It seems like more and more ‘trusted’ people and organisations are screaming ‘crypto-scam’ these days. I am not surprised if the public are confused and concerned about it as so many want to invest. So what’s the truth? and How can you sort the scams from the good opportunities?

Point 1. Who says they are scams?

We all know a ‘scam’ is a fraudulent opportunity when the other party is simply trying to rip you off.

Don’t you think its hilarious that banks dare call a new technology that will disrupt their monopoly as a ‘scam’. Jamie Diamond calls crypto a scam just after the bank his is CEO had to pay $13bn fraud settlement!

Isn’t it hilarious all the people that generalise and call crypto a new technology when all the tech gurus are piling in. Who cares if Warren Buffet calls Crypto a scam, this is the guy that thought the whole ‘internet’ boom was a joke as well.

Of course there are scams in this new area of investment. Just be wary WHEN someone calls a whole new area of technology a scam, they do not have the credible to do this. Especially Banks, Governments, old investors or your ‘uncle joe’. Listen to the experts in tech!

What are the scams in crypto?

I classify crypto investment opportunities into three areas:

a. Scams. These are opportunities designed simply to defraud people as the creator never had an intention to deliver.

b. Flawed. These are opportunities where anyone can tell that the team is highly unlikely to ever deliver a successful solution so any hope of the crypto having any intrinsic value is a joke.

c. Potential. These are opportunities where the team has a chance of delivering success to give the value promoted by the coin issuer.

I think scams are really both Scams and Flawed because whether the team intended or not, they obviously will never deliver the intrinsic value promised. The investment is guaranteed to fail. Their marketing claims are false and therefore people are being conned.

What is intrinsic value?

When an issuer launches a crypto-coin, they increasingly a claim as to the potential of the coin. ‘This is the crypto for the global $1trillion logisitics industry!’ They sell 50% of their coins for $25mil so value their coin at $50million. They know 99.99% of the coin buyers are purchasing to speculate so this is an investment offer, not utility.

Expectations are 10X growth SO the intrinsic value of the coins HAS TO BE $500mil one day OR this coin has been launch as a ‘pump & dump’ or ‘has fraudulent marketing claims’. Makes sense?

So for the coin to be worth $500mil, what has to happen?

If the coin was a utility crypto to be used on a blockchain, how much coin is REALLY required? If it’s a ‘stake’ then how much business is required for a $500million stake in the blockchain? $10billion?

So do the team really have the technology, credibility, management and power to create $10billion in business? Or $1billion in business? or even $100million in real business?

If you cant see the intrinsic value easily, if the issuer doesnt clearly explain how it will create that value, then its probably rubbish and, no matter what they tell you, its a scam. And the only reason you should invest is because you think the coin will spike and you are highly likely to fail.

How do you spot a crypto scam?

Scams are actually easy to spot. Its only ignorance and greed that blinds you.

  1. Proof of business. What proof is there that they have a business/office. If concerned google, ask questions and proof.
  2. Proof of people. Who is behind the business? are they just a group of techies or lads who will code in their underwear in mothers basement? FORGET the advisors! Who is working FULL-TIME in the business.
  3. Proof of Concept. Where is the proof that the concept they have will work?
  4. Proof of competition. How clearly do they explain their competitors? If they say they haven’t competitors, ie orginal idea, how credible is that? Normally its rubbish, people will be doing something else!

Proof, proof, proof…thats the key. Look for proof. Ask for proof.

Price growth tricks.

‘The price will grow 1% per day for 100 days’… run for the hills!

‘The coin will boom because of automated buying system’…run for the hills!

Marketing systems in ICOs to build the price nearly always cover a scam. You are warned.

Never ask promoters!

If you ask questions of people who are being paid bounties to promote a coin, expect to be lied to. Ask other people who are EXPERTS in start up opportunities what they think.

Compare Competitors.

Nearly all ideas now have competitors. Compare energy coins. Compare logistic coins. Compare crypto-currencies. They all need to compete one day. How many ‘smart contract’ platforms does the world want or need?

LAST POINT — Dont confuse Tech with Product!

The famous last words learnt in the Dot Com boom of the 1990s where people confused websites with revenues. Now people confuse smart technology with a marketable product that will add intrinsic value to the investment.

Always start with the customer. Will the customer buy what they are selling or proposing? Look to the product. If its doesn’t scream ‘sales’, don’t invest.


90% of true scams are easy to spot. And frankly most people join these knowing that they look weak and they just hope they can make a quick profit.

Its the 10% that are hard to spot. I was recruited into a crypto-business that had everything right except…. So anyone can be caught. It happens to the best of us.

The key is to due that simple due diligence and to focus on sound business fundamentals; Product, Competition, Team, Marketing. If anything does not look ok, don’t invest, there will always be another opportunity coming along.

Good luck and happy hunting

Credibility. Since 1992, Ed has been a world expert on the world of Direct Sales and new business opportunities. He wrote for two years on business opportunities in London’s Evening Standard newspaper. He helped the British Government understand scams, pyramids and public opportunities when they launched their regulations. He has been full-time in crypto since Nov 2015.

I am Financial Futurist, Educator & Entrepreneur. Multi-million selling author in 20 languages. The Future of Crypto book coming.