Cryptocurrency project value judgment and fraud routines

The cryptocurrency has a huge ups and downs, with a huge increase of thousands of times and a “zero coin” with a decrease of 99%. Even in a bull market, there are many people who lose money.

Therefore, which cryptocurrencies are worth investing in is a common concern of all investors, and they need to be aware of them when investing.

1. Types of high-value cryptocurrencies

1. Faith-driven: Bitcoin BTC

Although the market value of Bitcoin in the overall market value of cryptocurrencies is declining, Bitcoin is synonymous with cryptocurrency and has the most computing power in the entire network.

Bitcoin is the vane of the entire cryptocurrency market. It can be said that when Bitcoin rises, the market will rise, and when Bitcoin falls, the market will fall. If Bitcoin falls, then the skin will not exist, and Mao will be attached!

2. Hard currency: ETH, USDT, etc.

ETH brought the blockchain into the 2.0 era, and the rise of smart contracts made ETH a hard currency. In addition, both private equity and ICO crowdfunding use ETH as the fundraising currency, and the status of the second ETH cryptocurrency is extremely consolidated.

As a general-purpose token, USDT is the connecting currency between legal currency and encrypted currency, and maintains a 1:1 exchange relationship with the U.S. dollar. Under the current circumstances, USDT is a safe haven among cryptocurrencies.

3. Basic public chain: ADA, ELF, NEO, etc.

Blockchain projects with public chains have huge technical thresholds and application expectations. The continuous implementation of various applications based on public chains will bring huge practical value support for public chain cryptocurrencies.

4. Anonymous: XRP, XMR, Zcash, etc.

Encrypted currency using anonymous encryption technology is a hidden channel for asset transfer and a shelter for many illegal businesses. The huge social “just need” makes anonymous cryptocurrency very useful.

5. Exchange tokens: HT, OKB, BNB, BIG, DEW, etc.

The cryptocurrency exchange, like the “nuclear money printing machine”, is the center of the entire blockchain traffic, and the tokens issued by it have more practical value than ordinary cryptocurrencies.

Second, the analysis direction of the value of cryptocurrency

1. Demand level direction analysis

What problem has this blockchain project solved?

Is there any advantage to using blockchain technology to solve this problem?

Does the solution to this problem meet the characteristics of “high frequency” and “rigid demand”?

The birth of a project determines its destiny. Project speculators often use blockchain + hot areas to package beautiful shells. This kind of “pink skull” type of project is often a big pit that makes ordinary investors “leeks”.

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2. White paper and team member analysis

The white paper is a concept at the beginning of the project. Investors can use the white paper to understand the core competitiveness and operating mechanism of the project, and evaluate the integrity of the project roadmap and governance structure.

Investors can further judge whether the resume is true and valid for the team members listed in the white paper.

In the public information channels, you can observe whether the founding team members actively share their ideas and progress on social media such as WeChat and forums, and whether they can actively answer questions from investors and the outside world. These are important references for investment judgments. factor.

When there are major delays in the project, some projects will also withdraw the published white papers on the official website.

3. Analysis of code technical aspects

On Github, you can view the project code management mechanism, code security review mechanism, etc., to judge the innovation, safety and feasibility of the project.

Check whether there are irreplaceable core technologies or functions. For example, Ethereum has a better technical solution than Bitcoin-smart contracts, which can improve the speed of confirmation of transactions across the network.

The number of stars on the Github website is the collection status of the project, which directly reflects the user’s attention of the project on Github. Generally speaking, the higher the attention of developers, the more development and application of the project public chain.

4. Financing history and ICO analysis

There are many high-quality blockchain startup projects that can obtain angel investment from investors or institutions after a period of operation.

This kind of investment behavior means that the investment institution has already analyzed the project once, and investors can feel a little more relieved.

When the project conducts ICO (referring to foreign projects, domestic ICO is not allowed), you can judge whether the financial governance structure is perfect and whether there is embezzlement by checking the completion rate of fundraising, evaluating the financial management system, the use plan of the raised funds and the financial audit system risk.

3. With the help of professional rating agencies

Judging the value of a cryptocurrency project from an investment perspective is a process that requires collecting information from multiple parties and combining past investment experience to conduct research and judgment. For ordinary investors, the threshold is quite high and requires a lot of time and energy.

Fortunately, a number of professional evaluation agencies have emerged on the market, such as DPRating (DPRating), which provide investors with neutral cryptocurrency evaluation results.

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Founded in May 2017, DPRating is the world’s leading blockchain rating agency and is positioned to become the Moody’s of the cryptocurrency world. Dapao Ratings took the lead in publishing a number of quantitative rating models, and based on this, released neutral rating reports for nearly a hundred projects, which are well received by the industry.

Unlike traditional international rating giants such as Moody’s and Standard & Poor’s, DPRating insists on not charging the rated party, guarantees objective neutrality in an institutionalized form, and independently conducts project ratings, rankings, indexes, and due diligence.

In June 2017, DPRating released the ICO quantitative rating model SmartICO for the first time in the world. In October of the same year, the model was refined into three versions: budding stage, growth stage, and mature stage, which are applicable to the corresponding life Periodic projects.

DPRating (Cannon Rating) is also the world’s first organization that audits the development of project codes and publishes a list of project code quality. The list has been published monthly since August 2017, and each issue covers nearly 200 well-known projects. .

Four, fraudulent routines in the name of cryptocurrency

Routine 1: Pyramid MLM

Different from the normal development of membership, the main source of high profits for this routine is the development of offline. Adopting a head-to-head development method and applying the concept of a blockchain project, it is generally claimed that its Token can get a high return, and the way of high return is to attract more investors into the game.

After investors enter the market, they are allocated according to a fixed level, and at the same time, dynamic fund allocation is carried out according to the amount of funds invested by investors.

Such a pyramid-style pulling head routine also actively combines blockchain concepts such as “mining machine mining” and “computing power”, which often makes newcomers overwhelmed, but its essence is to pull people and establish a pyramid-like hierarchical structure.

Routine 2: The dealer board that can only enter but not exit

Such routines generally open a virtual currency trading platform after publishing their own cryptocurrency. The cryptocurrency can only be traded on the trading platform and will be highly controlled.

The price of this type of cryptocurrency purchased by investors on the project’s own trading platform is arbitrarily manipulated, and the rising trend is generally used to attract investors to increase investment, and these increases are only the digital changes on the account.

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Investors are often easy to recharge and difficult to withdraw. Some withdrawal fees are as high as 1 ETH, and some have set a long-term withdrawal threshold, making it difficult for investors to exchange “counterfeit” cryptocurrencies for legal tender.

Routine 3: Artificially split funds

This “routine coin” has no code base, and can only be rewarded by artificial splitting. Through continuous splitting in a short period of time, a large number of “Tokens” are generated, giving investors the illusion of skyrocketing wealth and increasing investment. field.

When no newcomers enter the market, it often triggers a stampede sell-off, forming a crash. The common propaganda method is: “Only rise but not fall.”

According to incomplete statistics, since 2016, there have been more than 180 fraud cases under the guise of cryptocurrency published on the Judgment Document Network, with a total amount of up to hundreds of billions of yuan.

Among them, 90% of the cases belonged to various types of fraudulent activities through the development of offline fraud, most of which were the above-mentioned three types of fraud routines.

These MLM, bookmakers, and capital markets under the banner of the blockchain have a very high risk of running away, and most of the servers are set up overseas, and it is difficult for victims to defend their rights.

It’s the old saying that readers who want to invest in digital currency must learn some basic knowledge of blockchain and basic principles of transactions. Although it may be boring at the beginning, you must believe in yourself. As long as you are willing to learn, you will definitely be able to learn.

Only by making money within our cognition can we be invincible in this technological wave.

Author/ Translator: Jamie Kim
Bio: Jamie Kim is a technology journalist. Raised in Hong Kong and always vocal at heart. She aims to share her expertise with the readers at blockreview.net. Kim is a Bitcoin maximalist who believes with unwavering conviction that Bitcoin is the only cryptocurrency – in fact, currency – worth caring about.