OneKey hardware wallets are all about security - but there are some risks that even your OneKey can't protect you from. In this section, we'll discuss common Web3 scam tactics and what you need to be aware of as you explore this area.
In Web3, absolutely anyone can start a project and start selling tokens - there are no business checks, no regulators, and no code of conduct for cryptocurrency projects.
More importantly, since blockchain transactions are immutable and there is no central governing entity, there is no way to get your cryptocurrency back if you do make a bad judgment call. Once it's gone, it's gone. That's why it's so important to understand the different scams in the Web3 space and how to spot them before they find you.
Dumping is not a new scam - in fact, it's as old as the deal itself.
When a product or business idea is "peddled," it means that a person is advocating for the idea, but for personal gain. In other words, they may tell you that the item is a "once in a lifetime opportunity!" Or "You need to buy it now before it sells out!" - Convincing you that the idea is a great investment opportunity. In reality, it's not really a great opportunity at all, and the only people who will benefit from your investment are scammers.
Well, in the free and easy world of cryptocurrency, where anyone can start a project and seek your investment, fake fake projects are very common.
Opening a price for a cryptocurrency can take several forms.
- This could mean advertising a fake project (we'll get back to that).
- It can also refer to someone who advocates for a project in exchange for a financial reward. (i.e. not impartial advice).
In either case, the idea is the same: build hype around the project so that unsuspecting people like you and I will buy it.
A little bit of hype can go a long way - the more people who invest, the greater the demand for tokens, the higher the price, and the greater the value of the entire project.
How to Spot a Cryptocurrency Fake
Cryptocurrency scams may not always be obvious. You may not always find someone saying, "Hey! Look at this great token, if you want to make money and save the world, you should invest 100% in it right now!" . Instead, it may look something like this.
Not all influencers are on Instagram. In the cryptocurrency space, you may come across an influencer, such as a celebrity endorsing a project.
But celebrities may not be transparent: they may be paid from such endorsements, or have a stake in the project themselves. Either way, their advice is unjust and won't benefit you - it's driven by self-interest.
What's the lesson? Always ask why. When an influential figure seems to suddenly turn their attention and advocacy to a cryptocurrency - without any previous signs of interest in the market - there's a good chance they're doing it for themselves, not for you.
- The founder of the project
Naturally, the team behind a cryptocurrency project wants the project to succeed - and they themselves may have a large stake in it. It stands to reason that they would hype it up in order to gain attention and investment.
But remember - the team has a vested interest in seeing the project succeed. So their advice is unlikely to be impartial.
What's the lesson? Do your own research. If a team promises to deliver more of what the world has to offer, check it against their roadmap, white papers and other sources like Etherscan.
Rugpulls - A Perfect Cryptocurrency Scam
Now let's talk about another scam that is prevalent in cryptocurrencies.
This scam is exactly what they sound like: someone pulling the rug out from under your feet. In the case of cryptocurrencies, Rugpull involves a fake project that sells tokens or NFTs and promises a bright future.
As the demand for the project increases, the price of the tokens increases, and so does the overall value of the project. The point is what?The project has no futureand the creators know this when they accept your money.
Once you and other investors put money into the project (pumping with cryptocurrency), the demand and price of tokens increases. Then the creators or founders sell their own shares (dumping) which are now inflated due to all the interest you and other buyers have shown.
The creators of the project never wanted to see through it and gave up after selling their shares. You and other investors are left with only the tokens of a defunct project.
A recent example is the so-called SushiSwap (SUSHI) exit scam. The price of the program rose sharply and its creator, the anonymous chef Nomi, immediately cashed out $14 million. This caused SUSHI's price to drop from over $9 to a little over $1 in less than a week. After an outcry from the community, Chef Nomi eventually sent the funds back. Most "Rugpull" events end in bullshit.
You're the gatekeeper.
In short, the freedom of Web3 makes it a perfect environment for almost anyone to make any claim they like. Even though your keys are completely secure in your OneKey,youstill have to double check the project before you interact with it.
How to avoid being scammed
Before you let someone talk you and your money into a project (no matter how enthusiastic they are), make sure you do the following.
- Ask yourself why someone should reach out to you - would they be interested in talking?
- Never reply to private messages recommending cryptocurrency projects- there is no reason for anyone to contact you privately in Web3.
- Do Your Own Research (DYOR). Gather key facts about the project, not subjective hilarity.
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