
Scammers Using Fake News to Screw with Bitcoin Investors - pgrote
https://www.buzzfeed.com/ryanmac/heres-how-scammers-are-using-fake-news-to-screw-with-bitcoin?utm_term=.hudE0Br1Z1#.buz6Np54A4
======
Theodores
I think the bigger danger is from groupthink expectation that the coin markets
follow a boom-bust on an annual basis due to the Chinese New Year. They see
now as a good time to pick up cheap coin from Asia. They expect to be 3x up in
the Autumn and to ride a wild ride up next Christmas to come crashing down in
the Chinese New Year.

These people believe there are only so many coins and that it is these coins
that have value, regardless of how much they are worth in USD. For them it is
how well their coin compares to bitcoin that matters. They think they can ride
out any crash as they are 'bound' to be 10x up next year as more people start
using crypto to store their wealth.

I do not believe that most people giving bad advice on coin are deliberately
giving bad advice or aware that their advice is founded on poor information,
fear and greed.

In this environment there is a frenzy to get in on the next ICO so scammers
don't have to try very hard to scam.

I can see that a bitcoin miner has put together a business model and with that
some risk management. They calculate the ROI and hopefully they get the
numbers right and profit after paying off the kit.

However, I do not believe most coin 'investors' are doing risk management
properly, they are like a herd of naive day traders from the 1990's losing
their savings but getting ever more coin, thinking they are up because one of
their coins is up against bitcoin.

It is not so much the scammers but the echo chamber and the FOMO that is the
problem here.

~~~
justaman
There are hundreds of coins out there. 99% of them will fail. Even the 1% is a
silly investment when compared to physical gold.

~~~
rdlecler1
Can you justify that? Other than jewelery and some industrial purposes what
makes gold so valuable?

~~~
ggg9990
Gold is more valuable than cryptocurrency because 1) for a “by acclamation”
store of value, the thousands of years and billions of people who recognize
gold as an asset is a big advantage, and 2) you can’t make “forks” of gold
unlike Bitcoin Cash, Dogecoin, etc.

~~~
andrewla
What's funny about this comment is that literally every extent currency in the
world is a fork of gold.

~~~
vkou
Yes, but unlike Dogecoin, those currencies have an army, a navy, and a tax
collection office to give them value.

~~~
Casseres
I read a comment on Reddit where some people were speculating about the future
of their coin. (This is a coin with "masternodes" that vote on how to spend a
discretionary mining tax.) They speculated that one day they might vote to
hire mercenaries to protect the coin's value.

~~~
vkou
At the point that you need to hire mercenaries to protect your coin's value,
why not just use them to rob people, or extort protection payments?

~~~
Casseres
I don't know, and I'm not sure how mercenaries would affect the coin's value,
but the thought is scary, and it offers a potential counterpoint to the
comment about coins not having militaries giving them value.

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ravenstine
These are really old scams – it's just that they're now being applied to a
different market.

~~~
JumpCrisscross
> _These are really old scams – it 's just that they're now being applied to a
> different market_

Bitcoin is the Conquistadors landing on the Americas and decimating the
natives with foreign diseases.

Mainline markets had pump and dumps. People got wary and regulatory
institutions were born to fight the malaise. The regulators were successful.
Pump and dumps are largely unheard of in large-cap U.S. equities. With the
threat neutered, common memory faded.

Blissfully unaware, investors relinquished the protection of their regulators,
cursing them as they shut the door, and wandered out unprotected and unwary.
Almost without delay the entire menagerie of foul schemes emerged: pump and
dumps, exchange failures, ticker painting, Ponzi schemes, _et cetera_.

~~~
wu-ikkyu
>The regulators were so successful that pump and dumps are largely unheard of
in large-cap U.S. equities.

Wasn't the 2008 stock market crash caused by the housing market being "pumped
and dumped"?

~~~
FLUX-YOU
Not really, that was much more of a systemic issue, so it's difficult to point
to one entity responsible. Those problems built up over years.

Pump and dumps by contrast have a much shorter time frame.

~~~
wu-ikkyu
So if a pump and dump gets big enough and goes on long enough, it can't be
described as such? Even though the price was artificially inflated and
investors were fed false information?

~~~
tikkabhuna
In a pump and dump scheme, usually an actor owned the instrument that was
being "pumped". In the 2008 crisis, there were a large number of groups that
was benefiting from the situation. A guy on Wall Street didn't own the houses
that were being bought, nor was he directly lending the money for them.

~~~
wu-ikkyu
>A guy on Wall Street didn't own the houses that were being bought, nor was he
directly lending the money for them.

Right, it wasn't "a guy", it was banks like Goldman Sachs.

My question remains: if a pump and dump scales up to where "a large number of
groups" benefit, rather than just "a guy on wall street", is it no longer
considered a "pump and dump"?

~~~
Goronmon
What would you consider being the "dump" side of the housing market collapse?

~~~
wu-ikkyu
The housing market itself. All the people who lost their houses, jobs and the
lost life savings and pensions which were invested in said market.

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zerostar07
These are happening literally all the time, mcaffee's name has been used to
pump a few of the coins but its not that effective anymore. there's a tool to
spot them [1]

[1] [https://coinzaa.com/tools/](https://coinzaa.com/tools/)

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thisisit
This happens even in real markets let alone cryptocurrencies. You will find
people pumping stocks on news that it might be bought by Amazon or something.

~~~
prklmn
That’s true, but pumping and dumping is indeed co sidered securities fraud, so
there’s an incentive not to do it in the stock market. Cryptocurrencies aren’t
considered securities by definition, so it’s open season to whoever would like
to participate in market manipulation.

~~~
JumpCrisscross
> _Cryptocurrencies aren’t considered securities_

This has not yet been decided [1][2].

[1]
[https://www.bu.edu/jostl/files/2016/01/21.1_Alberts_Final_we...](https://www.bu.edu/jostl/files/2016/01/21.1_Alberts_Final_web.pdf)

[2]
[http://apps.americanbar.org/buslaw/newsletter/0014/materials...](http://apps.americanbar.org/buslaw/newsletter/0014/materials/investmentch2.pdf)

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KasianFranks
This has been happening with stocks for quite some time e.g.
[https://en.wikipedia.org/wiki/Timothy_Sykes](https://en.wikipedia.org/wiki/Timothy_Sykes)
which included bots, astroturfing and fake soc net profiles.

------
payne92
There's an adage in poker that's applicable to crypto trading: if you don't
know who the sucker is at the table....it's probably you.

~~~
klenwell
One of the plot points of The Big Short that I found interesting was Mark Baum
character finally discovering who was on the other side of the swap he buys
from Jared Vennett at Deutsche Bank. And then you had the whole Florida
subplot showing how the housing bubble entangled people all the way down the
food chain.

I'm still not clear who the suckers are in these cryptocoin markets that are
driving up the price. I'm starting to hear stories about barbers and janitors
and friends of friends buying in. I guess it got popular enough in South Korea
that the government had to step in.

How mainstream has crypto trading gone? Who are the suckers?

~~~
stingraycharles
> How mainstream has crypto trading gone? Who are the suckers?

I would say it's the early majority now. But it has reached the point where I
see people following crypto stocks in the train regularly, and apparently all
of my non-techie friends (teacher, historian, etc) all own a small chunk of
crypto stocks now.

~~~
alanfalcon
“Stocks”

That’s such an unfortunate metaphor for crypto.

------
wils1245
The decentralized nature of cryptocurrencies means that implementing
countermeasures to market manipulation is severely hampered. It's a fatal flaw
of to the idea of cryptocurrencies as something socially useful.

------
omegbule
This is also called having 'weak hands' by the cryptocurrency community.

------
simias
Offtopic pet peeve: I'm really annoyed that "Fake News" seems to have replaced
the perfectly cromulent "disinformation". What's worse it's even commonly used
as-is in french as well, because apparently it's still cool to drop random
english words while speaking french.

~~~
tdb7893
Is there some reason that I'm seeing the word "cromulent" more and more now?
(for those not in the know the word is originally from a Simpsons episode in
the mid 90's)

~~~
ghostbrainalpha
I think the trend you are noticing is real. Simpson's memes and shit-posting
is on the rise everywhere.

A Bart Simpson joke was a MAJOR part of this weeks Saturday Night Live.

(This Aussie Rapper’s ‘Simpsons’-Referencing Track Is Cromulent AF)
[http://www.moshtix.com.au/v2/news/musicnews/this-aussie-
rapp...](http://www.moshtix.com.au/v2/news/musicnews/this-aussie-rappers-
simpsons-referencing-track-is-cromulent-af/7028)

What I don't understand is the EXTREME uptick in "cromulent" from Google
Trends on May, 28th. If someone with stronger Google-Fu could figure it out
that would be cool.

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ska
s/investors/speculators/g

~~~
exolymph
Speculators are a type of investor.

~~~
inanutshellus
and, being a subset, his point still stands.

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Sangermaine
This is just a link to the Hacker News front page.

~~~
brndnmtthws
I appreciate your comment.

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leecarraher
I generally disregard bitcoin speculation and opinion articles. Not just
because it seems bitcoin market prices are hard to predict, but also due to
the fact that bitcoin, being an unregulated market(for better or worse), means
that otherwise illegal practices for the stock market(e.g. pump and dump) are
legal.

