attract the general public.
Stage 5: Upgradeable Smart Contracts
With the introduction of upgradeable smart contracts in solidity there came a time when the whole crypto developers found hope to get rid of the static/immutable nature of blockchain.
This means developers were allowed to push updates to their smart contracts. This new method of deploying the smart contracts went viral quickly resulting in almost every major company deploying their smart contract and making them upgradeable.
Since these smart contracts could be upgraded at any time by the developer, scammers built a very simple app and the app would not do anything miscellaneous until the scammer decides to push an update.
This update had miscellaneous code that resulted in the scammer stealing the money from the public.
Stage 6: NFTs
The best one and the biggest and the easiest one on the list is the NFTs. Why even bother to build the project when you can simply try to oversell some random images on the Internet. There was a time when scammers used to create projects spend time making it look legit and actually do something that helped crypto or at least that looked good on paper.
NFTs changed everything, now scammers just hire the ad companies/ YouTubers/ Twitter accounts to vouch for their project resulting in people buying in thinking they are going to make some profit but instead they end up being a part of the group, and thus they are also the one who is promoting this project.
NFTs took Ponzi schemes to next level since now users are the ones selling their own token. Users buy NFTs from the scammer at a fixed price and after the sale is completed users are forced to find someone who would buy NFTs from them at an increased price.
This works very badly as almost all of the people in the system will lose money since they have been left with value-less NFTs that no one wants to buy, and they are not getting any refund from scammers either.
The perfect example to explain this would be if I sold you a stone for $2 and then your only way for you to make money is to sell that stone for $4 and for the next person only way of making money is to sell the stone for $6 but there comes a time when this stone is overvalued and there will not be any buyer this will make the whole purchase cycle fail to make only the first few sellers money while completely ripping off the rest.