Beware blockchain, cryptocurrency scams
Ghost Technologies CEO Ray Bursey advises people to recognize warning signs
As more people are becoming interested in blockchains and cryptocurrency, they are also getting scammed, says Ray Bursey, a local blockchain mining enthusiast and CEO of Ghost Technologies.
Bursey says there are people locally who are attempting to scam newcomers to the technology by taking advantage of the fact that most people find it confusing.
“A lot of people don’t understand it, and a lot of people lose their shirts over it really,” he said.
There has been a lot of buzz about blockchain mining and cryptocurrency in the province lately.
Just last week, a Mount Pearl man said he’d accept cryptocurrency for his house that is up for sale.
Last fall, the province’s first cryptocurrency ATM was installed at The Fifth Ticket, a restaurant in St. John’s, and another was installed a couple of weeks ago at Tobin’s Convenience in Labrador City.
Last week, newly opened St. John’s bar Yes B’ys announced it is accepting Flashcoin cryptocurrency.
Bursey, who was responsible for installing the ATM at The Fifth Ticket, said there are a few red flags newcomers to blockchain mining and cryptocurrency trading should watch out for.
First is an opportunity that sounds like a Ponzi scheme.
“If you’re getting into cryptocurrency, and the person who’s bringing you in says, OK, if you sign up so many more people, you’ll get X percentage of their (profit),” said Bursey.
He said people might be asked to pay money to sign up and they’ll earn a percentage of the profits of everyone else they bring on board.
“Well one per cent of nothing is still nothing,” he said. “Yet you paid, say, $600 up front.”
Bursey also said people should be wary of anyone who charges money for information.
“If you’re looking for information and someone’s telling you that you have to pay for it, that flies in the face of everything that blockchain is. There are groups that will answer all of your questions for free. They hold free seminars, all of that. But if someone’s asking for money? Red flags.”
Bursey suggested local group Blockchain NL as a resource. The group aims to educate people about blockchain technology through meetings and lectures.
Bursey said the technology is so new that no one can claim to be an expert.
“I’m still learning and been at this for four years.”
Anyone looking to get involved should first do a lot of reading and research, he said, noting that websites such as bitcoin.com, Twitter and Reddit all have a wealth of information.
In spite of his warnings, Bursey said it’s relatively easy for a regular person to get started, noting that people can use a home computer to learn how to mine, but not for Bitcoin because I’ve it uses higher-powered technologies. Cryptocurrencies such as Ethereum and Monero use regular computers.
“They’re catering to the regular person, not to big companies, not large organizations looking for profit. They want the coins to be for people, to take control from large corporations, banks, governments, and put financial access into the hands of literally everyone, more or less.”
He said people can also trade cryptocurrencies, but likened it to the stock market, where individuals can both make and lose a lot of money quickly.
Bursey said he doesn’t want to scare people off, but rather his goal is to make sure people educate themselves before investing and, potentially, losing a lot of money.
“If you’re looking for information and someone’s telling you that you have to pay for it, that flies in the face of everything that blockchain is. There are groups that will answer all of your questions for free. They hold free seminars, all of that. But if someone’s asking for money? Red flags.” Ray Bursey, Ghost Technologies