Although bitcoin was the first cryptocurrency, hundreds of others followed it. If you’re investing in the altcoin universe, you likely want to research how active each cryptocurrency is on exchanges. Unfortunately, that technique might give bogus results.
Two Conflicting Reports, Both of Them Damning
Alameda Research recently published research showing that 68% of activity on crypto exchanges is fake. If there’s any positive news in that announcement, it’s that earlier findings from Bitwise Asset Management put the percentage of false activity somewhere between 80-90%.
Even if the latest research is more accurate, it’s still concerning.
News That Illuminates Fake Crypto Problems
Some recent headlines emphasize why the issues with fake crypto are so worrisome. For example, a college sophomore created a company called Gotbit that uses bots to artificially inflate crypto trading activity on the exchanges. The goal is to eventually get a cryptocurrency listed on CoinMarketCap.
If a cryptocurrency reaches that point, Gotbit’s intermediaries take care of the final steps of putting it onto CoinMarketCap. However, the cryptocurrency has to get listed on smaller exchanges first. Gotbit charges $6,000 per month and up for its so-called market-making services and is reportedly working on 30 projects.
Scammers are already trying to trick people into buying Facebook’s cryptocurrency now, even though it won’t launch until next year. Some of them set up a fake token presale. In another incident occurring in late June 2019, European authorities arrested six people in the Netherlands and the United Kingdom connected with allegations of a theft involving multimillion-dollars worth of cryptocurrency.
Those criminals allegedly used a tactic called “typosquatting.” It requires making ..
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