As is common with every developing innovation, bad players always show up to take advantage of the unsuspecting ignorant newbies. What appears to be more worrisome is the inability of certain governments and other presumably reliable platforms to distinguish between the good and bad eggs within the system.
Governments need cryptocurrency experts
With the Bitcoin price reaching an all-time high and showing strong character in terms of value, the entire crypto space has become more attractive and the influx of newcomers has become very significant.
Cointelegraph wrote how certain governments have bundled suspicious creations and authentic cryptocurrencies together, with the Bank of Uganda putting OneCoin and Bitcoin in the same trash bucket as an example of such.
Organized scams
Founder and CEO at Cashaa, Kumar Gaurav, thinks that such a situation is possible because governments do not turn to the experts who can advise them appropriately. If they did, Gaurav is certain that they would realize that OneCoin has nothing to do with Bitcoin. He describes OneCoin as an organized scam.
Gaurav says:
“OneCoin has nothing to do with Bitcoin, it is probably the most well-known scam in the sphere, and it has been for a couple of years. Their representatives keep trying to introduce people to their scheme, sometimes without knowing what they are doing, and without knowing what Bitcoin actually is.”
Gaurav also retains the opinion that these governments may have to look for experts abroad for research and suggestions on policy making when it comes to the disruptive technology.
Swiscoin not genuine?
According to Gaurav, not only governments, but some platforms considered reliable happen to recognize non-qualified entities as cryptocurrencies.
At the time of writing, Swiscoin was listed on CoinMarketCap as a genuine cryptocurrency although Gaurav insists that it is a scam like OneCoin.
According to Gaurav, conference organizers are giving some suspicious cloud mining companies a platform as sponsor or “expert” speakers, although they have nothing to do with innovation, research or other useful knowledge.
The danger of being scammed comes from scamcoins as well as from companies which pretend to be involved in a legitimate cryptocurrency, but are offering services that rip people off, says Gaurav. This fact contributes to institutions getting a wrong opinion about legitimate cryptocurrencies:
“When not even some actors in the sphere can make the distinction yet, then it is no surprise that some less-informed governments do not make this distinction either and are either treating legitimate coins as illegitimate or the other way round.”
Gaurav suggests that in order to avoid mixing up genuine entities with elements of scam, institutions first have to educate themselves and look at previous institutions’ statements.
He notes that there have been plenty of well-researched statements and reports on cryptocurrency by well-known institutions, which have been around as early as the ECB’s on “virtual currency schemes” in 2012.
Still not a scam?
Aleksandar Matanovic does not agree totally that Swiscoin can be considered a scam. He identifies certain features of Swiscoin that may qualify it as a true cryptocurrency. These features include the possibility to buy mining equipment for Swiscoin, so there might be some real mining going on (unlike those who perform “centralized mining”), their claim to be open source and the fact that they are listed on some external exchanges, although with very low trading volumes.
Matanovic notes that these three qualities differentiate Swiscoin from those that are obvious scams.
Cryptocurrencies and MLM can live together
Aleksandar Matanovic makes it clear that just because some businesses use MLM for growing its user base doesn’t automatically make it a scam. However, he expresses his dislike for most of the MLM “cryptocurrencies” not being honest about what they really are.
Matanovic says:
“They are mostly claiming that they are the “new Bitcoin” while in fact, they have no similarities with Bitcoin except for having “coin” as a part of their name.”
He explains that as long as propagators are honest about what they are and are not misleading people and the value of their coin is decided by the laws of the market and not by internal price manipulation, then there is nothing wrong if there is an MLM element to it or if the product is not even a cryptocurrency at all. “Just don’t claim to be a cryptocurrency if you are not one.”
Matanovic says:
“As far as I can see, they might be a real cryptocurrency. We have to differentiate the technology part from the marketing part. As far as the technology part is concerned, they might be the real deal, with features that cryptocurrencies have. However, it doesn’t guarantee that the MLM part of their business isn’t a scam. The question becomes: Are they running a cryptocurrency project and using sound and legit MLM system to help grow the user base or are they running an MLM scam and using the technology they have developed as an excuse?”