The world of decentralized finance is exploding. There are more and more transactions made every day. One of the most used blockchain currently is the ethereum one and the problem is that there are a lot of transaction fees. This is why more and more people are moving to BSC (Binance Smart Chain) to not pay a lot of fees for each transaction, this is the emergence of new blockchains to compensate for the delay of the ether blockchain.
Even if scams have always existed, they evolve according to these new tools and methods to trap new blockchain users. In this article, we will focus on scams that evolve on the BSC blockchain
What is a scam in BSC?
So, how does a scam work? What does it look like? Is it possible to stop a scam? How to avoid them? All these questions you are asking yourself are legitimate and necessary to invest responsibly and securely. First of all, we will define what is a scam and what is the process of scammers to trap you.
A scam on the BSC (Binance Smart Chain) is a fake token that aims to lure users by redirecting them to sites, in reality these fake tokens have no value and cannot be exchanged or transacted upon through DEXs (Decentralized exchanges) like PancakeSwap.
We can distinguish two types of scams :
- It can be unknown cryptocurrencies, which you have never seen before.
- But it can also be cryptocurrencies that we know like Bitcoin, except that there is only the name that is identical
Most of the time, you get a cryptocurrency that you don't know at all in your wallet, so you tell yourself that you would like to sell it and you click on the crypto. It points you to a site that allows you to sell your cryptocurrency. There is a nice showcase site that talks about a revolutionary project and explains the reason why you received your cryptocurrency for free. They then ask you to validate a transaction through your MetaMask to sign a malicious smart contract or ask for your seed phrase. They will offer you to exchange your tokens to famous cryptocurrencies like BTC or ETH.
You are not signing the right to sell this cryptocurrency, but the right for scammers to empty your MetaMask balance. All your cryptocurrencies are sent to the hackers' wallet.
Their approach techniques and how to beware
Social networking scams are the most notorious scams in the crypto-currency ecosystem. Seeking to target the novice, the more naive and the desperate following a technical problem, this scam can be found almost everywhere in replies to a post talking about cryptocurrencies on social networks. The purpose of this scam is to send you a message and contact you by any means to steal your cryptos.
By sending an email address, an online form or a malicious website, the scammer will promise you to earn money quickly or solve one of your problems.
To avoid 80% of BSC scams, you have to do your own research. Start by using the name of the token and find out if people are talking about it on the internet. You will quickly find out if it is a scam or not by searching this way. Also eliminate projects that have no future or are too good to be true, with proposals that are unreal or without value.
By doing a little research you will eliminate many of the scams easily, however you are better off being too sure than not sure enough. To do this, you will be able to analyze the smart contracts of these tokens.
Analyse a smart contract
With the transparency of blockchain, you have the ability to analyze all the characteristics of a smart contract. To do this, you must have the address of the smart contract to copy and paste into the binance scan. There are 5 steps to spotting scams or not by analyzing a smart contract.
1.Check if the token’s liquidity pool is locked/burned
The liquidity is used to exchange your tokens and is specified by the creator of the token, it can be removed when it wishes if it is not locked or burned.
2. Check if the ratio Market Cap/Liquidity Provider is enough
If there is no liquidity it is a trap, but it’s the same if there is low liquidity. The reason is because it involves high volatility. Always check if the Market Cap/LP ratio is sufficient, the maximum to tolerate should be 50/1.
3. Check if contract ownership is renounced
This is not an obligation since some token creators prefer to keep all the control on their token, in this situation it is better to trust the creator. To verify if ownership is renounced, click on “Contract”, then “Read the contract”, then “Owner” line. Just read the beginning of the address and if it’s “0x00”, the ownership is renounced.
4.Check if it’s not a Honeypot
A honeypot is a smart contract which prohibits investors from selling their tokens, you can verify that if there are a lot of buys, then a big sell over and over. If the sales are made by the same address, it is often a honeypot. You can anticipate a honeypot by investing a small amount of money and then try to sell the token. Be careful, there are Honeypot with delay.
5.Check the owners of the token
If we are talking about millions of people who have the same number of tokens, we must be wary. At the same time, if someone has a big amount of the token supply (>10%) it can be dangerous.
Can we get our money back after being tricked by a scam?
In crypto-currencies, when you make a transfer, it is irreversible. It is this transparency of transactions and the impossibility of modifying them that makes the blockchain secure, in return it makes it impossible to get your money back after being trapped in a scam. Once the money has been sent from one wallet to another, it is no longer possible to go back. So you have to be careful and not send cryptos without being sure that you are sending them to a trusted person.
As the blockchain sector is still young and is not clearly regulated by strict laws in almost all countries, it is very difficult to get your money back in case of a scam.
Even though crypto-currencies are a revolution and will eventually change our way of life, it is unfortunately necessary to admit that there are many scams in the sector which is still young. It is therefore necessary to be careful.
The basic rule to follow is to never believe in promises of amazing profits. If it sounds too good, there is bound to be a scam somewhere. Nowadays, it is almost impossible to get back the money you lose because of a scam. So you have to do everything you can to avoid being tricked into losing your money.