My first big boy job was at TSYS back in September of 2011. I was still in school as a super senior, but also working practically full time on prepaid card systems. Back during the early prepaid card era, we saw some crazy things…unsurprising though given the amount of people who are “underbanked”, even in the 20 sq. mi radius of the office. As the world turned, I learned the plan of using KYC to create another layer of capital controls on top of prepaid cards. In the name of anti-terrorism of course. In 2013 I could no longer bring myself to care to contribute anything or even collect a paycheck from the company, so I quit.
Let’s see what an average scam in Bitcoin looks like today. For reference we will use this Reddit post from a known scammer. A complete newcomer clueless as to where to ascertain real knowledge will likely fall for such a scam.
The previous tight “lockstep” correlation between Bitcoin price and volume ended in late 2014 – with the price now dipping/lagging below the level predicted by Metcalfe’s law.
First we see the utilization of pseudoscience as evidence to a claim. Con artists usually use scientific sounding theories to back their con.
Metcalfe’s Law was debunked earlier, and it has even been postulated that connections in a network such as Bitcoin can detract from the system’s value. Using this as evidence for a claim ignores the existence of scammers and malicious actors. In this case the real scammers are ignored since they are too difficult to see for the average derp, and instead more visible and less malicious scammers are targeted instead.
Delusional consumers in revolt of the mass adoption variety, often utilize pseudoscience to advance their agendas. Voices have formulated pseudoarguments in such quantity it has become a disservice to the endearing novice seeking actual education. One of these psuedoarguments involving the debunked Metcalfe’s “Law”, has resulted in an endorsement of scamming. Hopefully, showing the failed application of this pseudoscience in Bitcoin, will allow for the endearing novice to understand the dangers of becoming too friendly to scammers.
Now for the pseudoscientific argument:
Well, I wasn’t the first one who said that. I[t] was some guy named Metcalfe. And as I already mentioned, “Metcalfe’s Law” has functioned pretty good up until now for Bitcoin – showing that, yes, more people does mean more value – despite the fact that you for some reason refuse to believe that.
Building policy around this logic in Bitcoin will inevitably lead to an influx of scammers that prey on weak novices. Unfortunately many have placed confidence in this flawed advice.
A scam is a scam by any other name, and unfortunately the Ethereum Central Bank fully endorses and runs on scams to keep ether huffers addicted. The company behind The DAO fiasco, Slockit, is one of core hype units for the Ethereum bubble. Their promise of their so-called “Slock” has investors drooling for no reason other than use of the word “blockchain” in the description. The DAO fiasco proves Slockit is ignorant of scammers to the point of enablement.
Usually when one doesn’t acknowledge the existence of scammers in relation to a business model, the business itself usually unfolds into a scam. The government’s solution to scammers is retroactive coercive force – putting one in prison for fraud after the fact. Bitcoin facilitates a mindset where one honors contracts because it’s the right thing to do, while acknowledging the existence of, and identifying scammers without the use of coercive force. As with children and their parents, trust must be earned. When one knows what a Web of Trust is and how it works, scammers are caught in a self-imposed filter, while building relationships with trustworthy peers over extended periods of time – business as usual. Read more…