Editorial: Squid Game-inspired crypto token scam

·3 min read

Anonymous developers created a crypto currency named after the hit Netflix South Korean series, “Squid Game.” Early this week, the Squid token had hit a high of just over $2,860 (P144,660.23), before it plummeted to effectively zero, according to CoinMarketCap.

The crash happened after the token’s unknown creators cashed out, collecting at least $3.4 million (P171.9 million) in investor funds. An investor from Shanghai found his life savings of $28,000 (P1.4 million) gone forever.

This scenario is described as “rug pull.”

“The crypto ecosystem is rife with so-called ‘rug pull’ schemes wherein token founders abruptly abandon their project and take investor funds with them by swapping the project coin for cash,” according to CNBC, an American business news channel.

In a nutshell, cryptocurrency is a digital currency—it has no physical form. It is decentralized, which means it is not backed by the government’s central bank. It is also volatile—it could skyrocket in any moment and it could fall hard back to the bottom. Cryptocurrencies use blockchain technology, a digital ledger of transactions that is duplicated and distributed across the entire network of computer systems on the blockchain. It is a system of recording information in a way impossible to change, hack, or cheat the system (Euromoney).

The top two cryptocurrencies in the market right now are Bitcoin and Ethereum, and the former is the original and current king of cryptocurrencies. Bitcoin was created in 2008 by an anonymous person or group of people who goes by the name of Satoshi Nakamoto. The original crypto has a limited supply of 21 million tokens. It can be sent from one user to another user on the peer-to-peer bitcoin network without the need for intermediaries (Wikipedia).

As of October 11, 2021, there were over 6,000 cryptos in the market, according to Statista.com.

Several Filipinos are aware about cryptocurrencies. In 2019, the Organization for Economic Cooperation and Development published a report stating that 74 percent of Filipinos who participated in the survey conducted from February to March 2019 knew what cryptocurrencies were. But only around 32 percent of the respondents said they owned crypto assets.

As of 5:01 p.m. Wednesday, November 3, 2021, the global overall market cap of cryptocurrencies stood at 2.75 trillion in US dollars. That is a whopping 139.1 trillion in Philippine peso.

The investor from Shanghai interviewed by CNBC explained his reason for buying the Squid token: “My rush to buy this token is for a single idea that went into my brain that ‘Squid Game’ is very, very popular now, and its token must be popular now. It’s a tragedy. I don’t know how to recover my loss.”

Several crypto trading experts said one must not be a Fomo (fear of missing out) and must invest only the money that one could afford to lose.

Before investing in crypto, one must study first the crypto market by reading materials from experts.

In 2018, Ethereum founder Vitalik Buterin said: “If you’re trying to figure out where to store your life savings, traditional assets are still your safest bet.”

Money does not grow on trees, really.

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