Investing in masternodes Part 2: Masternode Scams
August 13, 2018
See Part 1 here: The risks of Investing in masternodes for passive income
There are many masternode scams out there. These projects are set up by criminals to defraud you of your money. Avoiding scams should be a crypto investors priority. The following are some pointers to avoid them; they are by no means a comprehensive list. Scammers are getting more and more crafty.
Type of masternode scams:
- Promising one thing, when the founders have entirely different intentions.
- Pre-mine: A large percentage of the coins are mined by the developers before they mining is available to the public. This means that the developers take more than their fair share, just because they can.
- Instamine: Developers mine as soon as the blockchain goes live. They would be ready to mine the first 50 blocks which would have special block rewards.
- Developers disappearing once the mainnet goes live.
- Pump and Dumps: Developers publish fake news, then they dump sell all their coins in the run-up to the story, then they either escape or they slowly abandon the project seemingly because of issues beyond their control.
- Hidden bobby traps in code. While the code is open source on GitHub , developers put in whatever they like. Most of the time, a few people (at least those who fall for these scams) will never actually check the code.
- Difficult to setup masternodes, while these are not an outright scam – sometimes developer have an interest not to have too many masternodes live so their masternodes make better returns.
- Masternodes have a treasury system, this system is managed by those who have the most masternodes. The treasury could be manipulated in the long term by scammers, by providing little to no value to the projects that they have approved for their benefit, rather than for the benefit of the community.
- Scammers are becoming better and better, as investors avoid scams, scammers are investing more in creating a more slick site, whitepaper and road map. The scammers up their game and create masternode project with some other objectives to look more legitimate.
- Some masternode projects claim that their product is being tested or their product is in MVP or pre-MVP stage.
- Some projects claim that their product is being tested or their product is in MVP or pre-MVP stage. Check their github, ask questions, ask for demos and screenshots. Do not take the developers word for it.
- Beware of master node coins whose whitepapers are copied
- Scammers might try to scam you by offering help to install your masternode
- The ROI on the masternode listing services is not always accurate.
Masternode Scammers lure investors with the promise of secure passive income. They are becoming better, as investors avoid scams, scammers are investing more in creating a better scam.
remember; When it is too good to be true, it is.