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Homepage / News November 28, 2017 250 views

Crying Wolf? Why You Can&#039t Ignore Crypto &#039Scam&#039 Accusations

Crying Wolf? Why You Can&#039t Ignore Crypto &#039Scam&#039 Accusations

Marc Hochstein is the managing editor of CoinDesk and the former editor-in-chief of monetary business publication American Banker.

The following opinion piece originally appeared in&nbspCoinDesk Weekly, a&nbspcustom-curated newsletter delivered each Sunday, exclusively to our subscribers.

As youngsters, we all heard the story of&nbspthe boy who cried wolf and learned that the moral was not to raise false alarms, or else no one particular will believe it when you report a genuine emergency.

But there’s one more, much less clear and much more unsettling lesson of the fable. It is the takeaway for the&nbsprecipients&nbspof a distress contact (the villagers in the story):&nbspEven if someone pulled your leg&nbspin the previous about a supposed clear and present danger, there is nevertheless the possibility he might be dead serious&nbspthis time. So if you write him off simply because of his track record, there’s a chance your sheep will be devoured.

This is a large difficulty for any individual attempting to basically&nbspmake sense of the crypto space, significantly significantly less make money in it.

Everything’s a scam

Bitcoiners, specially bitcoin maximalists, have a habit of calling something they find a little dubious, or that they simply&nbspdon’t like, a “scam.”

It’s a significant charge – fraud is a crime, after all, punishable with jail time – but on Twitter and in crypto forums it gets thrown&nbsparound like higher college kids in the locker area calling every other dorks and losers. Although, to be fair, the “S” word is occasionally&nbspused in a way that’s unmistakably&nbspplayful.

In a footnote to his hilarious and believed-provoking 2014 essay “Everyone’s a Scammer,” Michael Goldstein of the Satoshi Nakamoto Institute writes,&nbsp”‘scammer’&nbspis a heuristic, not an accusation.”

If you believe bitcoin is going to the moon, as Goldstein does,&nbspthen a merchant who accepts it is a scammer, even if her alpaca socks are as warm and cozy as advertised, and a HODLer seeking to buy it off you is a scammer as well, even if the fiat he’s providing in exchange is real.

A scam, in this broad definition, is any attempt to part you from your bitcoin.

Yet another way to believe about this concern&nbspis that maybe telling mom-and-pop investors&nbsp”all altcoins and ICOs are scams”&nbspis the equivalent of telling children that porcupines shoot their quills.&nbspIt’s not actually correct, but if they believe it, they’ll steer clear of a hazard and you are going to have completed a mitzvah.

In crypto, these hazards might contain undesirable tips pursued in earnest, very good suggestions poorly executed and outright&nbspscams. Some argue that the first two categories may well as properly be subsets&nbspof the third, for all sensible purposes.

Risk of defamation

That is all nicely and very good for the Wild West of crypto, but&nbspin civil society, the word “scam” implies an intent to deceive. Calling somebody a scammer can damage that&nbspperson’s reputation (unless, of course, the charge is leveled so typically, at so many people, that no one particular offers it much weight anymore). Without having solid&nbspevidence, the label&nbspis potentially defamatory.

It really is feasible to raise doubts about an notion or business model, or a team’s ability to execute on it, with out jumping straight to fraud accusations.&nbsp(At times these lines of inquiry may well ultimately lead to the uncovering of fraud&nbspone of the 1st articles&nbsppoking holes in Enron’s facade&nbspmerely recommended that the company’s company was overly complicated and its stock overpriced, understatements in retrospect.)

But&nbspa 4-letter insult is the easiest way to make oneself heard in the shouting match of online conversation, which I suspect is another cause&nbspwhy it gets utilised so casually.

Plus,&nbspif the CEO of the largest bank in the U.S. can call bitcoin a fraud, while his institution is developing a private blockchain based on ethereum (a protocol that&nbspprobably would by no means have existed with out bitcoin), then why ought to anybody bother picking&nbsptheir words very carefully?

Wolves not far

Getting back to the villagers who ignored the shepherd boy, although, there&nbspare&nbspa lot of dodgy schemes&nbspin this space.

Just this month, a startup raised $374,000 through an initial coin offering on ethereum, then&nbspdisappeared, according to Vice. There is a lengthylistofstorieslike that.

Typically the initial individuals to query the&nbspoperators&nbspare the same ones employing histrionic language on other topics. Which signifies that you can’t just shrug your shoulders and roll your eyes when the trolls cry “scam.” Sometimes they are right.

Sorting the signal from the noise might be harder in this industry than practically anywhere else.

Wolf image through Shutterstock

The leader in blockchain news, CoinDesk strives to offer you an open platform for dialogue and discussion on all things blockchain by encouraging contributed articles. As such, the opinions expressed in this write-up are the author’s own and do not necessarily reflect the view of CoinDesk.

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Published at Mon, 27 Nov 2017 22:22:33 +0000