With the wild moves in bitcoin, the hucksters and charlatans are out in full force. Below are two headlines I came across in just the last 24 hours.
Cryptocurrency fund of hedge funds launched for retail investors
How to make $700,000 with Penny Cryptocoins
The Financial Industry Regulatory Authority (FINRA) has taken note of the goings-on and recently warned.
Especially in today’s ‘hot’ cryptocurrency environment, it’s easy for companies or their promoters to make glorified claims about new products, services and other cryptocurrency-related connections. And, even when legitimate companies flock to a hot, new sector, fraudsters almost always follow suit, exploiting the news to launch their latest frauds du jour.
The practice of selling fairy tales to the naive civilians is nothing new. Tim Wu, in The Attention Merchants, wrote about the snake oil salesman at the Chicago World’s Fair in 1893: “Clark Stanley stood before his booth in an elaborate cowboy outfit, a beaded leather jacket with a colorful bandana, his hair worn long with a prominent goatee and mustache.”
A beaded leather jacket with a colorful bandana would have stood out then as it would today. Charlatans usually look the part.
The products are besides the point, what they’re really selling is hope. Snake oil was sold as a cure for all of your health ailments and cryptocurrencies are sold as a cure for all your financial problems.
While spectators watched, Clark would reach into a sack, pluck out a fresh snake, asphyxiate it with ether, and plunge it into a pot of boiling water. As he did so, fatty remnants of the snake rose to the top, which Clark skimmed and, on the spot, mixed into an elixir. The resulting potion he called “Clark Stanley’s Snake Oil Liniment” and sold to onlookers. The Snake Oil, Clark boasted, had the power to cure many ailments: it was “good for man and beast.
The promise of overnight health and get rich quick schemes seem so obviously fraudulent, yet plenty of people fall victim to these schemes. If it sounds too good to be true, if the person looks the part, and if you have any doubts at all, do not do it