No, Bitcoin can not be rug pulled simply because Bitcoins found have already disappeared from the scene a long time ago. And Satoshi Nakamoto (Bitcoins founder) Did not own all the Bitcoins, Nor did they control the network.
For a project to be rug pulled, it needs to be able to be rug pulled. Bitcoin is and has always been resistant to this because of its decentralized nature. The whole network behind Bitcoin was never built up in a way that collects money first and comes with results later. No, Bitcoin works by a POW (Proof Of Work) system that makes it come with work and results first and money later. This is exactly what makes Bitcoin so different from many other Altcoins, and is what will keep it moving forward for quite some time.
But let's dive deeper into what a rug pull is, what makes Bitcoin immune, and how crypto rug pulls happen with other altcoins.
What is a rug pull?
A rug pull in the crypto space is usually simply explained as the project founders running away with the funds from the investors. You see many crypto projects raise new capital at the beginning of their project's journey. In return, they provide their investors with a token linked to their future products. Very often, investors already receive and trade these tokens before the project even delivers a glimpse of their product. And sometimes there is not even a product.
This is where scammers pull the rug, so to say. They do this by simply not delivering on their promises and not spending any of the investor's money on the needs and development of the project. Instead, they probably spend it on themselves. Buying nice cars and vacation homes, and leaving the investors with nothing.
A rug pull, especially in crypto, are simple scams that many people fall for and keep falling for. They are hard to recognize sometimes, as people put their trust in people or companies that they shouldn't trust. These scams are typically disguised as tokens for real-looking projects like wallet scams, or exchange, scams. But often they just jump on trends, like AI, DeFi, or gaming.
What makes Bitcoin immune from being rug pulled?
What makes Bitcoin immune from being rug pulled is the simple fact that it never had an ICO (Initial Coin Offering). AKA, Bitcoin never raised any money. In the early days, there were only 2 ways to get your hands on some BTC, and that was to either mine it or buy it from someone who mined it. Although, people could buy in and they still can by simply buying Bitcoin. The process of creating Bitcoin (AKA mining) would cost some electricity, computer power, and work. Making the process of getting Bitcoin not as simple as just investing, instead, miners would have to power the network that keeps Bitcoin running and in return, they would be rewarded. This makes it so that the Bitcoin network gained strength and functionality first, and miners would be rewarded after.
Although Bitcoin did have an anonymous founder, this founder never controlled much of the network. But does still have a lot of dormant coins. Still, the Bitcoin network does not care about how many coins you own, as it does not help you increase your level of influence over the network. Making it so that the Bitcoins' founder currently has the same level of control over the network and its value as you, or I have.
How does crypto get rug pulled?
Crypto projects most often get the rug pulled by their founders that simply get the money and run with it. This whole process of pulling the rug is absolutely not legal. But because crypto is not regulated in many places, the oversight on projects that scam people is very little.
Each project that had its rug pulled went slightly differently. But most of them play around with the same theme. The project first raises as much money as it can, then they give their newly created (worthless) token to their investors. They wail a little for investors to start trading and sometimes to see if the price goes up or not. And then when they think the time is right, they might dump their own tokens on the market. Making even more money on top of the cash they already raised.
Depending on the project after, they drained as much money from their investors as they could. Often the project either runs right away or comes up with an excuse for why they can not continue the project. Some founders also run overseas to already prevent themselves from being caught by the local authorities and live a rich life in some other country on the beach.
Projects like this are simply scams, but because they are easy to pull off, they happened a lot. Making it more important than ever to do a lot of research about a project before ever investing in it.
Can you get your money back on crypto rug pull?
No, if you invested in a crypto project that was rug-pulled, you will not get your money back. I'm sorry to say, but if this happened to you, you have been scammed. At this point, little can be done to retrieve your money, and the best action to take right now is to report it to your authorities.
Sadly because of the lack of regulation and the poor abilities of some law enforcement authorities, many scam founders never get caught and will not have their stolen money ceased. And as long as this doesn't happen, there is no way for you to get your money back.
When it comes to rug pulls, it is thus more useful to prevent falling for them than it is to try to get your money back. Nevertheless, you should always try to not fall for them as well as seek justice for the crimes that have been committed against you and others that got scammed.
How to recognize a rug pull
It is impossible to be 100% sure in crypto that a project is not a rug pull. But there are some indicators that we can look at that make a project less likely to be one. These indicators are:
- The team shows their identity
If the team does not show their identity for whatever reason, this is a straight red flag. Projects that are fully anonymous are in an easy position to scam you.
- The project is registered with the correct authority
When a project is registered with the right authorities, this gives you some oversight and control that you are not being scammed. Not only because they should have been checked by this authority, but also because they will be registered with their real identity.
- They already have some form of product
If there is already a product, instead of having to wait to see one being created. You already know that there is a team that is actually building something and has experience doing so. This makes it less likely for them to scam you, as they clearly have the abilities and skills to build something.
- The team is active and has a track record
Scammers are often lazy and do not come from a background of previous successful projects. That's why it's a good indicator when the project is active in their development and their social interaction.
Conclusion
Although Bitcoin can not be rug-pulled, many other crypto projects can. So please make sure that you navigate safely around these projects and prevent BTC theft. And you do not get scammed unnecessarily. Because this can be difficult, many people stay with Bitcoin only for many reasons, of which one is that they know it can't get the rug pulled in the future either.
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