Cryptocurrency-based MLM i.e. Crypto MLM is a combination of two words Cryptocurrency and MLM. Let us discuss the same in brief.
What is Crypto MLM?
Cryptocurrency as we all know is a digital or virtual currency. It is a payment method where the security of every transaction is ensured through Cryptography.
Cryptography is a technique for secure information transfer using mathematical formulas and encryption algorithms.
Cryptocurrencies such as Bitcoin and Ethereum work on a decentralized system known as Blockchain is used to keep track of every transaction.
Bitcoin is the first Cryptocurrency and has the highest market capitalization.
MLM (Direct Selling) i.e. Multi-Level Marketing is an alternative method of marketing and distribution.
MLM was used by the product-based companies but now the MLM companies have also started including Crypto in their plans, which are known as Crypto MLM, similar to Forex MLM.
Always remember, that most MLM companies include crypto tokens in their plans and not crypto coins. If you don’t know the difference between coins and tokens, read our existing post, Crypto Coin Vs Token.
Why Crypto MLM are Scams?
We have reviewed a lot of Crypto MLM companies and came to the conclusion that most Crypto MLMs are scams. Such as
Remember Crypto MLM scams, combine MLM and Cryptocurrency in different ways. Like some promise commission on staking, some charge mining investment, crypto trading bot service or 200% ROI on deposit.
We came across a few major red flags that were common in all companies as below:
Crypto Fascinates Easily
Crypto is a new technology and hence most people get attracted to it without understanding its basics and chances of being scammed.
Due to the mindset of following new technology desperately, people are not able to differentiate between opportunity and scam. This gives an edge to scammers to fool people using terms like smart contract, decentralized, Defi, etc.
Logic should always be above fascination. Promoters share attractive things but never disclose basic fundamentals.
It is highly suggested not to believe promotional things and if you can’t understand just stay away. Below are a few more points to consider before blindly investing in Crypto MLM.
Impossible Guaranteed Returns
None of the industry can give guaranteed returns and if any company claims to do so, it is the biggest red flag.
Be it crypto, forex or any other market, none of them has a chance of guaranteed returns, Up-down is behavior of the market. If any Crypto MLM company claims to do so, it is only a false claim.
Luring people through guaranteed returns is one of the common tactics followed by scam companies.
Like Crypto MLM promise to provide 1% ROI every day for the next 1 year and initially they actually provide, which is part of money-circulation.
Money Circulation Scam
For a long time, Pyramid and Ponzi scams loot people by pretending to be genuine MLM as MLM is a legal concept. Now, they turned themselves to Crypto MLM and present themselves as advanced tech companies.
As we discussed earlier, people get easily fascinated by the name Crypto and the companies take benefit from it.
Scam companies first ask for the basic investment in a particular token and ask investors to bring more people to earn easy returns. This keeps on going till the company gathers a huge crowd and soon plans to shut down and disappear.
Crypto MLMs block the investor’s money for some specified time beneath the idea of providing higher returns.
Crypto MLM scams aim to collect the loftiest amount from the maximum number of people, after reaching the peak they disable withdrawal and then close all operations.
The company logic behind blocking money is gathering time to do money circulation. This is one of the serious red flags.
Founders are Hidden
The most highlighting part of any Crypto MLM Scam is hidden founders or insufficient data on the company website.
People never try to understand why the founders hide especially when such companies are not registered and blindly follow high returns.
Operators keep making fake promises and loot people by following a series of scams without getting traced.
How to Avoid Crypto MLM Scams?
Most Crypto MLM and their plans are too good to be true. If you find such a company, examine them in every aspect.
Below are points that can help you to avoid such scams:
- Check warnings against companies, as various countries & authorities release warning to prevent scams.
- Find the actual people behind every internet opportunity and check their history.
- Investment companies should be registered in your country and have authorizations from financial regulators.
- If Crypto MLM is using popular blockchain technology, such as Ethereum (ERC-20) and Binance (BEP-20) then it doesn’t mean these popular names are involved in the project.
- Keeping your crypto wallets inaccessible to others.
- Crypto MLM often tries to manipulate cryptocurrencies, hence don’t get fooled.
- Only participate in any cryptocurrency and MLM opportunity after understanding the concept well and avoid money-circulations.
We hope this post helped you to understand Crypto MLM properly and might save you from losing your money. Feel free to share your queries or suggestions in the comment section.