It is no secret that the cryptocurrency industry is fraught with scams. Some of the more high-profile bitcoin scams–such as Mt. Gox–receive mainstream press coverage and reinforce the misguided stereotype that criminals are bitcoin’s primary user group. Many in the Bitcoin community are understandably worried by this. However, Austrian economist Jeffrey Tucker sees a silver lining Tucker says the proliferation of bitcoin scams is actually a “bullish sign” for the bitcoin industry because scams tend to coalesce around budding industries with explosive potential.
Economist, author, and frequent Bitcoin conference speaker Jeffrey Tucker ruminated about scams in a blog post titled “A Theory of the Scam.”
Concerning a conference I’m attending in two weeks, a huge controversy has broken out about one of the 50 or so speakers. Many people think he is a scam artist, a guy who came up with a new cryptocoin as part of a Ponzi-like pump-and-dump scheme.
Tucker, of course, is referring to the controversy revolving around GAW CEO and PayCoin creator Josh Garza’s presence at the upcoming North American Bitcoin Conference in Miami. Some in the bitcoin community believe the coin is a scam and that allowing Garza to market it at the conference hurts bitcoin’s credibility (and the cryptocurrency industry at large).
While neglecting to debate PayCoin’s validity, Tucker says that while scams abound in the bitcoin space and negatively affect many people, the community should recognize a silver lining.
But let’s ask a deeper question: why are scam artists so attracted to Bitcoin? The answer is actually flattering. Scam artists are the evil cousins of genuine entrepreneurs. They are alert to new opportunities. They are attracted to ventures that are popular among the smart set. They are profoundly aware of what people imagine to be the next big thing. Their interest in Bitcoin, then, is actually a bullish sign. I would be more worried about this market if scam artists were not interested in it.
He evidences the wide variety of scams present during the advent of the internet, railroad, and home “mini-library” industry. Although they produced a myriad of negative articles in the press, the presence of scams did not prevent those industries from thriving. Rather, they highlighted the massive potential behind these industries. Tucker believes the same is true of bitcoin scams.
So the next time a bitcoin exchange CEO disappears with client funds, a mining company mysteriously ceases miner payouts, or scammers find a way to manipulate a legitimate bitcoin service, it’s okay to express outrage and concern. But once the initial anxiety passes, remember Jeffrey Tucker’s observation that the continuing proliferation of bitcoin scams indicates the industry is brimming with potential.
Images from Wikimedia Commons and Shutterstock.
Last modified: March 4, 2021 4:42 PM