Recently I started watching the Madoff mini-series on Netflix with my family (Madoff: The Monster of Wall Street). It’s still staggering to me what he did, who he fooled and how long he got away with it. And, historically he hasn’t been alone. It can be easy to forget the dotcom VC inflated boom/bust, the Enron scandal, Worldcom Scandal and 2008 housing bubble crash.
While we have some recent news of bad actors like SBF in crypto, they are following an old playbook from traditional finance . These are flaws that have been exploited repeatedly. I’d love to help everyone avoid these situations, because they have absolutely nothing to do with the progress Bitcoin and some blockchain projects can bring. In fact, the structure of Bitcoin itself - the lack of banks, middlemen and full transparency - can help prevent scams.
Here are six ways you can avoid this:
Don’t do cloud mining. I’ve yet to see a legitimate example of cloud mining and they all have resulted in “rug pulls”. Real mining will share things like serial numbers, pool viewer information, and use your own addresses to regularly deposit your coins.
Don’t believe a scheme where you send one and they send two back. They won’t send anything back. Often these are YouTube videos where an Elon Musk talking or Michael Saylor talking window is surrounded by some 2 for 1 scam offer. They get shut down quickly but then pop up again.
Be incredibly careful with “altcoins” (or as many call them, “shitcoins”). Where there are maybe a handful of okay projects, 91% of projects from 2014 are gone.
Expect full transparency. With your investments with Avid Intent, you can see the miners active in the pools, see all the transactions and deposits go directly to your hardware wallet.
Use exchanges to exchange only. Wherever possible, use a hardware wallet to store your crypto.
Run from earn or yield programs in crypto. Nearly all of these are in trouble or will be in trouble. While we have become accustomed to interest earning savings and checking accounts from banks, these are based on the bank lending our money out again for mortgages and personal loans. While there may be some future legitimate crypto projects that do this, there are very few today. So ask them the question “where does your yield come from?” Better yet, get the money off of exchanges and self custody your coins in a hardware wallet of your choosing.