[Tarophin] Don't expect decentralized markets to play by centralized rules
[Tarophin] Much in the same way as city dwellers make mistakes when they move into a rural area, the same goes for cryptocurrency investors who are used to centralized system. Dreaming of a bullish market, they start investing, but often make mistakes. They sometimes make excessive transactions without knowing the fees charged on ethereum trading. One might brush off such events as “a learning experience,” but some are not so easy to ignore. One investor from China sent $1 million worth of USDT to the wrong DeFi address on a platform called Swerve. Luckily, Tether has recovered and returned $1million worth of USDT to the investor. Tether’s CTO said that Tether was able to recover the fund because it belongs to centralized finance. Cryptocurrencies advocate decentralized system, but they sometimes take advantage of a centralized system. An investigation into a pyramid scam in the Korean cryptocurrency circle back in 2018, which crashed the market, is about to enter the final stage. The fraudsters coaxed investors into believing that a number of investors put their money into a certain cryptocurrency. Novice investors believed that the earlier they invest the higher their return is. They didn’t sift through the contracts while making the decision and were in the dark that it was a scam. However, it turns out that somebody in their 20s was behind the fraud. The affected investors sued those allegedly involved in the case. It was a rational act, but a bit of irony. When they first invested in cryptocurrency, they wholeheartedly praised decentralization. Now they rushed to the centralized agencies to try and recover. One should tolerate the potentially huge risks associated with cryptocurrency investment. Still, novice retail investors would find themselves in a disadvantageous position, because not only did they have inadequate investment information but there are few ways to receive compensation from crypto-based scams. Even if a regulation on crypto businesses comes into effect, they would not be treated the same as investors with established financial institutions. The crypto market is virtually lawless. The victims of scams are in distress because the fraudsters are often acquitted. What they can do is protect themselves. Investors should not bet big on entities that they don’t know. They should be aware where their money will be put and not put too much trust on others’ words. Even if they keep the mindset, the market is already too risky.