For Dummies

[guitarman61]

I will not try to talk the jargon and attempt to pretend like I know anything.
That being said, guys like me that have virtually zero clue about the vast landscape of cryptocurrency are the ones making most of the mistakes and bad investment choices.
What I am looking for is a dumbed down real discussion that lays out the pitfalls. What are the real warning signs.
Alt coins. What are the dead giveaways that an alt coin is a scam coin or a pump and dump scheme.
Positive hype is everywhere and I could not care less about someone's enthusiastic blather. I would much rather know about the failures. The scams. How to look at coins armed with the basic knowledge of warning signs.

I am currently looking at and referring to a specific: OneCoin at www.onecoin.eu
As a newbie, I am drawn in by the ability to make money out of the gate due to the MLM structure.
MLM's inherently have a dark side built in however. I want to gain knowledge pertaining to coin when an alt coin is trying to get started and uses MLM tactics to gain members/investors.

What is the downside of pre-mining? OneCoin has just started their closed source mining on Jan 20 and has already mined 550,000 of their own coins. They claim that this mining internal of their own network is only a way to make it "fair" for the network. They plan to mine the majority of their own coins prior to going public and are still not in an exchange.

Bottom line question: What is the best way for newbies to cut their teeth in cryptocurrency?

[1714951981]

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[pawel7777]

I've never heard of OneCoin before, but the only value this coin have is satirical value.

https://bitcointalk.org/index.php?topic=878946.0

It's poorly crafted scam, nothing more. They didn't even bother to create any coin, no algorithm, no specs whatsoever...

I couldn't point any warning signs in this case, as all this 'project' is one big warning sign and there's everything wrong with this 'coin'.

Dumbed down advise:

Don't touch this shit with a ten-foot pole and don't waste another second on it or similar scams.

The era of investing in new altcoins is dying, you won't make any money this way.

[troleybüs]

Premining is bad because coin owners dump them with no loss. It's unfair to start a currency with premining, even if it's %0.0001.

[kwaasteniet]

Most of the coins that uses pre-mining are build for the benefit of the starter. They hope that their coin get some users and therefor value and then they can cashout with the premined coins. They always say that the premining is needed for the network or for advertising  or the server cost and so on but in most cases is it only to fill the pockets of the starter(s). It's so simple to scam people!!

[guitarman61]

Thanks for the comments.

Followup on mining: Should mining accelerate or get slower with time? I thought the algorithm was supposed to increase difficulty and thus slow the mining process, or only reward the super-computer miners. Can a coin generate 5,000 to 10,000 coins every 10 minutes? That seems obscene.

More basic advice for this dummie: Where should I be looking to start today?

[EvilDave]

Start here:
https://bitcointalk.org/index.php?topic=927144

Joe200 has done a good job on creating a 'probably not a scam' short list.......

For the rest, you are very much on your own, so trust no-one, do lots of research, and don't throw your investment cash away on the first Bitcoin-killing, to the Moon, 1000% profit in 2 weeks currency that someone offers you.....there'll be another world beater along next week. 

[pawel7777]

Thanks for the comments.

Followup on mining: Should mining accelerate or get slower with time? I thought the algorithm was supposed to increase difficulty and thus slow the mining process, or only reward the super-computer miners. Can a coin generate 5,000 to 10,000 coins every 10 minutes? That seems obscene.

You probably need to read a bit more about the mining.
Algorithm is not suppose to increase the difficulty but to adjust it. More miners (more hash power) - the diff goes up, less miners - it goes down.

More basic advice for this dummie: Where should I be looking to start today?

Start what? What's your goal? Are you looking for best investment? Do you want to start mining? Trading? Or have you already decided you want to invest in altcoin but you don't know which one?

[guitarman61]

"Start what? What's your goal? Are you looking for best investment? Do you want to start mining? Trading? Or have you already decided you want to invest in altcoin but you don't know which one?"

I'm not looking to invest in mining yet. I do want to invest in coin, and not necessarily altcoin, although I have been hearing from people that altcoin is better right now. You're right that I need better education. That is step one I guess. I just want to start in on an income stream on the side that won't take 10 hours a day to babysit and won't take $10,000 worth of equipment to get into.

Update on OneCoin mining: In 9 days they have premined 2,270,000 coins with 52,000 members.

[thejaytiesto]

Premining is bad because coin owners dump them with no loss. It's unfair to start a currency with premining, even if it's %0.0001.

Premining is not that bad if it's done in a legit way. For example, Bitstar is a coin that actually uses their prime in a legitimate way.

[SOAD]

Alt coins. What are the dead giveaways that an alt coin is a scam coin or a pump and dump scheme.

Most of them are, but look for total lack of innovation. Why does the coin exist and what ios the point of it? If there is none then likely a crapcoin.

What is the downside of pre-mining? OneCoin has just started their closed source mining on Jan 20 and has already mined 550,000 of their own coins. They claim that this mining internal of their own network is only a way to make it "fair" for the network. They plan to mine the majority of their own coins prior to going public and are still not in an exchange.

The downside is it's a con designed to make the devs richer.

Bottom line question: What is the best way for newbies to cut their teeth in cryptocurrency?

Avoid alt coins and buy bitcoin. You can easily earn your first coins from this forum via a signature campaign so I'd avoid 99.9% of alts altogether.

[homo homini lupus]

signs of scams:

-newbe dev
-flashmine (fast blocks in the beginning)
-ninjamine as coins end up not distributed but highly concentrated and often that's the intention behind it.
-premine (dev dumps on your face and then abandones the coin) - there is no premine needed ever for a moneytoken as these coins are decentral. A good dev with a vision mines his coin, takes donations or even buys it and makes it appreciate value with his work. (it's rare but this happens)
-lots of promises and no delivery
-ICO, IPO, presale (selfbuy free premine)

basically the only 100% legit way to distribute coins is through longterm pow-mining. Everything else is worthless crap made for 2 weeks pump and dump. A longterm coin with longterm plan is mined longterm. Period.

further indicators:

-selfmoderated thread and complaints about censorship on the forum or another uncensored thread about that coin
-closed source (could be anything)


There's more but that's what i can think of from top of the head.
A dev who wantsto have a successful product will not have 1% premine or ninjalaunch. That's what coins do that are made for a quick buck for the dev.

Generally i would recommend to every newbe: stay away from brand new coins completely. Stick to coins older than 6 months or so. Within 6 months most scams are uncovered if they were such. Most coins that survive 6 months are good to go on even longer. Most scams die within the first 6 months. So stick to the established coins with solid community to avoid additional risks.

Brand new coins aren't for newbees. The markets are extremely volatile, risks are extremely high, 90% fail within short time, scams are many - it's just too much risk for an inexperienced user to put a lot money into. Stick with your money to established stuff that has a (trade)history and trackrecord aswell as solid community.

[muhrohmat]

as we know a coin to be stable neeed few premine and also be good marketing and market implementation even in games for be used and be worth like 500 satoshis a piece and be mined by many.

[guitarman61]

Thank you for the great advice.

homo homini lupis thank you for really caring enough to put together a great "watch out for" list. Very informative.

[Q7]

What is the downside of pre-mining? OneCoin has just started their closed source mining on Jan 20 and has already mined 550,000 of their own coins. They claim that this mining internal of their own network is only a way to make it "fair" for the network. They plan to mine the majority of their own coins prior to going public and are still not in an exchange.

Bottom line question: What is the best way for newbies to cut their teeth in cryptocurrency?

I don't know about others think about premining. For me, it creates a sense of feeling whereby there is an unfair advantage so it leads to a loss of confidence in the coin itself.

[paddox]

What is the downside of pre-mining? OneCoin has just started their closed source mining on Jan 20 and has already mined 550,000 of their own coins. They claim that this mining internal of their own network is only a way to make it "fair" for the network. They plan to mine the majority of their own coins prior to going public and are still not in an exchange.

Bottom line question: What is the best way for newbies to cut their teeth in cryptocurrency?

I don't know about others think about premining. For me, it creates a sense of feeling whereby there is an unfair advantage so it leads to a loss of confidence in the coin itself.

If the dev keeps all the premine for himself I agree it creates a sense of feeling whereby there is an unfair advantage. There are POS coins where the premine is distributed among many people, which seems OK to me, but that is not the case here.

[guitarman61]

I have had a disturbing epiphany about something. Since my OneCoin account was hijacked away from me, I no longer can view the member dashboard information and will have to use projections based on what I have personally witnessed up until Feb 1.
There is a listing of the 3 highest count token accounts on the dashboard landing page. The top account had, as of Feb 1, over 185,000,000 tokens, which would yield over 46,000,000 coins to just one account. At the rate that tokens have been adding to that account, the account holder will have over 250,000,000 tokens very soon, and continue to add tokens progressively.
Here is my epiphany:
185,000,000 tokens would cost in excess of 23,000,000 euros. There is no billionaire investing tens of millions of euros in OneCoin. So, who is this account holder then? How about the owner of OneCoin herself, Ruja Ignatova. This makes perfect sense and also reveals a potential scam of all scams. She has over 58,000 paying customers now, who have spent between 130 and 5000 euros for packages in OneCoin. That yields tens of millions of euros into her bank account from all those purchases. Now the scam part. She is buying, from HERSELF, tokens out of those funds. She is simply transferring her own money onto her own bank account and claiming ownership of OneCoin tokens. Are you getting this?
Think about this again:
People buy OneCoin tokens with real money.
The funds from those purchases, real money, goes to Ruja's bank account.
She then takes that real money and tells the OneCoin system that she is buying tokens.
She uses funds, from those purchases, in her own bank account, to buy tokens, which puts that money right back into her own bank account............
She will end up owning 25% minimum, to an even larger percentage that is truly unlimited, of the 1.2 billion OneCoins to be mined. She could end up owning more than 50% of all OneCoin coins, with other principals in the OneCoin organization owning another large percentage of OneCoin coins as well.
Can you say MONOPOLIZE?
Oh, and don't forget that 100% of OneCoins are to be self mined. There will be no public mining. No open source. And I highly doubt these coins will ever go to a public exchange - OneCoin coins will only be available in OneCoin's internal network exchange, where Ruja, and the other principals in the OneCoin organization, will pump and dump their coins on unsuspecting dupes who will buy into the hype and horseshit marketing that the MLM gurus in OneCoin are going to conjure up.
By the way - I have not even mentioned the fact that she started this whole operation with nothing but air as a product. An idea. This entire organization is built on an MLM platform of selling an idea and making money through selling that same idea to your family and friends and getting them to sell the idea to their circle of influence and so on... The principals in OneCoin are getting very wealthy, with a probable 50 million euros in sales already, from selling air to dupes. Then they will be getting their final cash influx when they sell their stash of "coins" that they bought with the dupes' money. This small group of people at the top of OneCoin could be spiltting 100,000,000 euros when this is all said and done. And OneCoin coin value will end up being ZERO. Pure GENIUS!!!!
This could be an EPIC scam...............