Is the bonanza of Cryptocurrency bringing distress?
Author: Ananthu Sajith and Vishwas Saproo
Crypto is the one word that’s popping up everywhere right now. With the surge in the pricing of various cryptocurrencies like Bitcoin and Ethereum, more people are starting to regard it as a viable investment opportunity. However, with the rise of Cryptocurrency, there is also a dangerous investment disaster presenting itself to unsuspecting newcomers to the crypto market. The surge of pricing of Dogecoin, which was widely regarded as a meme coin or a coin that was initially created to mock the very concept of crypto, has inspired several deceivers to come up with meme coins of their own. These scammers often recruit popular social media influencers either through cash or a direct stake in the crypto and get them to persuade its credibility to their unsuspecting fans. They often claim how “it’s going to be the next dogecoin” to capitalize on dogecoins’ sudden surge of pricing. We fail to realize that the people tricked here are not stupid; instead, they are from economically disadvantaged backgrounds looking forward to making quick money. It’s exceptionally unethical how these social media influencers and scam artists are taking advantage of these underprivileged communities and their ignorance about the cryptocurrency space and exploiting it to make money off of them.
The pump and dump scheme that these con artists employ is a simple formula. They create a cryptocurrency coin which is incredibly easy to do and only requires paying a developer a paltry sum. They then name it something funny or goofy to convince people that it’s another “meme-coin.” They then pay a celebrity/influencer to promote this coin on their social media, often claiming it will be the next Dogecoin. As more people buy into the coin, the value of the coin increases, and since a majority of the coin stake is with the developers of the coin and, in some cases, the influencers, they end up making quick money. When it reaches an all-time high, these developers resort to dumping, i.e., they sell all their holding in the crypto and cash out, ultimately disappearing. The price of the crypto coin tanks leads to enormous losses for those who invested in it. Influencers will often try to dodge accountability by saying bogus statements similar to how they mentioned it was a meme coin.
In recent years, we’ve seen that several social media-based celebrities who have risen to fame because of these platforms have resorted to this tactic of selling and making their followers buy crypto and brainwashing them into it to make money from their followers. They gain certain sponsorships regarding this and get to warm money in many different ways. These celebrities misuse their position of fan support and power to exploit the economically disadvantaged for their own personal benefit.
As the scams are increasing with sophistication day-by-day with new features being implemented to assure their victims that it is not a scam and with very little regulation from the government due to the very nature of cryptocurrency, they have managed to dupe unsuspecting investors.
All hope is not lost however, as more scams come into the market, the awareness about them is also increasing. Several social media personalities have taken it upon themselves to uncover the truth behind these cryptocurrency schemes.
If we think and look seriously into this problem, we can find that the countries with low technological advancements will suffer losses and would not be able to do something better in that field. Many small countries still don’t have basic things like the Internet, smart devices, and other such stuff, so how can we even think they would be interested in getting Cryptocurrency. Except for some extensive, developed, and prosperous countries, most developing countries depend on animals and farming for their lives, so making crypto a global form of the economy would make them suffer a lot. Making Cryptocurrency the main form of payment and economy will seriously hit those who don’t know anything about it and are not that much into the tech regarding stuff.
Even after its many shortcomings and the problems that will arise due to it, we cannot totally dismiss cryptocurrency from the mainstream as it comes with tons of advantages too, the first advantage is that cryptocurrencies combine important properties to foster trust, such as accountability and transparency, allowing trust-free interactions between counterparties. The underlying blockchain technology uses consensus mechanisms, hash functions, and public and private key encryption to control transactions, which means that the user does not have to trust the counterparty. Another benefit of the decentralization of cryptocurrencies is that governments cannot manage them. Hence, cryptocurrencies are not restricted to a specific geographic area and can be traded around the world. Therefore, people can use Bitcoin to provide low-cost money transfers, particularly those seeking to transfer small amounts of money internationally, such as remittance payments. The citizens can often transfer this money cheaper than with central bank-issued currencies because using cryptocurrencies allows worldwide financial transfer without an intermediary institution. In addition, the speed of money transfer is increased by eliminating intermediaries.
Thus, would like to conclude by saying that the growth in the technological sector is tremendously important but we cannot overlook the fact that racing towards income via using high end technologies will cause predicament to the less fortunate ones and would tend to make the poor people poorer for selfish gains. So investing in crypto and being involved in it is not wrong but you cannot force it to be some kind of compulsory form of currency.