The Junk Coins Of Coinmarketcap

Part 3 of a series skipping BORING fundamentals in order to give you actionable tips.

Read part 1 here:

Read part 2 here:


Coinmarketcap is a great tool to get a bird’s view idea of cryptocurrency valuation.

Market cap, current price, circulating supply, volume and change are all instantly available and on clear display. You can look up the specific markets offering a crypto for trade; get convenient links to project announcements, websites and social media; delve into the charts per day, month or year; and there’s even weekly historical snapshots to let you view the bigger picture.


All the red you could want in one look


There’s a downside to this efficiency: because Coinmarketcap is such a staple tool, it becomes an attractive target.

By skewing perceptions of value, bad actors can make new investors buy worthless cryptocurrencies. For this purpose, the most obvious vector of attack is…




On Coinmarketcap, coins are ordered by their market cap.

(Shocker, I know.)

The idea of market cap comes from the stock market. This indicator makes sense in a regulated economy with regulated exchange places, as laws rule out most manipulation.

Crypto differs from that. Exchanges exist all over the world, with widely variable compliance to financial laws (if at all). There is little to no barrier of entry for investors, which can lead to unreasonable ICO market capitalizations.


Select the “Volume” column on Coinmarketcap, and you get the following picture:


Once ordered by volume, #5, #8, #9 and #10 drop out of the top ten.


Consider this thought experiment.

  • You launch your own cryptocurrency for a decentralized toaster (let’s call it Toastcoin).
  • You build it on the Ethereum blockchain as an ERC20 token with a supply of one billion.
  • You go on EtherDelta, a decentralized exchange where any ERC20 tokens can be exchanged.
  • You start trading Toastcoins between your own addresses.
  • You trade 1000 of them over and over, for sums in the 0.1 ETH range (roughly $18 at the time of this writing).

Congratulations! Your market cap is now $18 / 1,000 * 1,000,000,000 = $180 millions.


In short, market caps (and thus Coinmarketcap rankings) are easy to manipulate with low volume coins.




Scam accusations are thrown around with abandon in cryptocurrency.

Personal grievances with a distribution model or concerns of technical prowess are put on the same level as lack of transparency and stolen assets.

Still, there are situations in which you can say without a doubt: there is nothing there. These people are here to take your money and run.


There are two such scams in the top20 list of Coinmarketcap, as of July 29th 2017. Before you scroll down, go have a look right now and try to see if you can figure it out.


Gun optional.


All done?


Locked in your guesses?


Let’s get to the big reveal…





Not to be confused with Bitcoin Cash, BitConnect sits at the #12 spot with a market cap of $400 millions and a daily volume of $3 millions.

Those numbers aren’t abnormal in themselves.

But if you inspect the markets this crypto is traded on, a different story comes to light.



90% of the volume is traded on their very own exchange.

The remaining scraps are on Livecoin, Novaexchange, CoinExchange… Exchanges known for adding cryptos of dubious value.

We also see none of the slightly more “reputable” exchanges such as Kraken, Bitfinex, Poloniex, Bittrex, Liqui.


This already looks bad for a top20 cryptocurrency. Time to take a look at their website and announcement to see what this BitConnect thing is all about.


From the bitcointalk announcement topic:

BitConnect coin is an open source, peer-to-peer, community driven decentralized cryptocurrency that allow people to store and invest their wealth in a non-government controlled currency, and even earn a substantial interest on investment.”

BitConnect coin can be bought and sold both online and offline. However, the most popular way is to exchange them on crypto currency sites where you can buy, sell or exchange BitConnect coin for another digital currency or fiat money.”

“The moment you acquire BitConnect Coin it becomes an interest bearing asset with 120% return per year through PoS minting.”


That’s it. That’s their whole value proposition. “Buy BitConnect and you’re going to make tons of money”. They’re not even bothering to come up with reasons this cryptocurrency should appreciate. It’s just going to work. All you have to do is believe…

…believe if it quacks like a Ponzi scheme and looks like a Ponzi scheme, it’s probably a Ponzi scheme.


The website linked in Coinmarketcap,, doesn’t offer much more information. It’s a standard business landing page, and the various links bring you to pages giving a general air of incompetence, but not outright malevolence.

But something interesting happens if you put “bitconnect” in a search engine. The first results direct you not towards, but A much more active page, encouraging you to “invest in bitconnect lending”.


Up to 500% per year? +0.25% daily? Boy oh boy where do I sign!


And there’s the Ponzi.

Buy BCC with your hard-earned BTC, then lock out those BCC for half a year.

Get paid from the next suckers, until the money flow dries up and the founders run with what is left.


Bitconnect has been outed as a scam before. No amount of proof discourages commenters from vehemently arguing the venture is legit. Ponzi scams are viral and target vulnerable people, a combination making them hard to defeat in unregulated markets. Every new “investor” has incentive to promote the platform no matter what, as their money is locked in.

The writing is on the wall. Those behind Bitconnect will exitscam at one point as the scheme collapses under its exponential need for new money, likely before 2018. Any “investor” joining in now will be left holding worthless tokens.

Stay away, and ignore the poor souls stuck in purgatory.


“After BitConnect, this isn’t so bad…”






A lower profile project, Veritaseum currently holds spot #20 in the Coinmarketcap ranking. It boasts a market cap of $280 million USD, and a daily volume of $620,000. Small volume, but not unreasonably so at a passing glance.

Next step: a look at the exchanges it’s traded on.

Looking this up is a good idea for just about any cryptocurrency. Most legitimate projects are listed on Bittrex, Liqui, Bitfinex, Kraken or Poloniex.

This is NOT an endorsement of these particular exchanges. Regardless, these exchanges tend to have higher standards for listing coins.

Coming back to Veritaseum, here’s what we see.



95% of the volume coming straight from EtherDelta, a decentralized exchange where anyone can put their own ERC20 token.

Those of you paying attention might remember a “thought experiment”. Turns out it isn’t so hypothetical.

With Bitconnect, we’ve had an example of a scam relying on anonymity and crowds. Here’s the opposite scheme.

Veritaseum is the brainchild of one Reggie Middleton. Leveraging credentials in finance and media appearances, he presents himself as a trusted authority. Lost in this confusing world of cryptocurrencies? Reggie’s got your back. Reggie was on TV. Reggie predicted the housing crash. You can trust Reggie.


Cute slogan, phone number, gold coins. The trademark boomer bait.


Their team consists of Reggie himself, one Polish programmer who lists another company as his main source of employment, and a faceless advisor.

Their Twitter (@Veritaseuminc) is a stream of comments on Veritaseum’s price.

The main output of the Veritaseum team consists of endless Youtube videos featuring Reggie telling you Veritaseum is awesome.

The Veritaseum coin is a bog-standard ERC20 token, without any clear purpose nor any kind of work being done.


When you buy VERI, you are buying nothing. This is a one-man personal brand marketing campaign.


An image search for Reggie Middleton gives this picture as a result.


On the bright side, unlike an actual Ponzi there’s no pressing reason for Veritaseum to exitscam. Reggie’s bot regularly pumps up the price on EtherDelta by buying his own coins, triggering fear of missing out in a few people who join in. This can last for a long while, given most of the supply is owned by the Veritaseum team.

Think of it as another Bitcoin dice game, except your odds of winning are 1 in 10.


You’re spared the Jim Carrey meme this time, but don’t buy VERI or else…





Market cap based rankings aren’t to be blindly trusted.

Volume is an indicator. So are the exchanges trading this coin.

+40% daily uptrends are bad investments. If it seems too good to be true, it probably is.


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