Coin World reported:
Recently, news that Alipay and WeChat Pay issued statements not supporting virtual currency transactions has reached everyone. The purpose is to prevent financial crimes and maintain the order of the financial market.
It seems that in the minds of the mainstream public, virtual currencies led by Bitcoin have a notorious reputation, no different from Ponzi schemes and the Tulip Bubble. However, it is a bit awkward that the comment section of Alipay's statement was quickly taken over by the crypto community, with many expressing, 'Bitcoin really is a scam that makes people rich and turns them into societal wastes.'
After all, Bitcoin has been developing for nearly 10 years and is now comparable to 'Ants Competing in Walking'. If you still have misunderstandings about Bitcoin, this article will provide answers.
01 Bitcoin VS Ponzi Scheme
The essence of a Ponzi scheme is essentially pyramid selling, also known as recruiting for returns. The most important characteristic is robbing Peter to pay Paul; without new funds entering from new recruits, the system will collapse quickly. All participants are in a chain relationship, with those higher up earning more.
Since its inception, Bitcoin has experienced crises such as exchange hacks and changes in national policies that triggered price plummets and investor exits. However, due to the inherent consensus and circulation value, it has been able to recover quickly each time. All participants are decentralized; there is no direct reward for bringing people in.
As of now, Bitcoin has a market value of $215 billion, surpassing the national currencies of South Korea, Brazil, Canada, Mexico, and Australia, becoming the 11th largest currency in the world.
02 Bitcoin VS Tulip Bubble
The Tulip Bubble, known as the earliest recorded speculative activity in human history, has a more vivid name: the game of passing the flower while drumming. Generally, things with bubble characteristics have two features: they have no use value and no use scenario. Investors are well aware of this but do not believe they will be so unlucky as to receive the last stick. When fewer new participants enter, some can’t withstand panic selling, leading to a rapid collapse.
In fact, the core point in determining whether an investment is a Tulip Bubble is to see if the commodity has value – including practical value and consensus value.
Bitcoin possesses the fundamental characteristics of gold as currency: scarcity, anti-counterfeiting, and stable nature. Essentially, both are based on the consensus value of the group. However, the audience forming consensus around Bitcoin is still relatively small, and it is not on the same level as gold, which has been recognized by countries for thousands of years.
The use value of Bitcoin was initially mainly for black market circulation, completely anonymous and untraceable. This is often criticized, but technology is innocent. You may not know that video software optimization, hard disk industry, broadband network popularization, online chatting, online payment, and smart hardware, which accompany every aspect of your online life, were initially driven by illegal industries pushing for innovation.
Bitcoin may become 'digital gold.' The improvement of the blockchain economic system and the explosion of technological applications will become a part of our lives. This will inevitably attract more capital inflow and drive price increases, which is part of the normal supply and demand rules in the market. The practical value and consensus value of the entire ecosystem will be further strengthened.
Ten years later, perhaps no one will ask such questions: 'Is Bitcoin a Tulip Bubble?' Just as no one asks whether gold is a Tulip Bubble anymore.
03 True Scams
So what happened to those who claim they lost everything in the crypto market? It is likely that they did not buy Bitcoin but rather air coins or Ponzi coins. We've summarized the characteristics of these scams:
Buying Coins with Promises of High Returns
Typically shouting slogans like: 'If you missed out on the ten thousand times return of Bitcoin, do you want to miss out on the ten thousand times return of XXX coin? XXX coin is even better than Bitcoin. If you invest in XXX coin, you can quickly achieve financial freedom.' This is undoubtedly a scam.
Promising Airdrops, Asking for Private Keys
Airdrop scams fall into two categories: one involves tricking you into providing your wallet's private key during the airdrop event to steal your coins; the other is a fake airdrop, where you participate but don't receive the corresponding tokens, usually aimed at gathering users and then monetizing that gathered user base.
Paid Group for Trading Signals
These are usually set up by so-called experts, with fees varying based on the 'expert's' influence, ranging from hundreds to hundreds of thousands or even millions. After joining the group, they analyze the market daily and teach you how to trade. However, most of what these influencers analyze daily is sourced from other channels; the real purpose of opening the group is to raise money.
Using the white paper as a universal token
To gain user trust, they will use a white paper to package themselves as promoting a real application project. Since most white papers are written in English and contain technical terms that are difficult to understand, it makes the white paper seem more 'high-end' and easier for users to believe.
However, when asked about substantive issues like project progress, they can't provide a clear answer.
Celebrity Endorsement
Some projects you haven't heard of, but upon seeing the promotion 'Our project is different from others; we have famous investor XXX, who is a big name in blockchain technology and well-known in the industry. You can check their information online to see how impressive they are,' you fall into the trap.
Unbeknownst to many, using celebrities for endorsement is a common scam tactic, often using celebrities to 'boost' their projects to gain user trust.
VX Trading and Receiving Coins
Some people create a very professional image in their social circles, making users feel highly credible. Then, in the communication process, they first ask the other party to transfer tokens to them. After the transfer, they immediately block them and continue to find the next victim. Since the current token address cannot be linked to the user's identity, it is basically impossible to recover the money after being scammed.
Recruiting for Returns
Many criminals take advantage of a few people's desire to get rich with digital currencies, heavily promoting a particular token without a white paper or trading website, relying entirely on offline transactions, and implementing a multi-level marketing-like approach to recruit people for returns, seeking ill-gotten gains. This behavior is also known as a new form of internet pyramid scheme.
Any scam can only be defended against by understanding it. I hope everyone can understand digital currency investment positively, understand blockchain, and avoid unnecessary property losses.
