Crypto investors (2015): how the info-charlatans profit from the gullible

The business of much of the crypto ecosystem does not depend on the coin becoming more valuable, but on new people continuously coming in to buy. When buyers stop coming in, the price collapses and those who arrived late lose out.

The first cryptocurrency, **Bitcoin**, was created in **2009**. But the phenomenon of cryptocurrency investors as we know it today did not take off until years later. By **2015** there was already a mature recruitment ecosystem: forums, social media and supposed gurus explaining how to get rich mining or buying digital coins. The mechanics are reminiscent of the charlatans who sell get-rich courses, except that here the business is not the course, but the growth of the scheme itself.

## What really sustains the value of a cryptocurrency

A cryptocurrency is not backed by any government or any physical asset. Its value rests solely on the confidence of those who buy it. State money has not been backed by gold for decades either, but a government has institutions, an army and fiscal capacity behind it. A mathematical algorithm on the internet has none of that, and it has already shown its flaws on at least two documented occasions. When investors become aware of this difference, many resort to a curious argument: that Bitcoin is worth what the electricity needed to mine it costs. It is circular reasoning, because the energy cost does not create demand.

## Anonymity, exchanges and the trail that never disappears

Cryptocurrency wallets are pseudonymous. You can accumulate **100 million** in one address and, in principle, nobody will know it is yours. The algorithms make it very difficult to link an identity to a wallet. Until the moment comes to withdraw. Then you have to show up at a bank with your passport, and the anonymity evaporates. To blur that line between cashing out and depositing, the trading platforms, the exchanges, were created. Their function is to conceal who paid whom and why. That very opacity makes them the perfect place for cryptocurrency theft. Tracing the money is possible through cryptanalysis, but it is a long, expensive and tedious process. Unless you have been defrauded of a couple of million dollars, nobody is going to go down that road.

## A saturated market that keeps looking for new participants

Cryptocurrency investors firmly believe in the fairness of the system and that the price will keep rising. That second part seems to have run its course: the market is saturated. Even so, efforts continue to attract new participants to the pyramid schemes, and lawsuits continue against particularly wealthy exchange operators. Recruitment no longer requires renting a room or giving talks. It is enough to write on forums or social media about how much you earned mining or buying Bitcoin, about what you sold and which remote island you plan to choose to live on. Because you will have money for the rest of your life and a hundred years more, so why deprive yourself of anything?

## The digital cult that needs no premises

Meetings and the recruitment of new members take place online. There is no need to rent a venue, argue or persuade face to face. You only need to know how to lie with style on a forum. The model is cheap, scalable and hard to pursue in court. Those who join convinced they are investing in the future end up, without knowing it, as the base of the scheme: their money sustains the price of those who entered before them. And when the music stops, the one who arrived last is left holding the ticket.

This is not financial advice. If you are thinking of investing in cryptocurrencies, consult a professional and distrust anyone who promises guaranteed returns.