Cryptocurrency spent a long time living under the stereotype of scam before it transformed, proving itself to break that layer of prejudice. Through technology advancement, cryptocurrencies have shown that scams come from greed, not from the platform. Furthermore, blockchain is also a technology that helps prevent scams and frauds effectively, creating transparency for any platform or transaction method.

Does the product model determine a scam or not?

Let's take a look at the most notorious scams in crypto history:

• Mt.Gox - the exchange that accounted for more than 70% of global Bitcoin transactions in 2014 has lost about 800,000 Bitcoins of its users and has not returned them yet.
• QuadrigaCX, Canada's largest cryptocurrency exchange, was charged with fraud after its founder died and lost access to a cold wallet containing more than $200 million in user assets.
• Thodex - a Turkish exchange - suddenly stopped working, and the director fled with more than 2 billion USD in user assets.
• Bitconnect - a Ponzi scheme branded with blockchain technology has caused more than $2 billion in losses to global investors.
• FTX - one of the world's leading exchanges, illegally appropriated tens of billions of dollars in user deposits.

These scams have caused billions of dollars in losses for investors, but most of all, have created a rift in trust for the entire market. However, almost all of these scams, as well as all other scams across all sectors, are rooted in greed, and centralization has facilitated that.

Blockchain technology has fueled a trend that has revolutionized in every way - decentralization. However, projects, or platforms in the name of blockchain, are overly centralized, making investors' assets completely controlled by a small number of individuals and organizations. This is completely contrary to the destination values of blockchain and crypto, as well as creating potential dangers for investors when joining in the market.

Major scams like Mt.Gox, Quadriga, or the recent FTX incident have shown how dangerous centralization can be. These companies all offer extremely “harmless” products such as spot trading, or leveraged trading, etc., and even essential trading tools for the market. The only bottom line that creates the condition for the scam to happen is that the company/exchange holds full rights to hold the user's assets.

With cryptocurrencies becoming more popular, many forms of technology-labeled scams have also appeared, hiding under the guise of exchanges, or investment platforms, completely centralized and easily manipulated. This is also a worrying issue that investors need to pay special attention to when participating in the market. In Vietnam, there have also been many forms of fraud in the name of cryptocurrency to blind and lure participants. A recent example is Wefinex, which uses the name of a binary options exchange - a trading method in which players predict the uptrend of assets such as commodities, currencies, stocks or cryptocurrencies at the time of prediction. Players on the Wefinex platform will be completely controlled by the exchange, from game results to personal assets. Wefinex was closed after signs of fraud were detected, but it already caused hundreds of billions of VND in losses for many investors.

Decentralization creates transparency

If it is not a centralized platform, but a decentralized platform where users can utilize by connecting to a cryptocurrency wallet and have full control over their assets, scams of billion USD will not happen, investors' assets will still be safe because it is not in the hands of the exchange owner, but under the full control of users.

Additionally, with over-centralized trading platforms, investors also have to be in a "vs the exchange" situation when it has the ability to interfere with the results, the price line, or even more dangerously lock money withdrawals and lock the user's account. This risk is extremely common for platforms that offer options trading in the name of blockchain technology and cryptocurrencies. These platforms often hold users' assets in an opaque way, adjust order results, or lock users' withdrawals to appropriate assets. However, if those options trading platforms were implemented completely in a decentralized manner, there would be absolutely no possibility of such a scam.

Currently, many Spot trading platforms, as well as leveraged Margin trading, Futures trading or Binary Option contracts ones have been completely decentralized and are fully competitive with those centralized exchanges today on security, safety, as well as features. With decentralized technology, many other popular forms of transactions can become more popular in the cryptocurrency market thanks to the superior security, safety and transparency of blockchain and smart contracts.

By taking advantage of technology and optimizing the decentralized, secure, and transparent nature of blockchain and smart contracts, other well-known risky niche markets such as prediction markets or options trading can become much more attractive and safe in the eyes of investors in particular, and the public in general.