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Breaking News: Celsius Founder Alex Mashinsky Receives 12-Year Prison Sentence

Relying On Data Analytics Can Help You Avoid Rug Pulls And Scams

NewsBTC
NewsBTC
3 years ago
3 mins read
DeFy Trends

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A sizable portion of this world’s population has grown to love trading, buying and selling with all kinds of cryptocurrency assets as well as NFTs. This makes sense too as after all, who wouldn’t want to be a part of one of the fastest-growing industries of all time and earn a lot of money while doing so? However, with such popularity also comes the risk of investing in certain cryptocurrency projects which may turn out to be disingenuous and fraudulent.

Rug pulls

A ‘rug pull’ occurs when developers steal funds from investors and quit the project after a large sum has been allotted to the fraudulent DeFi project. These projects are typically established by individuals with ulterior motives and evil intent. One of the more recent famous rug pulls was that of the ‘Squid Game (SQUID)’ cryptocurrency, a project which looked to cash in on the massive success experienced by a Netflix show of the same name. After successfully drawing in numerous investors, it did not take long for rug pull reports to start coming in.

Therein lies the problem though, as a large number of investors usually prefer to ‘get rich quick’ and so end up investing in projects which are based solely on the hype, with this usually resulting in substantial losses. Nowadays, the NFT sector is experiencing similar problems, as many individuals involved with NFTs often invest in projects that they know next to nothing about. Some of the more well-known NFT rug pulls involve the ‘Baller Ape Club’ (which was an obvious copy of the ‘Bored Ape Yacht Club’) and the ‘Iconics Presale’, which involved a teenager stealing a massive 1,000 SOL before deleting all social media accounts and activities.

What’s the solution?

The solution is rather straightforward and simple, which is to utilize AI-driven and other data analytics to help investors make more informed decisions. There are already many groups that are already working on this such as Delphi Digital, Dune Analytics, and Defy Trends. Defy Trends’ all-women team, in particular, had actually used both on-chain and off-chain data analytics to predict the crash which happened this past May.

Imgesu Cetin, CEO and founder of Defy Trends believes using string analysis and data science algorithms to deliver real-time information on market sentiment, as well as the fundamentals is key. “We are able to use AI-powered market forecasting to give investors the information they need to make informed decisions without doing all the thinking for them,” said Cetin. “There are numerous trading bots out there, but we think our approach gives people the information to be informed of what is happening on-chain and off-chain so they can focus on the metrics they think matter.”

The point is though that investors need to be made aware of the project that they are investing in and using data analytics would hence appear to be the answer. In fact, knowing data that occurs on a blockchain (on-chain) as well as all that transpires outside of it (off-chain) can often mean the difference between investing in a viable project or spending money on a blatant scam. As cryptocurrencies and NFTs become increasingly popular, so too will the aforementioned fraudulent activities and so one can never be too careful nowadays and should thus rely on data analytics.

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Disclaimer: The information found on NewsBTC is for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.

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NewsBTC is a cryptocurrency news service that covers bitcoin news today, technical analysis & forecasts for bitcoin price and other altcoins. Here at NewsBTC, we are dedicated to enlightening everyone about bitcoin and other cryptocurrencies.

We cover BTC news related to bitcoin exchanges, bitcoin mining and price forecasts for various cryptocurrencies.

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