• Scamcoins are created to steal the money of investors.
• Most Scamcoin are identifiable because they have common characteristics which are listed below.

What is a Scamcoin

Scamcoins are coins created to steal investors’ money. The sole purpose of launching a scamcoin is to benefit the creators. Creators often generate hype for the coin so that more and more investors invest in it. To promote scamcoins, creators make grand and attractive promises. Inexperienced investors who get flaunted by these promises usually invest significant amounts in these scam coins.

Once the creators get adequate funds they dump the coin and take out all the valuable money of the investors. It is how a scamcoin works and leaves the investors in huge losses. Moreover, there is nothing the investors can do to recover their money.

So investors must be well-informed about scamcoins. We have explained in detail all the different techniques of scamming and how one can easily detect a scamcoin.  

Techniques used for scamming

The creators of scamcoin use traditional techniques of scamming people, which makes it difficult for young investors to identify these techniques. Some of the most frequently used scamming techniques are as follows: 

Rug Pulls 

It is the most commonly used technique is the rug pull in this technique creators create a lot of hype by advertising the coin. Another method they use for creating hype is by investing in large amounts to raise the coin value. Once the value gets skyrocketed many investors get attracted to the coin assuming that it is a very successful coin. Investors put large amounts of funds into the coin. Once the creator collects reasonable amounts of money the creators lock down the coin trading and disappear with all the investors’ money.

Cloud Mining

Mining is a complicated process but the reward of mining is also very big as you get awarded with a cryptocurrency that is of significant value. Imagine a situation in which you just have to take a subscription to the cloud mining services and the company will send mined currency to you directly in your wallet. Seems a very easy money-making scheme naa this is how cloud mining scams happen. Cloud mining scammers offer cloud mining services they offer you a subscription to mine cryptocurrencies for you once you pay the subscription fee all you get is betrayal.

How to detect a Scam coin

These are some common characteristics of scamcoins:

• Unrealistic grand claims 

This is a clear technique used by scamcoin creators claiming grand promises of super profits to attract more investors. Although it is used by all coin creators to promote their coin the thing which differentiates scamcoin from a normal coin is that they make unrealistic claims.

• Low market capitalization 

Since low market capitalization makes it easier to pump and dump so it is very common to keep the market cap of scamcoin very low. It is a very common characteristic seen in pump-and-dump scamcoins. 

• Lack of Community support 

Since Scamcoins are made by inexperienced developers they cannot gather a strong community for the coin. This also makes it difficult to evaluate the trustworthiness of the coin due to the lack of information available online.

• Unreliable technology

Since the developers of the scamcoins are not very experienced they often do is, they just copycat an existing cryptocurrency to avoid excess hard work or even sometimes list their coin on unreliable and unpopular blockchains. This is also a very common characteristic of a Scamcoin.