Today I got a new follower on Twitter (I don’t see them all, but sometimes I spot them). Apparently they’re a company that uses complex sounding financial terms to make money from your money, and offer 2-5% interest a day.
Let me cut to the chase. They’re a scam. Anyone offering anything like that is a scam. I want you all to be aware of this sort of fairly basic confidence scam.
I know they’re a scam, because even if someone magically did find a way to make 2-5% a day reliably, they’d just retire. They don’t need your money. It would just be a lot of paperwork for them to deal with. You see, 2% a day (so the lower bound there is) 1,137% interest a year, due to the magic of compound interest. 5% interest a day is 54,211,841% a year.
If you can reliably earn even the lower amount, you’d just get a loan from the bank, and leave it to grow for few years, at which point a major would government turns up to ask if you could stop destabilising their economy with your disproportionate wealth. Hell you’d probably single-handedly drive up the value of Dogecoin through scarcity within a couple of years.
At peak, Bitcoin grew 1,000% in a year, going from $10 to $1,000 in 2013. It did this once. It did not, as this company would like you to believe, do it repeatably every year.
Some general tips though:
- Do you understand how a company makes money? Not “Oh they said something about arbitrage”, but understand what the terms used mean, and who they are making money from exactly. Arbitrage, for example, is defined as “the simultaneous buying and selling of securities, currency, or commodities in different markets or in derivative forms in order to take advantage of differing prices for the same asset.”, which means someone has to screw up the pricing somewhere for it to work, and if you’re extracting 1,000+% a year from them, they’re going to go broke fast.
- If the entire company website was replaced with the word “penis” one day, would you know who to sue for your money back? Yes this happened: https://thenextweb.com/hardfork/2018/01/29/cryptocurrency-prodeum-scam-exit-penis/
- Do you understand the legal or tax implications of their investment process? This will depend where you are, where they are, and the agreements in place between the two countries. Hint; if you don’t know where they’re registered, then you don’t definitely don’t know what the implications are.
Please everyone, stay safe out there. I hope to post fluffier content next time :)