As children, we all heard the story of the boy who cried wolf and learned that the moral was not to raise false alarms, or else no one will believe it when you report a real emergency.
But there’s another, less obvious and more unsettling lesson of the fable. It’s the takeaway for the recipients of a distress call (the villagers in the story): Even if someone pulled your leg in the past about a supposed clear and present danger, there is still the possibility he might be dead serious this time. So if you write him off because of his track record, there’s a chance your sheep will be devoured.
This is a big problem for anyone trying to simply make sense of the crypto space, much less make money in it.
Everything’s a scam
Bitcoiners, especially bitcoin maximalists, have a habit of calling anything they find a little dubious, or that they simply don’t like, a “scam.”
It’s a serious charge – fraud is a crime, after all, punishable with jail time – but on Twitter and in crypto forums it gets thrown around like high school kids in the locker room calling each other dorks and losers. Though, to be fair, the “S” word is sometimes used in a way that’s unmistakably playful.
In a footnote to his hilarious and thought-provoking 2014 essay “Everyone’s a Scammer,” Michael Goldstein of the Satoshi Nakamoto Institute writes, “‘scammer’ is a heuristic, not an accusation.”
If you believe bitcoin is going to the moon, as Goldstein does, then a merchant who accepts it is a scammer, even if her alpaca socks are as warm and cozy as advertised, and a HODLer seeking to buy it off you is a scammer too, even if the fiat he’s offering in exchange is real.
A scam, in this broad definition, is any attempt to part you from your bitcoin.
Another way to think about this issue is that perhaps telling mom-and-pop investors “all altcoins and ICOs are scams” is the equivalent of telling kids that porcupines shoot their quills. It’s not literally true, but if they believe it, they’ll steer clear of a hazard and you’ll have done a mitzvah.
In crypto, those hazards may include bad ideas pursued in earnest, good ideas poorly executed and outright scams. Some argue that the first two categories might as well be subsets of the third, for all practical purposes…