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Archive

Crypto Keeper. Fraud vs Regulation vs Faith in Cryptocurrencies.

“I love money. I love everything about it. I bought some pretty good stuff. Got me a $300 pair of socks. Got a fur sink. An electric dog polisher. A gasoline powered turtleneck sweater. And, of course, I bought some dumb stuff, too.”

–Steve Martin

“A nickel ain’t worth a dime anymore.”

–Yogi Berra

 

Our friends at Coincentral have a new and interesting article out on Bitcoin fraud which you can read here:

https://coincentral.com/the-past-and-present-of-bitcoin-mining-fraud/

Also out today an article in The Guardian on a major cryptocurrencies hack in South Korea which you can read here:

https://www.theguardian.com/technology/2018/jun/11/bitcoin-price-cryptocurrency-hacked-south-korea-coincheck

There is no doubt that cryptocurrencies pose unique opportunities for profit, fraud and theft. Of course so do banks and your corner grocery store. The more pressing question is one of scale and faith. The average bank robbery nets a little over 3 thousand in marked bills with a high risk factor including the possibility of death and robbing a 7/11 is likely to net you either a hundred bucks or less or a face full of hot metal because the clerk is armed. In theory hacking a bitcoin stash is nowhere near as dangerous unless the feds come calling.

As Aaron Magel at Coincentral puts it:

“Bitcoin mining and fraud are an unfortunate reality we must face as an industry. From things like Bitconnect to Butterfly labs to even Onecoin, there are a lot of scams and fraud floating around.

These schemes leave people high and dry with lost money and no product or service rendered. They play off of people’s greed and irrational expectations of gains, despite exaggerated promises of gains.

Ultimately, these schemes, sow seeds of distrust amongst users and attract ire from regulators in a fledgling industry where everyone is already walking on eggshells.”

Eggshells indeed. But as we mentioned previously the issue here is not the elimination of fraud or theft because people were doing that before cryptocurrencies and they’ll be doing long after cryptocurrencies are replaced by something else.

What interests us is the idea of faith in the system and that the emergence of cryptocurrencies is not just down to technological advances (though that’s a crucial ingredient) but is reflective of a growing belief that the traditional monetary system is systematically flawed.

Consider Magrel’s comment:

“Bitcoin mining and fraud are an unfortunate reality we must face as an industry.”

He’s right but substitute Stock Market for Bitcoin or Counterfeiting and you have the same equation.

Or consider our questions about the investigation into fraudulent fundraising for Nonprofits in the arts.

Which you can read about here:

https://theviolentink.blog/2017/07/31/chicago-symphony-orchestra-fundraising-scandal-expands-to-houston-ballet/

As we reported previously the CSO hired a vendor (DCM Telefundraising) who in turn hired a convicted serial fraudster. When confronted with public records verifying that the telefundraising manager had served time in federal prison for credit card fraud the CSO didn’t fire the vendor but asked that the vendor remove the former felon. Which DCM did and then transferred her to the Houston Ballet where she had the same job and access to thousands of credit cards.

Our point in revisiting this issue is to highlight the irony in certain quarters for their hysteria over regulation (or the lack of) in the cryptocurrency world. Surely there should be some regulation and standardization. But the hysteria is based on the idea that cryptocurrencies are distinctly unsafe versus the rest of the system which is presented as safer due to regulation and oversight. Except of course there’s precious little oversight and deregulation is the mantra of at least half the voters in this country who complain about red tape and crime without ever making the connection between the two.

Are cryptocurrencies safe?

Sure.

About safe as your credit card when you give it to a fundraiser you’ve never met who works for a company you’ve never heard of on behalf of an organization with an impeccable record of cultural achievements who has as much concern for your financial security as a pickpocket in a crowded subway.

 

For a look at the background to the fundraising in the arts issue see the following which contains public records detailing the individual involved:

https://theviolentink.blog/2017/06/03/who-is-jacqueline-berkaw/

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