Bitcoin has tripled in value in the last few months, but altcoins haven’t moved a lot. This happens every time a bull market is formed. This is the perfect time to grab enough coins to operate a masternode or two. That being said, there are several mistakes most “newbies” make that you should try to avoid.
Misleading Statistics and Information
Investors Attracted to High ROI %
This is the most common mistake that everyone makes. There are projects that promise ridiculous annual ROI (Return-of-investment) like 200 %, 500 % or even higher. These projects are most likely quick cash-grabs that portray the illusion of development. It is unwise to invest your money in these projects. For further explanation on why can be found here.
Investing in a Project with Masternodes That Doesn’t Have a Website / Whitepaper / Roadmap
These were the laziest scammers that would attract new investors that had absolutely no idea what they were doing. These malicious users would “sweet talk” newbies in to trusting their vision with nothing to show for. Most of the time they would fork a coin like PIVX, re-skin the wallet (which takes 30 minutes or so), Insta mine half of the supply in the genesis block and start distributing the coins to investors in exchange of Bitcoins. Few days later they would disappear and repeat the same technique.
Masternode Hosting Platforms
On theory these are very easy to use and convenient but are often hacked or the developers exit with user’s funds, leaving them scammed. Most users are afraid of running their own Masternode because they think it’s very complicated and figuratively speaking, requires a PhD in Computer science. Truth is that it does not require such qualification, but it does require some knowledge and common sense and it isn’t that hard to setup one. These platforms aim at people who easily trust others, don’t have the knowledge required or are too lazy to set it up themselves.
Misleading Users, Social Media and Other Sources
Trusting random Discord / Telegram / Twitter Users
There are a ton of scammers which contact you through these social platforms inviting you to invest in “The new Bitcoin BUT with Masternodes which will rise 1000% in price soon” or something along those lines. These projects are forks of other projects with 0 development, progress or community. If someone contacts you offering such a coin, just block and report them.
Private ICO rooms
These rooms started back in 2015 but exploded in numbers in 2017 when a lot of projects raised funds through these tactics. They would invite investors to private channels on Discord or Telegram and offer 1 masternode per round resembling an auction. Investors bet on how much they would pay per 1 masternode (let’s say 1,000 coins). After the developers distribute all the coins and collect their BTC, they announce to the rest of the community that wasn’t part of the private funding how much they have raised. Several days or weeks later they usually dump all their available coins on the available exchanges and cut ties with the community, leaving investors with coins which have 0 value.
Conclusion
At the end of the day, the methods and tools these malicious users use to scam people and leave them high and dry will continue to increase. What has always been a great recommendation is to always pay attention to what is happening within your part of the crypto community and the projects you have interest in. If something sounds too good to be true, it probably is.