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Ethereum: A number of hard forks turn out to be scams (decryptmedia.com)
79 points by timcc50 8 months ago | hide | past | web | favorite | 110 comments

I'm at the point where I just assume that if it is cryptocurrency, I assume the likelihood of being a scam is close to 100%.

I followed cryptocurrency just casually out of curiosity for awhile but the association between that and scams and crime and such are just so high I have to wonder if I'm alone or if there really eventually is a perception problem.

Obviously you could argue "hey just money has that problem" maybe, but for some reason I don't make that association.

It's not that cryptocurrency is inherently a scam, but people have found no good use case for it yet (other than scamming people).

It seems like that for any problem that you could conceivably use a cryptocurrency to fix, we can easily find other solutions that are actually much cheaper and much more efficient.

That's not to say there aren't any problems that cryptocurrencies are better at, there could be, but so far no one has discovered them.

Seems to be useful for representing and trading assets. See all the ERC20 tokens and all the Decentralized Finance applications built around them.

Or the ERC721 token interface for representing in-game assets that can move across gaming worlds.

Adoption of these open standards means a large number of applications can be accessed from the same wallets.

Forgive my naivety, but I feel this is down to the earliness of the ecosystem and infratructure. We are getting more and more validation of relatively simple use cases (CryptoKitties) in combination with the current state of the art in dapp tech (Metamask provider, Ethereum’s 10s block time for finality, centralized exchanges and early decentralized exchange).

Once the blockchain tiramisu becomes less like a delicately constructed interaction of tech and more like a modular/mature stack, perhaps the UX barrier to entry will be low enough to reap the network effect.

Bitcoin is over 10 years old. That’s almost half as old as what most people would call the modern internet.

Stop using that “early days” cop out. It still has the same fundamental issues.

Right, 10 years in and bitcoin has proven it's value as a digital alternative to gold.

Ethereum is 4 years old, and the vast majority of "tokens" even younger. Crypto is very much still early. I don't mean this as a "cop out" but rather a sober reality of how much further the tech has to go.

Would it not be more fair to compare crypto progress to that of the early internet? It took most of a decade of development before the modern internet was born, another decade before the bubble burst and a few more years before pundits stopped calling it a fad, and recognized the business value.

We should all be skeptical of those who would over promise and under deliver on new technology, but I can't imagine why we wouldn't assume an optimistic stance towards it.

No, the Internet, even before it was called that way, always had more demand than capacity. For various reasons, not all of them commercial, the Internet was a thing that was very much desired. Even before that, people wanted to build the Internet's predecessors: Connecting computers (long before they were common!) to foster easy and quick communication and exchange of data over any distance was something people have always been working towards.

The Internet was always growing in capacity, size, population and applicability. At no point was there anyone ever saying anywhere "gee, we have so much Internet, what shall we ever do with it". Even during and just after the dot com bubble the Internet itself still continued growing.

Comparing cryptocoins to the Internet, the thing that massively changed virtually all aspects of human life in the past few decades, is...

proven it's value as a digital alternative to gold

I wouldn’t expect to be taken seriously after leading with that...

You’re right I should have included a “so far”.

>Right, 10 years in and bitcoin has proven it's value as a digital alternative to gold.

Meh, it's far more volatile than gold. What it has done is proven it's value as the cash-equivalent of the internet for illicit trade.

It is hard to say how much bitcoin (and other cryptos) are used for illicit trade but one simply has to log onto a darknet market and look at the number of reviews for specific product listings, or for entire seller accounts to see that likely tens of millions of dollars a day in exchanges are occurring across 'publicly known' darknet markets, the bulk of that for drugs although still a decent amount for digital services like credit card dumps as well as fake identification/documents/coupons, weapons etc.

I even found human remains for sale on a darknet market while attempting to get a rough idea of how much commerce is taking place on them early last year. Multiple sellers had basically every major bone in the human body for sell including dozens and dozens of skulls . Now, you can buy skulls on the clear net but they're often well-handled medical specimens. I got the very distinct impression these were absolutely grave-robbed remains.

Bitcoin is basically the first prototype, with all problems that entails. I would be extremely surprised if it ends up being the cryptocurrency that wins in the end.

Bitcoin has little to do with the value that will come from blockchain.

Bitcoin is an example of the value that has and will come from blockchain. It has everything to do with it.

>but people have found no good use case for it yet

Buying drugs is a great use case

Also ransom and extortion.

Are crypto-currencies not effective as a money-laundering method? I had assumed that part of the great rise and fall of BTC was dark money flowing in & out on its way to some clean-looking equivalent, plus some speculation on the side.

I’d argue (generally) no, because literally every transaction is in the ledger. Then there are two ways to get value back out:

1. At some point you want to get fiat back out, thus associating your identity to transactions. While there are some exchanges that are less stringent on verification requirements, the tie is pretty simple to see via the surveilled central banking system in most countries that tends to maintain the strict-ish verifications.

2. Exchange for goods. Unless this is off-chain, it’s again pairing a physical good back out somehow in an exchange of things.

You can get around this by "washing" via a privacy coin like monero.

You can also "wash" physical bank notes but that in no way helps you launder the money, you still need a plausible explanation on how it is in your possession when The Man comes asking.

Yeah that is the dangerous thread as far as getting caught goes.

"I invested well in Monero"

Definitely a good point, though really depends on where how that Monero trade happens. If it’s ever traded/redeemed on an exchange, that privacy mostly disappears.

I think if the crypocommodity game has done anything it's created a more clever and more technically proficient scammer.

According to the article, many real people who likely consider themselves experts in this "field" were at least initially fooled.

I don't think your comparison to real money is wrong at all. Look, we can mostly all understand what real government issued money is. If people into crypto were first forced to understand what it is - the entire system would disappear in an instant.

I've said it before, there are geniuses in the cryptocommodity game. But they aren't the ones trying to buy low and sell high and concerned about forks. They're the ones pumping out SEO-invested ICOs, running exchanges, selling newsletters and books (or whatever the current version of that is). War is profitable if you're the arms dealer, not the solider.

Look, we can mostly all understand what real government issued money is

Not really, the vast majority of people have no real idea of how it works, beyond the simple cash transfer. In fact, the term "government issued money" is evidence of that - almost all money is created by commercial banks, not government.

We know money in the same way that people in ancient times knew the Sun - its workings are just regular enough that we can predict its effects on our lives tomorrow, without having to actually understand nuclear fusion or radiation.

> According to the article, many real people who likely consider themselves experts in this "field"

A lot of people who thought they were bitcoin "experts" lost all or most of their coins to MtGox.

MtGox is such a great and terrible example how even with some level of service there to help.....it can be even more dangerous.

And for all anyone know, they could have stolen it all from their own customers.

and a lot of so-called ‘police’ end up shot by criminals themselves

Do you honestly believe that's an apt analogy?

In that both are pithy dismissals that convey nothing of use to the conversation? Absolutely.

my point was that getting ripped off wouldn't preclude them from being 'experts'

I know how you feel and have followed crypto from the beginning, never willing to risk more than a few hundred quid. I think the main difference in how i feel about crypto vs fiat government issued currency is two fold: inability to pay taxes with it, instability in price that prevents a quick cashout on a greasy day. I'd rather buy a rolex or gold bullion if I'm going to long term gamble with throw away money, and I find stock and mutual fund charts more entertaining as far as a research heavy hobby that might net some extra pounds, for real investment I turn to index funds.

The key part of 'pay taxes with it' is that the debt you owe is denominated in the currency. While convenient to not have to manually sell the crypto first and then pay your taxes in dollars, you still face a lot of risk if the value of your crypto goes down. i.e. if I am going to own $1000 in taxes next year and I put $1000 under my mattress, then I will be able to pay my tax liability regardless of whether or not the dollar crashes in value. If I save that $1000 in bitcoin, I may not have enough to pay off my tax liability with that bitcoin.

Actually, the key part is acceptance, not denomination. There is an oft-cited theory that governments accepting currency as payment of debts incurred via taxation is what gives inherent value to fiat money. Thus, if governments accept BTC to pay for taxes, that should also impart some inherent value to it.

Of course, the theory may well be wrong, as evidenced by e.g. Somali shilling still being in use, even though there's no government backing it in any practical sense for decades.

Somalia has a central bank and it seems to have restored the value of the shilling somewhat:



That's a very recent development, though, and keep in mind that the government behind it controls less than half of the country, and even that control is often nominal and transient (i.e. the local warlord is allied with the central government at that particular point in time). And the shilling kept circulating at relatively stable rates for quite a while even before the bank was revived.

It's not very recent. The shilling hit a low point in 2008 and appreciated by over 3000% from 2012-2014.

According to what I read the "stability" prior to the central bank was a result of an equilibrium between the value of a note and the value of the paper it was printed on. Since there wasn't a central government printing money, it didn't decline further, but tying up $100 in paper to represent $100 seems pretty suboptimal.

If you were to make a list of each cryptocurrency you could find, then you’d be somewhere are 99.99%. The people buying these things either don’t understand how Bitcoin works, or think they are going to get rich quick from the greater fool strategy.

Cryptocurrency significantly reduces the risk and cost of attempting a scam, meaning if you're involved, you will be exposed to a huge volume of scam attempts. The result is that everyone in the market is very diligent about who they place their trust in, and anyone who's new to the space becomes that way before long.

I mean a currency that is primarily based on drugs, gambling, sex and cybercrime can't be all bad, can it?

You didn't know that anonymity can be used for unlawful things along with lawful things?

Good argument. I don't see the outcry against VPNs and the nasty stuff you can download

That's because they tried and failed miserably (kind of, they weren't tech-literate enough to even know what they should try, but they certainly tried very hard to try).

Are you talking about the US dollar?

It was only natural that so many scams came out of the crypto space. It's an unregulated field that's attracting millions of US dollars. Plus, you could steal a bunch and get away with it.

it's a people problem, not a money problem. if people put value into something, others will try to get as much of it as possible to make 'profit'. good luck solving that one. doesn't matter how you build your currencies, it's the value attached which causes human greed to become problem.

A number of Bitcoin hard forks are scams as well and a few of them are in the top 100 in terms of market cap.

The same thing could be said about airdrops.

Going on Coinmarketcap and clicking any coin's website in the top 50 will take you to basically the same type of site.

- Featuring voice-over video explaining why _this_ coin is the most decentralized and secure.

- A team page showcasing an absurdly large number of team members with stockphoto-like profiles photos.

- A roadmap, of which they're all on stage one.

- Whitepaper linked from primary navigation.

You don't need to go to top 100. Two Bitcoin forks that are scams are in Top 10 right now.

> You don't need to go to top 100. Two Bitcoin forks that are scams are in Top 10 right now.

The 2 forks he's referring to are Bitcoin Cash and Bitcoin SV in case anyone was wondering.

Bitcoin Core and Bitcoin SV?

Last time I tried Core fork of Bitcoin, it was useless, it had $30 transaction fees (due to artificial block size limit).

I was scammed out of my money, couldn't move it. This isn't fixed yet, fees will appear again when transaction volume increases.

Meanwhile with Bitcoin Cash I was sending $1 to Venezuelian for less than $0.01.

Scam implies theft. Those forks aren't being used to steal money from people.

What if one of the proponents of those projects is a guy who pretends to be Satoshi Nakamoto? When we all know he isn't, and know and he can't prove it. Should that affect the credibility of a project?

I mean it's not really a scam, but it's definitely fraud.

I'm old enough to have been watching financial markets for about twenty years now, and in my opinion a great percentage of the "cryptocurrency entrepreneurs" running cryptocurrency scams aren't really doing anything novel.

They just have new shiny tech bullshit to baffle people with. Twenty years ago they would be running pump-and-dump penny stock scams with Canadian small-cap mining stocks.

Perhaps, but then the real innovation isn’t in the bits, but rather in marketing to the “The apocalypse is nigh!” crowd, and other right wing conspiracy theory aficionados, that were previously dominated by the gold coin and dehydrated food grifters.

Yeah, it is probably a lot easier to get right-wing conspiracy theory enthusiasts to "invest" in something if you can convince them it's an ideological soulmate to their libertarian utopia, than it is to get them to open brokerage accounts and start buying stocks.

And subsequently loosing everyone's investment when the mine's head engineer gets thrown out of an helicopter

My hunch is that the only people buying into these obvious scams is other scammers. They look at it and think "hey, I bet a bunch of people will fall for this. I'll buy some first.".

But maybe I'm too naive =/.

Or people who follow the greater fool theory: https://en.wikipedia.org/wiki/Greater_fool_theory

That describes a significant portion of investment behavior, across all asset classes.

Hard Forks that end up spawning their own coins, (ie: continue to be mined under old consensus rules) are 100% scams. None of these are legit: Ethereum Classic, BCash, Bcash SV, MoneroV, Litecoin Cash. Never trust these -- at worst you can lose your money due to tx replays, fraud, pump-n-dump, etc.

What is "BCash"? That doesn't seem to be the name of any existing crypto project.

Its Bitcoin Cash, but I think the 'bitcoin core' group doesn't like them using the word 'Bitcoin' in their name, so it uses Bcash to refer/denigrate them, etc...

On the other hand, the people who forked Bitcoin into "Bitcoin Cash" would love for you to confuse them with Bitcoin.

It's like someone starting a company "Nike Shoes", getting mad when people disambiguate them from Nike with "NShoes" ("hey, that's not my branding!"), and insisting that people call Nike "Nike Core".

What makes cryptocurrency politics so uniquely toxic is that people will align themselves with a faction because they have $5 invested. The barrier to conflicts of interest are so low that it makes you wonder if anyone is speaking earnestly on even the most trivial issues, like the person above who asserted that Bcash didn't exist despite a quick google proving otherwise. Though some people even do the same thing when you mention Golang. ;)

I find it telling that the original poster is willing to say "Ethereum Classic" and "Litecoin Cash" but not "Bitcoin Cash". This pretty clearly identifies their crypto-tribe.

> On the other hand, the people who forked Bitcoin into "Bitcoin Cash" would love for you to confuse them with Bitcoin.

He called "Ethereum Classic" but it's chosen name and not just ETC or something.

Except proponents of crypto currency are exactly the kind of libertarians who would oppose trademark protections like this so it's ironic when they get strung up by this particular petard.

Got it: it's like how angry kids used to call Microsoft "M$".

That’s unfortunate. Many of my friends/colleague now say that Cryptos per se are a scam

Heck I said I feel that way in my post.

I wonder at what point is a high percentage of scams just so many people just don't want to chance it?

At least with banks or whatever we expect some safety net to some extent ... the irreversible crypto... man that's rough.

Anonymous, remote, irreversible transactions - the scammer's dream. That's why cryptocurrencies are such a scam magnet. The marks don't know who you are, the marks are far away, and they can't get their money back.

And if you trust a company with holding your coins....no reason they can't steal it just the same.

That’s a position that’s sort of hard to argue against.

They are correct.

Looks like we're halfway through the next cycle. :-P

Being scammed is just one of many sacrifices one must make in the name of freedom, or, something.

Now if you'll excuse me, I need to check my Dogecoin Wallet...

Hey DogeCoin has the full faith and credit of tens of thousands of Reddit users behind it! That's way better than /bCoin.

s/number of hard forks turn out to be scams/Scam/

I've been saying that since their decision how to handle the DAO. The devs have a special vip() function that effectively allows a hard fork if the devs lose money. And that vip() is located on the updater on each ethereum miner's machine.

Crypt has too many opportunists. It really is tragic because the technology is interesting. I do not see it the problem being fixed.

Or perhaps crypto has too many naive amateur opportunists, who can't compete - in either effectiveness or toxicity - with the established financial industries.

why are people surprised in 2019 about online scams and what's different here?

The biggest and most successful hard fork scam was the one moving from what is now called Etherium Classic to what is now called Etherium.

A lot of people are saying that crypto is a scam because there are malicious actors in the industry. This claim is as far fetched as saying emails are a scam because Nigerian Princes want to wire you millions of dollars or that the Internet is a scam because some websites contain viruses.

Don't let these small bumps distract from the greater picture and all the amazing work the developers at Ethereum, Bitcoin etc are doing.

I can close a deal via email, exchange love letters with my fiance and this will be probably easiest way to do. What can i do with bitcoin or ethereum? I am following cryptocurrencies since second year of bitcoin and still can't see real world applications that can't be solved in more predictive way. For example, once some virus stolen my bitcoins and how i can get them back?

You can transfer hundreds of millions of dollars in minutes, with very low costs. For example, [1]

[1] https://www.quora.com/Whats-the-largest-Bitcoin-transaction-...

No you cannot. You can transfer blockchain tokens ostensibly valued at millions, but you can't actually spend that money without cashing it out, which is extremely difficult with sums that large.

There is lots of things you can purchase directly with bitcoin.

Very few of them are both legal and tangible.

You can purchase anything on Newegg with bitcoin directly

Bitcoin isn't liquid like cash.

True. A lot of governments are working on fixing that... by making cash a lot less liquid.

Once you send a scammer hundreds of dollars, how do you get them back? You don't. You're pointing out a problem that exists with the current monetary system.

One use case of bitcoin, that is very similar to emails actually is being able to transfer value 24/7 rather than 9-5 on weekdays.

> Once you send a scammer hundreds of dollars, how do you get them back? You don't.

One of the main points of bitcoin is that it makes transactions irreversible. In the current financial system, many transactions can be reversed, which is a feature, not a bug.

Similarily email is irreversible. Sure some providers will stall your email so you have a period of time to cancel/edit the email...

Nothing prevents a crypto client from similarily stalling a payment until you are sure you want to pay...

> Nothing prevents a crypto client from similarily stalling a payment until you are sure you want to pay...

...and then all you need is fraud protection, monthly billing and airline miles and you've invented the credit card.

Only 1 side of a reversed transaction thinks it's a feature

You can buy things that are illegal in your jurisdiction.

Remember that the point if cryptocurrency is to enable finance in the absence of good government. It's useless if you like your government.

> Remember that the point if cryptocurrency

Nobody knows what the "point" of cryptocurrency is, and every enthusiast has a different opinion on that topic.

Yeah, that's exactly what the Church said about atheists.

"as an atheist what is the meaning of life? What is then the meaning of society? What is the meaning of ... ? "

It would be a lot simpler if we all simply served the commercial bankers, or perhaps the central bank or ... because then we wouldn't have to carry "the burden of having to ponder the meaning of our lives"

edit: slightly modified

That's a very strange analogy. Honestly I'm not really sure what you're trying to say but your sarcastic quip about serving central bakers tells me all I need to know.

I can buy things that are illegal in my jurisdiction with my Chase card, and the USPS delivers it.

Counterpoint: Nigerian scams are not an appreciable percentage of SMTP traffic by volume, if you look at what goes through a busy mail server. Even if you believe that cryptocurrency as a whole is not a scam, you have to acknowledge that a significant and appreciable percentage of the "coins" that you would see in a top-50 list of cryptocurrencies are highly suspicious or outright scams.

Which one of the top 50 are scams? I can't think of one. I think it would be more accurate to say that there is a lot of unsubstantiated marketing hype about cryptocurrencies that produces inflated valuations.

Email is useful for purposes other than scams and buying drugs. Crypto is, to a first-order approximation, not.

Email is mostly a scam, but you don't notice because you don't run your own mailserver and you have spam protection from a legitimate provider, and for now there is no direct way to transfer money via email.

Actually, I do run my own mailserver, with no spam filtering whatsoever. The volume of spam is high, but low enough to ignore.

> The volume of spam is high, but low enough to ignore.

Same with crypto. The projects people actually care about and follow aren't scams. Bitcoin, Ethereum, Nano, etc are not scams.

Sure there are some scams out there but they are mostly obvious. Just like email. But because some people have a personal crusade against crypto they like to play up the obvious scams as commonplace when they really aren't.

> A lot of people are saying that crypto is a scam because there are malicious actors in the industry.

Perish the thought. It doesn't even take any malicious actors to be a scam. It's a new kind of scam: a Nakamoto Scheme.

To your https://prestonbyrne.com/2017/12/08/bitcoin_ponzi/

> victim factories, which in the next crash will produce hundreds of thousands of howling investors with little formal legal recourse due to four years of inaction on the regulators’ part.

How did we get here? As https://davidgerard.co.uk/blockchain/2018/04/05/debunking-bu... points out:

> It’s been nine years. Nobody has a practical use case for blockchains proper.

It's now closer to ten. Same article:

> Git gives you pretty much everything offered by the business case for blockchains. The one thing it doesn’t do is add a ridiculously wasteful proof-of-work mechanism for who’s allowed to add transactions to the <s>blockchain</s> repository

Now, this leads to your second statement:

> Don't let these small bumps distract from the greater picture and all the amazing work the developers at Ethereum, Bitcoin etc are doing.

Which is what?

This ties back to it being a scam: without a practical use case, it lacks any intrinsic value and the only reason people temporarily paid a lot for it were downright scams (Tether), hodl zealots, other hype. It won't take a few more years and it'll settle on its true value which is zero.

ps. The Washington Post already in 2015 summarized this madness:

> So the Bitcoin faithful have tried to not only convert people, but also convince them to martyr themselves, financially-speaking, for the crypto cause. It goes something like this. - Hey, do you want to hear about the future? It's a digital currency called Bitcoin that lets you spend or move your money online without paying any fees. - Sounds great. How does it do that? - Well, Bitcoin saves you money by making transactions irreversible. - So ... if I get scammed, I got scammed? There's nothing I can do about it? - Yes. - Okay, but is it at least easy to use? - The thing is, I don't actually use it. I just hoard it. I'm waiting for some greater fools to push up the price by using theirs. - Oh. - Yeah. So you should buy some Bitcoins and use yours. - I'll get back to you on that.

Of course, you could call all these "Bitcoin faithful" malicious actors if you so want...

Ps. I just stumbled on a new McKinsey report (published on January 4, 2019) https://www.mckinsey.com/industries/financial-services/our-i... which has this:

> despite billions of dollars of investment, and nearly as many headlines, evidence for a practical scalable use for blockchain is thin on the ground.

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