What Makes a Scam Coin?


One time I had over twenty wallets installed on my computer. I bought coins in the 1 to 500 Satoshi range, waited for them to do something, and sold them, usually too early.

Often enough, though, the coins never went anywhere. I won’t start naming names just yet, it’d be unfair to pick on any specific “alt coin” which should more rightly be called “scam coin.” It’d be more than unfair, since thousands, if not over 10,000 now, have come and gone.

Serial Pumper

At the same time, this past week on Facebook I witnessed a serial pumper give birth to his own coin, apparently, but likely not his first or his last. Is there a problem with this? Well, it depends on what you see the coins as. If you see them as a financial instrument, then the problem is that these are not meant to benefit anyone but the creator, solve no fundamental problem that Bitcoin itself doesn’t, and are done with the worst of intentions.

If these were considered real financial instruments, then there’d be an SEC investigation into each one for these and other reasons.

However, if you see them as technology, then this is unsurprising. How many Linux distributions bring absolutely nothing new except a logo to the table? Plenty do that, and that’s perfectly acceptable under most open source software licenses. Yes, even when the software makes no clever innovation, just changing the name and branding is an acceptable practice, supposing the credits are left in place.

Repeat Offender

I have grown wary of anything this man I mention touches. If you look at all the coins he’s touched (read: probably created) before, they’re just deflated numbers now, with little to no hashing power and nothing of a serious community surrounding them.

repeat_altcoin_offenderIn effect, they’re schemes which prey on new investors, take their money, and roll it over into a new scheme, every few months.

I’ve been monitoring the situation for almost a year now, and the pattern goes like: new coin is mentioned in passing, new coin begins a pump cycle, new coin is raved about, new coin begins dump cycle, new coin dissipates, Bitcoin invested magically disappears. Where do you think the Bitcoin, the underpinning gold in the scheme, winds up? It winds up in the pocket of the “creator,” who uses it to better fund the programming and branding and promotion of the next “venture.”

Wouldn’t you say this is a scam in progress? Someone better call the Internet Police, I suppose.

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