Cryptocurrency has certainly been one of the most important economic themes of 2021. A decade from now we’ll look back on this year as a seminal moment in the evolution of cryptocurrency, defi, blockchain, and other economic related phenomena. Unfortunately, we’ll also think for a second about scam coins.
It’s still very early in the game. And any time a new topic, or in this case, asset class, catches fire, scammers pop up. That is to be expected and we’ve seen no shortage of cases.
Just as pump-and-dump schemes plague the stock market, so too do similar rug pull scams in the crypto world.
The maxim of limiting your investment to what you can safely lose is likely a decent rule of thumb when playing in the more speculative depths of the crypto world. Investors can and do lose every bit of capital in crypto in the worst of cases.
The Squid Game $SQUID coin fiasco proved that to be true recently. Investors lost everything. As sad as that is, essentially there are a few red flags to look out for. Those include demanding crypto only payments, vague details, promises to multiply your capital, and as Squid Game showed, even poor grammar and bizarrely worded white papers.
I like the rule of thumb that if it evokes strong FOMO, it’s probably worth avoiding.