Explore: Does blockchain pose a fraud risk? How to prevent fraud?

Investors who are often exposed to blockchain should understand that the entire blockchain field is full of false claims, conspiracy theories, confusing thinking and outright fraud. Many novice investors are very worried about blockchain before entering the circle. Is the blockchain a scam? In fact, the blockchain itself is not a scam. However, everyone needs to pay attention to the fact that many criminals commit fraud under the banner of "blockchain" and "virtual currency". This also makes many investors doubt Blockchain is a key point causing misunderstandings, and blockchain fraud techniques are similar to mobile telecommunications fraud techniques. Many investors may still not know whether blockchain is a scam? Let the editor analyze it for everyone below.

Is blockchain a scam?

Blockchain itself is not a scam, but its price formation mechanism is opaque and can easily cause investors to suffer huge losses. Due to the lack of supervision, it may be used by a small number of fraudsters and illegal fund-raisers and become a tool for illegal crimes and money laundering. Although there are no specific provisions in the law, according to the principle of legal punishment, blockchain investment itself is not illegal. However, investors need to be cautious, understand the risks, and choose a legal and compliant trading platform to protect their own interests.

Legal Basis

Article 3 of the "Criminal Law of the People's Republic of China"

Conviction and punishment according to the law, if unable to be convicted, no punishment will be imposed.

Article 13 of the Criminal Law of the People's Republic of China

Anything that endangers national sovereignty, territorial integrity and security, splits the country, subverts the power of the people's democratic dictatorship and overthrows the socialist system, and undermines social order and economic order, infringement of state-owned property or property collectively owned by the working people, infringement of citizens' private property, infringement of citizens' personal rights, democratic rights and other rights, as well as other acts that endanger society and should be punished in accordance with the law. It is a crime, but if the circumstances are obviously minor and the harm is not great, it is not considered a crime.

How does blockchain prevent fraud?

By implementing blockchain technology, businesses can achieve safer and faster transactions and focus on operations, expanding markets and building credibility. Several ways in which blockchain technology can help enterprises reduce and eliminate fraud include: ensuring the transparency, traceability and non-tamperability of transactions; automating transactions through smart contracts to reduce human error and fraud risks; establishing a decentralized Trust mechanism to reduce trust issues and fraud.

·Decentralized Structure

Since access to the blockchain database is not limited to one computer, it is easier to track transactions. A network of computers validates each transaction based on preset rules in the system. Recorded purchases may not be retroactively changed by changing subsequent arrangements without system consent.

·Transparency

Blockchain technology ensures that transactions are detailed and accurate. Once a transaction is concluded, it cannot be modified without leaving evidence of the modification. Additionally, blockchain helps identify and authenticate individuals within its system.

An excellent blockchain application that maximizes technical transparency is smart contracts. Smart contracts are programs that check all the details in an agreement and ensure that each detail is executed accordingly. In recent blockchain news, tech giants like Google have begun integrating smart contracts into their business operations. This demonstrates the capabilities of the technology.

·Encryption

Encryption of data in the blockchain ledger ensures its anonymity. This, in turn, ensures that transactions are secure, independent of central authorities, and prevents the identification of duplicate transactions. Encrypted data replicates the concept of real-world signatures by using mathematical codes to store and transmit data values ​​in a secure format. The target market can then receive the transactions, process them and ensure the authenticity of the arrangement.

·Easier Auditing

Blockchain technology providers can make auditing and monitoring activities more convenient through accurate, secure and accessible systems. For example, marketers can track their sales campaigns and ad impressions through blockchain’s decentralized ledger. Blockchain technology makes it easier to cross-check accounts and verify data.

·Zero risk of privacy leakage

Every data in the blockchain is recorded, encrypted and can be shared to multiple platforms. The system's strict security features effectively eliminate the risk of privacy leaks. All information is transmitted directly without intermediaries and supervision by other parties, ensuring the confidentiality and integrity of the information.

The above content is the editor’s specific analysis on whether the blockchain is a scam. Crypto industry experts point out that if any crypto platform offers very high yields, that is the first red flag of a fake crypto exchange. The growing popularity of cryptocurrencies has led to an increase in the number of cryptocurrency investors as well as real and fake cryptocurrency exchanges. A cryptocurrency exchange is a marketplace where cryptocurrencies can be bought and sold. Cryptocurrency exchanges provide storage for cryptocurrencies as well as trading services and price discovery through trading activities. According to crypto industry experts, one of the easiest ways to identify and perform basic due diligence is to check the details of a registered company.

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