16:36Forget Bitcoin: Inside the insane world of altcoin cryptocurrency trading
It seemed safe. Adam had investigated the coin's development team on LinkedIn, and watched a video of its CEO laying out a roadmap for the coin's future. A newswire piece published on Yahoo touted DeTrade's technology as advanced enough to disrupt cryptocurrency.
Thanks to Bitcoin hitting an all-time high valuation of $40,000, almost tripling its value in two months, cryptocurrency is very much back in the zeitgeist. But while Bitcoin is synonymous with cryptocurrency, it's not what crypto traders like Adam are interested in. Beneath Bitcoin and Ethereum, the second-most-known currency, is a strange underworld of different cryptocurrencies.
Called altcoins or, sometimes, "shitcoins," these are essentially penny-stock cryptocurrencies. And they're crazy. Bitcoin tripled its value recently, but many altcoins explode 30, 40 or 50 times over within days. Arguably the most famous is Dogecoin, which recently shot up thanks to a potent combination of Reddit and Elon Musk, but there are thousands of altcoins, forming an Indiana Jones-esque Cave of Crypto Wonders. The spoils can be life changing, but there are traps around each corner. Fortunes can be made and lost in seconds. Cons and fraudsters are everywhere, with traders vulnerable to scams at each step of the process.
Case in point: Adam's foray into DeTrade. The touted technology behind it wasn't real. Nothing about the project was. DeTrade, for all intents and purposes, didn't exist. The LinkedIn profiles were fake, and the video of its CEO was a deepfake created with AI. It was a scam. Those behind it, operating in the unregulated world of crypto, vanished. Adam lost his $2,500, but he got off easy. In total, those behind the scam took in around $2 million.
Just a regular day playing with altcoins, says Adam.
Million dollar joke
Adam had seen some tempestuous trading in recent weeks. One person managed to flip $2,000 into over $40,000 on two different occasions, but lost it all to scams both times. Another put $150 in a coin and doubled his money in 15 minutes. Decent result, but his $150 would've turned into $28,000 if he'd waited only one more day.
But despite the community's enthusiasm, there's a small problem. Right now cryptocurrencies don't really do anything.
Speculation is naturally part of this: People invest in Netflix, for instance, even though the company has yet to make a profit. However, cryptocurrency takes speculation into the stratosphere. For the most part, cryptocurrency is pure speculation. People are investing in technology that produces nothing, and has no practical application. As I write this, a coin called Meme is selling for $517. That's a little over four times the price of an Apple stock. Doge, a coin marketed after the internet slang for "dog," doubled in value earlier this month after a pornstar tweeted about it. After the price settled, it then rocketed once more when Reddit wanted to make it the GameStop of cryptocurrency.
This disconnect between value and purpose has made many experts understandably skeptical.
David Gerard is one such skeptic. He became interested in Bitcoin in 2013, when it first hit $1,000, and has since written two books on cryptocurrency. His most recent focuses on Libra, Facebook's ill-fated attempt at digital currency.
"The driving force of Bitcoin and cryptocurrency is nothing to do with technology," he told me during a Skype call. "It's all about the chance that people might get rich for free. All of this is about the psychology of get-rich-quick schemes."
Working years as an IT systems administrator, Gerard's job is to examine new technology and discern what's useful and what's not. Cryptocurrency, he told me, is not.
"Bitcoin burns a whole country's worth of electricity for the most inefficient payment network in human history," he said.
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