Altcoin enthusiasts are increasingly operating in a bubble that encourages this kind of behavior. This quote captures the essence of it all:
> “Everybody I know has gotten rug-pulled,” says Titus, a 38-year-old butcher in Salem, Oregon. “You know, you win some, you lose some. Hopefully, win more than lose.
I don’t know anyone who has been “rug-pulled” by a scam coin. It’s amazing that a butcher shop employee can end up in such a bubble that they think everyone around them is also participating in scam coin sales that end in exit scams.
This is the “but everyone’s
doing it” mentality that is used to normalize unhealthy behaviors. I’m sure the altcoin sellers are using this to their advantage.
>JOE KENNEDY, a famous rich guy in his day, exited the stock market in timely fashion after a shoeshine boy gave him some stock tips. He figured that when the shoeshine boys have tips, the market is too popular for its own good, a theory also advanced by Bernard Baruch, another vested interest who described the scene before the big Crash:
"Taxi drivers told you what to buy. The shoeshine boy could give you a summary of the day's financial news as he worked with rag and polish. An old beggar who regularly patrolled the street in front of my office now gave me tips and, I suppose, spent the money I and others gave him in the market. My cook had a brokerage account and followed the ticker closely. Her paper profits were quickly blown away in the gale of 1929."
Are we at the same fatal stage in the market today, when people who aren't expected to have stock tips have stock tips, including hot dog vendors, shoeshine boys, the homeless, pedicurists, barroom dancers, toll takers, and the trumpet player at the racetrack?
Probably not, I'd argue that the internet just allows people to more easily be sucked into these sorts of information silos.
The total crypto market cap is just over 1 trillion usd(depending on who you believe) and global equities market cap is nearly 100 trillion usd. I'm not that concerned so long as these low info investors stick to cryptos and meme stocks.
Shoeshine boys in the 1920s did not have access to 10-Ks at a press of a button like they would now.
Also, with crypto, there is no point in doing due diligence because the coins in question could disappear tomorrow due to a rugpull or code vulnerability, which no amount of 3rd party DD could know. That's why everyone chases fast gains.
> Who in their right mind invests in dog-named coin created 1 day ago?
I guess that at least 2 types of people. On one side you have the pump-and-dump experts, they buy early and then promote the new crypto-coin. The second type are the wannabe, people that see some new crypto-rich guy in the news and feel that they are losing an opportunity. People that have no knowledge about what a crypto-currency really is, that is not interested in long-term but need money now, people that listen to the pump-and-dump group to get their information. YouTube, Twitch, ... are bringing complex speculation devices to average citizens.
I would blame the lack of regulation and the lack of public education.
There’s a third category: gamblers. Not problem gamblers. Just people who play with this stuff instead of lottery tickets. Worst case, they lose a few hundred bucks and gain a funny story.
> This is not different from "penny stocks" investing and GME-style investing or gambling
Lets talk about GME style gambling.
GME has now used the proceeds from its secondary-stock offering to take money from investors, and buy Amazon executives, in preparation for GME's rebirth as an online webstore / distributor of video games.
I don't believe GME will be successful. But the stock market CAUSES companies to do things: to invest into new opportunities. As dumb as the GME-investors are, people are working to make their dream a new reality. And now GME has a few billion $$$ to rebirth itself into a digital marketplace.
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The same is NOT true for these stupid altcoins / scamcoins. People are sinking their money into a thing (I don't even want to call it a security) that has no value or way to convert itself into usable work.
That's the thing about the stock market: if your stock price flies high enough, you can SPO or IPO and use that money to do something useful.
That's the thing about "gambling on stocks", it actually causes something useful to happen. Now I think GME is still a bad investment (Even with their newfound $Billions, I don't think they're going to make that money back for their investors). But the mechanisms of the stock market are in fact working well.
Money has been taken from funtime gamblers and it has been channeled into a useful activity (the rebuilding of GME into a digital marketplace) with a non-zero chance of success. If it ends up being a success, those who spent money on GME's stock price will be holding onto tickets (stocks) representing their ownership of that bet.
This is how crypto is different from prior financial bubbles. In a financial bubble, people buy regulated securities thinking "they can only go up!". They lose money because the mania fades before they're able to sell.
With crypto, there is so much scammy behaviour around you, you have to go in with the mindset that you're one of the smart ones that will get in early and cash out before the inevitable rugpull.
I don't think that's particularly new. There's a long standing saying "You can't cheat an honest man", and it's very topical for long cons to make the mark believe that the objective is to swindle a third party.
Many, though not all 419 solicitations also hint at an illicit source of the purported money, and explain the advance fees demanded with bribes, etc to be paid.
Crypto's even better because shovel buyers at least inspect the product before making a purchase. Crypto hodlers are already primed to think that this new shovel is better than all the others before it.
It's a market with very asymmetric returns. If a typical rug pull results in millions but the typical victim is out hundreds, then there must be 10,000 victims for every winner.
This is 2017 all over again, back then it was worthless ICOs, now it's fake defi projects or meme coins doing the same. It attracts the same kind of people too, quick money chasers and ends up with relatively same results, large losses for most.
I completely agree. The trick is the same, create a complex product that is going to make it hard to regulate and sell it to unsophisticated investors that are blinded by the rapid initial gains. When it explodes let others fix the resulting mess and run with as many money as you can.
The only good part is something as fundamental as homes is not part of the schema. I hope that this reduces the size of the impact in the general economy.
This is a point that's understated. Problems in the stock market hurt the real economy, problems in the crypto market hit an insular community of people who are trying to scam each other, much less of a societal issue.
An ethical way to make money is to give products of your work to other people in exchange for their money. Cryptocurrencies produce nothing and satisfy no needs. Crypto traders take other traders' money in exchange for what? A hope that in future it will be possible to take more money from yet other traders? Crypto traders should not cry that they are victims of a pump and dump scheme because it is the same thing they wanted to do to others. I have no sympathy for them at all.
The problem is that crime, like anything else is an ecosystem. If the ecosystem gets a lot of funding they will become more sophisticated. Who knows where this money is going? It is probably not going to people with a lot of morals.
Safermoon.net is aiming to put an end to the rug-pull nonsense with a launchpad to easily create tokens that are genuinely secure.
I don't know if there are other projects like it but something should definitely done to avoid regulation that could mess up cryptocurrency altogether.
> “Everybody I know has gotten rug-pulled,” says Titus, a 38-year-old butcher in Salem, Oregon. “You know, you win some, you lose some. Hopefully, win more than lose.
I don’t know anyone who has been “rug-pulled” by a scam coin. It’s amazing that a butcher shop employee can end up in such a bubble that they think everyone around them is also participating in scam coin sales that end in exit scams.
This is the “but everyone’s doing it” mentality that is used to normalize unhealthy behaviors. I’m sure the altcoin sellers are using this to their advantage.