You might have heard about this new Bitcoin geek thing, after all it’s been all over the news. You might have heard about “that pirate guy” who “stole five million dollars”. You might have read on one of the underground scammer forums that Bitcoin geeks are damn easy yet Bitcoins themselves are damn tough. You might have heard that being irreversible Bitcoin actually makes things such as advance fee scams of all types feasible againii. You might have heard all sorts of things.
Well… here’s the thing : all you’ve heard is only partially true. For instance, it’s true that someone ran a Ponzi. However, the 500k Bitcoin / 5 mn Dollars figure is not quite accurate : it represents an estimate of the total receivables, not the Bitcoin actually deposited, nor the balance after substracting Bitcoin actually withdrawn. Even as an estimate it is kind of shakyiii. Ponzi schemes in general yield roughly speaking a few percent for their organiser, and so it’s rather unlikely the perpetrator netted more than a few thousand Bitcoins from this.
He worked on it for a year. It is a full time job, and it’s a job of the entrepreneurial sortiv. The thing was a one-time only affair, all the cache of the Ponzi is gone, probably for good. Maybe a new one could spring up in a few years if Bitcoins start featuring heavily on television and as a result we end up deluged with a new wave of mouthbreathers, but so far no such luck. So in short : worked like a dog for a year and propped on the cachev of a New Thing he managed to get… sort of a year’s salary. Could have made about the same freelancing, minus the insane hours. He’d have been working whenever he felt like it, without the risk of being randomly hit with pies-in-face for the next decade.
All the other examples I could give pretty much work the same way. It’s not that you can’t scam in Bitcoin. It’s just not worth it.
This may come as a shock, especially if you haven’t done your research too seriously, but Bitcoin is actually designed to be scammable. The system itself I mean. If you amass sufficient mining power you can wreak all sorts of havoc on it, nobody is disputing this and more importantly nobody cares about it.
Why not ? Well, simply because it’s not worth it. The exact same means which would allow you to cause havoc by going against the system would make you money going along with the system. If you have supercomputers galore, why attack it for a few pennies when you can mine and make the full Bitcoin ?
The exact same situation replicates itself with uncanny fractalness at this higher level. The very skills you need in order to scam (a good idea + people skills) are the requisites for starting a Bitcoin business. There’s plenty of people in Bitcoin land who started about the same time that pirate character did except they focused on business instead of scamming. They’re now worth half a million Bitcoin for real. I should know, because I’m one of them.
So in short : it’s not that crime doesn’t pay. It’s just that in Bitcoin business pays more.
Obviously if you’re scamming for the thrill of the troll that’s all irrelevant to you. I’m not going to argue as to anyone’s pastime preferences. But as Maggie the Cat famously asked,
- In case you’re wondering “who is this schmuck” : I am the owner of the largest Bitcoin denominated securities exchange (months ago this fact was contested but meanwhile the contender imploded).
I am also pretty well known for being what they call an asshole, or in other words one of those who doesn’t care about anyone’s feelings - which brings us to an interesting side-point : if you don’t know who I am you possibly haven’t done quite enough research on this Bitcoin thing. Scamming successfully takes a lot of study, must lurk moar.
You may think I have a vested interest in representing Bitcoin a certain way, and you may think this entire article stems from those preconceptions of mine. The thing is however that it’s quite impossible to be an asshole for very long when you hold preconceptions. The only way to survive as an asshole is to stick with the facts and pound everyone accordingly. Seeing how I’ve been an asshole all my life… you draw your own conclusion. [↩]
- The “cash my check for me” version is popular, the more typical “need some money to crack this address full of Bitcoin” hasn’t been deployed yet as far as I’ve seen. [↩]
- I’m not exactly sure who the source of it is, but it quite certainly originates on irc and it might actually have been me. If it actually is me then you can take my word for it that it’s shaky. If not, you can take whoever else’s word for the same thing. [↩]
- To put it mildly. Ever heard the “People making money online work sixteen hours a day for free to make fifty dollars while they sleep” ? [↩]
- Oh, it’s got cache, baby! It’s got cache up the yin-yang! And speaking of which, apparently the Beckhams christened a child “Seven”. [↩]