[Recap] BayaniChain CEO Advises How to Use Blockchain for Scam Prevention

Discover tips for identifying Ponzi schemes, avoiding phishing, and making informed investments in crypto using the blockchain.

Expert Shares Tips to Spot Crypto Scams Using the Blockchain (1)
  • Paul Soliman, the CEO of BayaniChain, shared his insights on detecting crypto scams through blockchain, addressing both novices and experienced users.
  • He emphasized the transparency of information in blockchain-based smart contracts to detect Ponzi schemes and stressed the importance of backing digital currencies with tangible assets.
  • Soliman also recommends decentralized exchange tools, like GoPlus and DexTools, along with tokensniffer.com to avoid different kinds of scams.

Amid a rising number of fraudsters targeting crypto and web3 newcomers, Paul Soliman, the CEO of Bayanichain, shared his expert insights on detecting crypto scams through blockchain for both novices and experienced users.

He tackled this during the recent BitPinas Webcast, hosted by BitPinas Editor-In-Chief (EIC) Michael Mislos, held on August 23, 2023, on its official social media pages.

Paul Soliman Sheds Light on Crypto Scams in BitPinas Webcast

For Soliman, it is easier to detect Ponzi schemes in the crypto ecosystem because all the information is readily available on smart contracts, which can be viewed on Etherscan or other smart contract ledgers. 

“Ginagamit yung blockchain into Ponzi kasi maraming pwedeng ipromise na malaking returns,” he stated, noting that scammers often use blockchain as a mask to claim transparency. 

[“They are using blockchain in Ponzi because they can promise big returns.”]

Fake Digital Currencies Versus Real Cryptocurrencies

Soliman also emphasized that the digital currencies offered by some entities are not actually cryptocurrencies, as they are not really on the blockchain. Explaining that there should be something that backs a digital currency, such as Bitcoin, fiat, or gold, as there are some that are simply a “digital” currency, but in most cases, scams do not have it.

“What’s the most important is contract verification, technically, lahat ng kontrata sa blockchain is open-source meaning nababasa ng isang specific na blockchain (and) bine-verify na tama ‘yung pagkakagawa, walang issue,” he expanded, while explaining that all tokens and coins have their own smart contracts. 

[“What’s most important is contract verification. Technically, all contracts on the blockchain are open-source, meaning they can be read by a specific blockchain (and) verified that their creation is accurate, without any issues.”]

Moreover, when it comes to phishing, he admitted that schemes disguised as giveaways were particularly prevalent during the last bull run.

“Ang pinakamalaking phishing attacks talaga hindi naman talaga sa crypto nanggagaling, it’s really on the normal day-to-day banking,” the CEO noted. 

[“The biggest phishing attacks actually don’t come from crypto, they really target normal day-to-day banking.”]

How to Avoid Scams Using Blockchain

While no system, including blockchain, is unhackable, its immutability and transparency make it much easier to track and catch fraudsters, according to Soliman.

He also stressed that, as smart contracts are essential in the industry, users must always read and comprehend everything they sign.

Tools for Scam Prevention: GoPlus Security and DEXTools

Meanwhile, Soliman shared two useful decentralized exchange tools, the GoPlus Security and DEXTools. These two tools help users protect their assets on decentralized exchanges (DEXs). GoPlus Security detects malicious contracts, while DexTools provides real-time information and a trust score system.

On the other hand, to avoid honeypot scams, he recommended using the tool called tokensniffer.com; all a user has to do is copy and paste a token contract, and they will know if it’s a scam. Honeypots are smart contracts that do not allow buyers to resell.

Soliman also pointed out that some tokens have built-in “taxes,” which means that the amount paid in taxes when purchasing the token goes directly to the token’s creator. Although token buyers can resell their tokens, the creator can increase the sell tax, which would eliminate any profit from the sale.

“Parang kumpanya ‘yung token, bago ka tumaya, (mag-research) at mag-analyze ka muna. Kasi pag hindi natin to tiningnan, at the end of the day, kung marami kang pera, sige bahala ka, but if savings mo tinataya mo, which is ‘wag naman, at hindi ka nag research, I’m 99% sure na 99% din ang scam,” he stated.

[“Tokens are like a company. Before you invest, do some research first. Analyze it first. Because if we don’t look into this and, at the end of the day, if you have a lot of money, then go ahead, but if you’re risking your savings, which you shouldn’t, and you haven’t done any research, I’m 99% sure that it’s also 99% a scam.”]

Red Flags and Due Diligence: How to Stay Safe

Mislos then reminded interested crypto investors that they should not put all their eggs in one basket. This means that interested investors should not lend all their capital to just one project or token unless it is well-established, like BTC, ETH, or BNB. 

Soliman also noted that knowing the creators—the owner address—of tokens is also useful, and from there, investors can start looking into more information as these are always readily available on the blockchain. 

People must also be alert to spotting red flags in a project, be really cautious when dealing with any project in general, and emphasize doing their own research (DYOR)

The Growing Concern of Scams in the Philippine Crypto Landscape

According to a recent study by ConsenSys and YouGov, they found that among Filipinos, the primary obstacle to entering the crypto space is the fear of scams. While global and Asian barriers include concerns about volatility, in the Philippines, scam apprehension is the most significant deterrent. 

Amid the popularity of artificial intelligence, blockchain security firm PeckShield has uncovered numerous pump-and-dump tokens imitating an AI chatbot named ChatGPT. These fraudulent tokens, totaling around 167, were launched on various blockchains, including 132 on BNB Chain, 25 on Ethereum, and 10 on other platforms. 

In May, Senator Risa Hontiveros warned about the presence in the Philippines of cryptocurrency scam hubs that exploit trafficked foreigners as crypto scammers. Hontiveros emphasized the need for social media intervention and highlighted national security issues concerning the influx of foreign individuals involved in such activities.

In 2022, a report from Solidus revealed an increase in scam tokens, marking a 41% rise with 117,629 created, compared to the previous year’s 83,400 scam tokens. Moreover, in 2021, two studies stated that 97.7% of the tokens launched on the decentralized cryptocurrency exchange Uniswap are locking contracts that tend to become rug pulls or malicious tokens eventually.

Recent Webcast Recaps

Last webcast, Luis Buenaventura shared that after he resigned as YGG country manager, he remains dedicated to the crypto sector, helping hacking victims, revealing scams, and backing promising initiatives. 

He continues to contribute to the community by producing content such as reels, essays, and his newsletter called Cryptoday.

Find more recap articles here:

This article is published on BitPinas: Webcast Recap: How to Use Blockchain to Avoid Getting Scammed

Disclaimer: BitPinas articles and its external content are not financial advice. The team serves to deliver independent, unbiased news to provide information for Philippine-crypto and beyond.

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