How to Spot a Fake Token using Blockchain Explorer
It is unfortunate that many associate crypto with frauds and scams, thus thinking the entire crypto thing is a ginormous ponzi scheme. For those who delve deeper than that, they can see that is absolutely not the case.
However, this does not preclude the fact that there are lots of scams and fraudulent activity out there that one need always guard against.
In this issue, I’ll show you what are the key things to look for to check the validity of a token. If anyone says they will send you a token, always check that what they are sending you is the real thing, hopefully before you put any money in it.
Fake vs Shit token
You might come across mentions of certain tokens referred to as “shitcoins”. Not wanting to discount the derogatory meaning behind it, the term is colloquially used to refer to any token that isn’t Bitcoin or Ethereum, in its more narrow definition. These are bona fide tokens representing a project that is worked on by a team of individuals with the aim of offering something of some use to someone in this world.
During a bull market, these tokens might also net you some of the more explosive gains you’ve heard of. They can be found on the back pages of a market aggregator like CoinGecko. These projects are usually at their earliest stages and have a long way to go to prove its viability and stability. Many don’t survive and die and early death, rendering the tokens useless once the project has been abandoned.
Fake tokens are different. These are designed with the sole purpose of making the user think it’s the real thing but it’s not. Stable coins such as USDT, USDC etc. and known tokens like ETH are usually the targets of imitators.
Real vs Fake token
The handiest way to check whether a token is real or fake would be on a blockchain explorer like Etherscan. Quick note: a blockchain explorer is a webpage where all the transactions that happen on the blockchain is presented so that anyone can have access to the transaction details. Etherscan is used to see all transactions made on the Ethereum blockchain.
Telltale Signs
The image above shows how a real and fake token would appear on the blockchain. Two points of note:
A colored logo for the real token
A dollar value associated with the number of units for the real token.
For context, this is where the information above came from in the blockchain explorer:
When you want to find out what happened to a transaction, you enter the transaction hash in the search bar of the blockchain explorer, and a page similar to the above will appear.
Seeing that grey icon with no dollar value next to it is a pretty sure sign that this is a fake token you are dealing with. In this case, the fake token pretends to be the real Tether USD (USDT).
When you click on the highlighted link of the token’s name, it will bring you to the token’s contract address page. This is where information about the token is located, including all transactions involving the token.
Let’s compare the same information with the real USDT:
Key points
Blue checkmark next to the token indicates this is the real deal.
Max Total Supply - technically there is no limit to the number of USDT tokens because these are issued as they are exchanged for real USDT.
Holders - the number of people holding the token on the Ethereum blockchain. This is a dead giveaway as this number can’t be inflated.
Total Transfers - the transactions involving the token on the blockchain. Note that this refers only to the ones made on that particular blockchain, not all transactions involving the token.
USDT is transacted on a number of blockchains, so each blockchain explorer will have their own number of transfers.
Price - there is no price for the fake token because it’s worthless.
Fully Diluted Market Cap - this figure is obtained by multiplying the Total Supply with the Price.
I’ve collected a few more examples of what a fake token would look like on different blockchain explorers:
How do Fake Tokens Appear?
There are numerous ways how fake tokens can appear in someone’s wallet and I certainly don’t know all of them. Two I can think of are:
Participation in an investment scheme (“scam”) whereby the participant is given assurance of juicy yield for the capital provided. The yield is in the form of fake tokens.
Malicious actors airdrop fake tokens into wallets. When the wallet holder interacts with the fake token, it might trigger something that leads to the wallet getting drained.
Suffice to say, it’s a really crazy world out there. I hope this article is of use in helping you detect what a fake token looks like. Please stay safe and take care when navigating the sometimes treacherous waters of the crypto world.
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