Are Cryptos scams?

From 2009,more than 100 cryptocurrencies are around, most of them based on blockchain technology, but despite the increased amounts, for many investors the topic is unclear and foggy when it comes to the technical aspect. Improving your own knowledge is quite easy as there is plenty of available information. This is most probably one of the reasons why many people just observe the phenomena, suspiciously and often consider it a scam.

Understandable. Technology is neutral by definition, what matters for people is often the application, so if the technology provides positive effects or not. Use matters at the end. 

Writing this paper we asked our self:

“how can we explain that Crypto isn’t a scam?”

Cryptocurrencies have much in common with financial products; let’s have a look at financial stocks. What happens when we decide to buy a share of a company X? Simply we accept that a “piece of paper” is worth 10, 10, 1000 euro. The value is subject to swings lately, and we often don’t have many chances to influence these swings as a single investor. 

So, if we go beyond technical details like “Proof of work”, “Proof of Stack”, Blockchain and so on, Cryptocurrencies behave exactly as financial titles (keeping in mind Security and Utility Token have differences). Yet today we bet on products, the value of which can change due to elements out of our control, and we bet to make money out of it. The game is exactly the same.

Buy cryptos, beside using them for daily life operations, it is still a bet, and in parallel, if we define Cryptos as scam, we should wonder why any stock exchange in the world should not be considered as a den of swindlers ready to take money out of investor’s pocket for nothing in return. We are not that sure that in the 14th Century the people in Bruges, Belgium, did not consider what was going on in the Ter Buerse palace a true scam, probably the did but we can surely say that the perception changed, and today, we are all used to heard about the effect of betting on stocks (pros and cons included) In this environment we can quote Leonardo Di Caprio’s Wolf of Wall Street and his “questionable” methods at the beginning of the “stock game for everybody”. Wasn’t that a scam too?

Let’s have a look at Bitcoin (BTC). How does it work? Meaning, how such intangible products can generate such values we are listening these days? Let’s make it simple: the community accepts the token and validates with transactions, so usage and availability affects the value. Simply and clear, it is a physiological value. You can accept to have your salary paid in stones, as long as you can use them, isn’t it?

As a final outcome, we think that cryptos, beside technologie and IT logics, can really be assimilated to the standard finance, with some exceptions, quiet part of our daily life.

“Yes, but BTC is used to buy weapons, dopes, money laundering and many other illegal stuff” 

Yes, probably among the millions of transactions, these are happening too. This does not certainly mean that Crypto by themselves is a scam or illegal tool.

Money was laundered much earlier than Cryptos and Blockchains. The black market exists by the minute the legal market was created, so why to be stupefied or be afraid as these things are happening ever since. As we already said, technology does not behave for good or bad or any party, it is related to the usage the community makes. 

“Got it but Cryptos aren’t safe”

Well, if we go deeply into the logic of the blockchain, we can say they are definitely safe (do we want to talk about counterfeit money?). The system wants to boost decentralized finance, but in a safe way, because every subject involved with his activity ensures that any transaction happens according to the rules. So the participation to the system guarantees its safety, opposite to a more standard situation where A SINGLE OPERATOR “guarantees” for the stocks or any other financial title, a share or a bill. So, the cryptocurrency transactions sit on a high level of safety, as long as you protect the access to your wallet. Alike you don’t leave the code of your credit card on a shop desk, you avoid to leave your access code around or naive behavior, your cryptos are fully safe.

What can be questionable is that nobody will ever argue on the transaction subject, you can do your grocery shop or buy an AK47 for your uncle’s birthday with the same effort. Again, you see that happening yet (remember? good and bad usage by the community), so it is not an effect of the blockchain.

On the other hand, transactions will be written and recorded forever and ever with no possibility to be changed. You can understand the difference with payment by cash, for that AK47 or any other questionable purchase.

So again, technology does not cheat. The problem is that along the way you can face who uses it to cheat on you, with not proper deals punishable by laws. On this we will open a more specific chapter in the coming posts.

As you might have understood, it was not our intention to explain Cryptos environment in 5 minute. Confidence is not that kind of operator, or, if you are interested in it, we offer training. In this paper we wanted to share a more balanced point of view, without boring you with explanations available everywhere.

Confidence takes care of something else. We offer tools to evaluate an investment in Cryptos with more available information about the blockchain projects you would like to spend your money into. We do it through proper reports about the project you are interested, as you can make the wisest possible choice with your money and avoid scams that use the hype generated by this new tool and by the volatility of this new branch of the finance.