The Cryptocurrency world is awesome. Technology, freedom, decentralization and censorship resistance. There is new excitement every day. I truly believe most people in crypto are convinced it will lead to a better world.
My freedom loving side strongly favors this market remain unregulated, we know when money is involved, it attracts a scam artists.
It’s a perfect environment for crypto magicians to open up shop.
I’m going to pull back the curtains and explain to the audience how the magic is done.
THE CRYPTO MAGIC SHOW - Start with a Hard Fork of Bitcoin
So we know this is step one in our magic crypto scam project.
The minor drawback of open source blockchain technology is that it can be copied. Once you copy it, you spend a few hours tinkering the code base and call it your own.
ALAKAZAM - A new cryptocurrency appears
Pull the proverbial rabbit out of the hat.
You have a new crypto with bitcoin in its name. People will notice.
To add a little flavor to your new coin, create a story that is semi-believable. The audience is naive so don’t spend too much time on this part.
A fairly low investment hiring someone from Upwork gets you a website and whitepaper.
ALAKAZOO - Make sure you own a good portion of these new coins
Change a few lines of code to add a nice healthy premine.
You can pretend it's not a premine, confuse people or claim it's locked up. At any point, they become a fail safe if the show gets cancelled.
Someone has to pay for Sally’s college.
------------ /BEGIN INTERMISSION ---------------
Are you with me so far audience? I’ll take questions
Question1: Why would anyone buy this coin?
The answer: Most people won’t. It’s all just part of the show.
Question2: What happens next?
The answer: Get some popcorn and have a seat. The shows about to start
again.
---------- /END INTERMISSION ----------
ALAKAZEE - Sabotage your project.
You actually don’t want anyone to buy your new coin. Not yet.
It’s a distraction to the audience. Look the other way.
It's better to really screw up your project. Make everyone thinks the project is a disaster. Maybe DDoS our own website.
Show some software developers the code so they rip it apart. Get everyone talking about it. And don’t even think about replay protection.
But what does this accomplish?
First, it gets the name out. It’s free marketing.
Secondly, people have major concerns means two important things.
- They do not want bitcoin holders to pull the coins out of their wallets.
- They want people that acquire the new coin on exchanges to sell it off immediately
Why would they want that outcome?
This ensures that 90% of the coins are not in circulation. Whales who are part of the scam can buy up coins that get sold off immediately when it's released. The total amount of circulated coins is extremely low.
ALAKAZII - When the time is right, start a market run
Just use some of those fake USD instruments available on exchanges and start buying up your scam crypto. Get that price moving. Paint that chart.
At the same time, use an exchange that allows wash trading.
The result. Trading a very low controlled volume of coins means that your new shitcoin will show up in the top 5 in market cap, which draws even more attention. The wash trading brings that volume up so it looks like legitimate trading from the outside.
From the inside, it’s may be as small as 100,000 coins that is getting traded. As the momentum traders notice the volume, they pile on and start moving the price.
ALAKABLAMBO - Sally could use a sports car
Very slowly you sell off your new currency on upswings. Trading your scamcoin for bitcoin and eventually cashing some of it in.
Shouldn’t take long to recoup your investment from buying up all the coins at lows.
Sally’s going to Harvard and she’s driving up in a shiny new sports car.
It’s just crypto magic.
Or maybe it isn’t.
It’s simply misdirection. Blink and you’ll miss it.
It’s the result of a young unregulated market that is seeing massive growth in a short period of time. The technology and structure of this market is often confusing. With new audience members seeing the show everyday, it’s easy to pull of the same trick over and over.
It certainly doesn’t hurt that there is an unprecedented amount of speculation in the crypto market. Coins don’t trade on the legitimacy of the project. They trade on news, hype, market cap and volume.
Until the audience wakes up, I expect we’ll see a lot more crypto magicians crawling out of the woodwork. New flavors of bitcoin hard forks are a certainty. Maybe at some point, the show gets old and people stop participating.
But for now, being a crypto magician might be the highest paying job in the world. And it could stay that way for awhile as long as people believe "it's magic."