On the evening of November 19, art adviser Adam Biesk was finishing work at his California home when he overheard a conversation between his wife and son, who had just come downstairs. The son, a kid in his early teens, was saying he had made a ton of money on a cryptocurrency that he himself had created.
[...] Earlier that evening, at 7:48 pm PT, Biesk's son had released into the wild 1 billion units of a new crypto coin, which he named Gen Z Quant. Simultaneously, he spent about $350 to purchase 51 million tokens, about 5 percent of the total supply, for himself.
Then he started to livestream himself on Pump.Fun, the website he had used to launch the coin. As people tuned in to see what he was doing, they started to buy into Gen Z Quant, leading the price to pitch sharply upward.
By 7:56 pm PT, a whirlwind eight minutes later, Biesk's son's tokens were worth almost $30,000—and he cashed out. "No way. Holy fuck! Holy fuck!" he said, flipping two middle fingers to the webcam, with tongue sticking out of his mouth. "Holy fuck! Thanks for the twenty bandos." After he dumped the tokens, the price of the coin plummeted, so large was his single trade.
To the normie ear, all this might sound impossible. But in the realm of memecoins, a type of cryptocurrency with no purpose or utility beyond financial speculation, it's relatively routine. Although many people lose money, a few have been known to make a lot—and fast.
In this case, Biesk's son had seemingly performed what is known as a soft rug pull, whereby somebody creates a new crypto token, promotes it online, then sells off their entire holdings either swiftly or over time, sinking its price. These maneuvers occupy something of a legal gray area, lawyers say, but are roundly condemned in the cryptosphere as ethically dubious at the least.
After dumping Gen Z Quant, Biesk's son did the same thing with two more coins—one called im sorry and another called my dog lucy—bringing his takings for the evening to more than $50,000.
The backlash was swift and ferocious. A torrent of abuse began to pour into the chat log on Pump.Fun, from traders who felt they had been swindled. "You little fucking scammer," wrote one commenter. Soon, the names and pictures of Biesk, his son, and other family members were circulating on X. They had been doxed. "Our phone started blowing up. Just phone call after phone call," says Biesk. "It was a very frightening situation."
As part of their revenge campaign, crypto traders continued to buy into Gen Z Quant, driving the coin's price far higher than the level at which Biesk's son had cashed out. At its peak, around 3 am PT the following morning, the coin had a theoretical total value of $72 million; the tokens the teenager had initially held were worth more than $3 million. Even now, the trading frenzy has died down, and they continue to be valued at twice the amount he received.
"In the end, a lot of people made money on his coin. But for us, caught in the middle, there was a lot of emotion," says Biesk. "The online backlash became so frighteningly scary that the realization that he made money was kind of tempered down with the fact that people became angry and started bullying."
[...] The "overwhelming majority" of new crypto tokens entering the market are scams of one form or another, designed expressly to squeeze money from buyers, not to hold a sustained value in the long term, according to crypto security company Blockaid. In the period since memecoin launchpads like Pump.Fun began to gain traction, the volume of soft rug pulls has increased in lockstep, says Ido Ben-Natan, Blockaid founder.
[...] On November 19, as the evening wore on, angry messages continued to tumble in, says Biesk. Though some celebrated his son's antics, calling for him to return and create another coin, others were threatening or aggressive. "Your son stole my fucking money," wrote one person over Instagram.
[...] That his teenager was capable of making $50,000 in an evening, Biesk theorizes, speaks to the fundamentally different relationship kids of that age have with money and investing, characterized by an urgency and hyperactivity that rubs up against traditional wisdom.
"To me, crypto can be hard to grasp, because there is nothing there behind it—it's not anything tangible. But I think kids relate to this intangible digital world more than adults do," says Biesk. "This has an immediacy to him. It's almost like he understands this better."
On December 1, after a two-week hiatus, Biesk's son returned to Pump.Fun to launch five new memecoins, apparently undeterred by the abuse. Disregarding the warnings built into the very names of some of the new coins—one was named test and another dontbuy—people bought in. Biesk's son made another $5,000.
(Score: 4, Disagree) by JoeMerchant on Monday December 09, @12:46PM (3 children)
Back in the 1970s it was charming young men approaching old ladies in the grocery store parking lot. One took my babysitter for the contents of her checking account one day with some vague promises of $100 profit. She lost $2k in 1971, that's over $15k today.
So a "smart kid on the Internet" did a little more than 3x better before people got wise to them, hardly surprising, that grocery store con ran for months in our area, I don't know if they ever caught him.
🌻🌻🌻 [google.com]
(Score: 5, Insightful) by OrugTor on Monday December 09, @04:05PM (2 children)
I love how the suckers take it personally. "He stole my money!" No, you gave him your money and realized too late you're an idiot for trusting a stranger on a website called Pump.Fun. You know what rhymes with "pump"? That's right, it's "dump".
Also, you know what makes a cryptocurrency better than the others? Me neither.
(Score: 3, Interesting) by JoeMerchant on Monday December 09, @04:59PM
> what makes a cryptocurrency better
It's a shame, because I do see a kernel of value in the whole blockchain value store concept. Not the "I'm gonna be drivin' a Lambo next week" crypto-bro kind of value, but for largely automated and distributed systems, I see the security of the implementations as a big plus, and the practicality of automated nano-transactions potentially enabling trust of unknown partners.
Slightly closer to English: Imagine you put a service out on the internet, maybe you offer secure online access to a 2TB SSD hooked to a Raspberry Pi. You could collect credit card numbers, charge monthly rates...
However, maybe you'd just like to exchange some of your online storage for access to a few other online stores. You could run your own blockchain, they could run theirs, independent auditors could verify that you're all doing the blockchain accounting correctly (while running their own blockchains). You could "recognize" the value of the other storage providers' "coins" on their chains (same for the auditors), and accept their coin in exchange for your own, and accept your coin in exchange for access to secure storage on your SSD, you in turn could barter back their coins for secure storage on their SSDs, and audit reports from the auditors or, run your own audits and offer them for sale... You could even charge for blockchain access to do the auditing, just to keep Denial Of Service griefers hopping...
Through that kind of system, you might be able to securely mirror 100GB of data from your SSD to 9 other SSDs around the world, in exchange for providing secure access to 1.9TB of your drive. Not only does your 100GB of data get backed up more securely, it's also directly accessible to people you want to share it with from 10 point sources instead of 1, and you don't have to mess with arranging for rack space, or rent and utilities for the other 9 sites.
The "value" of the cryptocurrency in that scenario is in keeping the collective resource sharing balanced / fair. Sure, you're only getting 1TB of net storage/access - but it's cooperatively deployed 10 places for the cost of sharing your 2TB resource. The "overhead" pays for the accounting / auditing / other expenses of sharing in a distributed fashion. And the real key is: if algorithms can handle this accounting work instead of traditional payment systems, then you've accomplished this distributed resource sharing relationship without involving any traditional currency handlers at all, you just run software on your connected resource.
Even though it's starting to gain some acceptance, I still feel the need to explicitly state: "NO PROOF OF WORK INVOLVED."
🌻🌻🌻 [google.com]
(Score: 1) by khallow on Wednesday December 11, @01:45AM
(Score: 5, Insightful) by r_a_trip on Monday December 09, @01:35PM (23 children)
Ah yes, crypto coins. I just can't see it as more than a pyramid scheme. "Here is a puff of smoke and it has value, believe me, it has value! We did a lot of complicated calculations to create this puff of smoke! Now give me your fiat currency!"
Yes, fiat currency is also largely imaginary, but it is state backed and issued. Bar extreme circumstances, $ 10 is $ 10. It just holds more credibility than the umpteenth coin by another "tech bro".
The biggest reason I view cryptocurrencies as a puff of smoke is the fact that crypto in the media is always expressed in the value of one fiat currency or another. You never hear that the Dollar is now worth 0.000010 BTC. If crypto was inherently valuable, you would hear fiat currency expressed in crypto.
(Score: 3, Touché) by JoeMerchant on Monday December 09, @02:08PM (9 children)
Well, I haven't done more than walk by it, but there is some kind of BTC ATM in our local drug store. Reminds me of the gambling machines they have in Germany, or slot machines in Nevada.
Veering off topic for a distant analogy, have you heard of the $2 drug plan? There's a list of the most common Rx drugs, including stuff like generic Prozac, that they plan to roll out available for $2 per month's supply. Sure, Prozac is better than crack, and maybe BTC is better than slot machines, but are they really? Is promoting nicotine vaping to teenagers really any better than tobacco cigarettes?
🌻🌻🌻 [google.com]
(Score: 2) by zocalo on Monday December 09, @03:43PM (8 children)
I don't think you need to be a card-carrying cynic to believe that "temporarily reduced mental capacity" might be a factor in the positioning of these things.
UNIX? They're not even circumcised! Savages!
(Score: 3, Touché) by JoeMerchant on Monday December 09, @04:27PM (7 children)
> They don't seem to be found in the kind of high-visibility high-footfall areas
Well, this latest BTC ATM was at the entrance to a Walgreens, about as respectable a "pharmacy / convenience store" as we get around here. I only go in one of those once every year or two on average (prices are insanely high), but they're quite successful, do get a lot of traffic, and it's mostly not dregs of the earth but I do question people who shop there when they can mostly get the same things elsewhere for 1/2 the price or less...
Way offtopic (or is it?) this particular Walgreens still has a Redbox DVD rental kiosk outside, waiting to be salvaged.
🌻🌻🌻 [google.com]
(Score: 2) by VLM on Monday December 09, @05:57PM (6 children)
Yeah I donno if those two phrases go together. Its not like corporate has set a closing date for the company but that's on the way.
I understand (possibly correctly) that they bet the company on the idea of setting up small health clinics in each pharmacy via a very expensive acquisition ... and lost, very badly. Stock price down like 85% in the last five years and the graph is going downhill fast. Hope you know where the closest CVS is, LOL. Between the two of them they shut down most of the small independents so when Walgreens does close (eventually someday) its going to be something like public health crisis for the zillions of people on long term meds.
Its sort of like, how do you go bankrupt selling computer junk in the early 00s during a technological boom, well the geniuses at compusa and circuit city found a way... so yeah only walgreens management could find a way to go bankrupt selling overpriced medical junk.
(Score: 2) by JoeMerchant on Monday December 09, @06:26PM (5 children)
Well, I guess I'm out of touch on Walgreens' specific corporate hijinx, I guess they'll be taken over by a new name one of these days.
It's rare that I can tell Walgreens apart from CVS - they're all too frequently built on two corners of the same intersection, and as far as I am concerned they have been "functionally equivalent" since forever.
🌻🌻🌻 [google.com]
(Score: 1, Interesting) by Anonymous Coward on Monday December 09, @07:11PM (1 child)
> ... tell Walgreens apart from CVS
The way to tell them apart here is that the CVS is inside a Target (big box store).
The pharmacy that I see with many people waiting in line (with several open registers) is at the local fancy supermarket. More business in the Wegmans Pharmacy than all the chains combined including Rite Aid.
(Score: 2) by JoeMerchant on Monday December 09, @10:44PM
Our big grocery chain (Publix) used to have super competitive prices on HNBA (Health and Beauty Aids, the kinds of crap you'd see in a Walgreens...), and very good Pharmacies.
That all went to hell about 5-8 years ago, the Pharmacies refuse to work with insurance, the prices are up at and above standalone drug store levels, luckily we have a choice of grocery stores where I am, a lot of Florida just doesn't unless you count Wally World.
🌻🌻🌻 [google.com]
(Score: 2) by VLM on Monday December 09, @07:25PM
It's interesting to speculate on who will buy the bones at the bankruptcy sale. I imagine Amazon salivating at the idea. Rite Aide is a 1/10 the size of CVS, probably too small to purchase. I don't think the anti-trust peeps would approve CVS buying Walgreens. Not much else out there in stand alone retail pharmacy space. Maybe they'll just dry up and blow away in the breeze like travel agents or vacuum cleaner repairmen.
Retail is weird and short term and I was always more into energy sector investing and retail is so fast moving maybe they'll pull out of their slump if they have good holiday sales, maybe.
(Score: 5, Insightful) by cmdrklarg on Monday December 09, @10:11PM (1 child)
Yup, that's how it is near my house. That CVS is where I pick up my prescriptions. I go there for them as that's where I went when I was still married, and we lived on that side of the main road going between them.
Now I'm on the other side of that main road. I had thought about switching to Walgreen's so I wouldn't have to cross that main road, but the company's support of their religious employees killed that notion. These holy rollers (including pharmacists) were preventing customers from acquiring birth control, including those with prescriptions! Practice your belief in fairy tales on your own time; if your religion prevents you from doing your job, you need a different job.
The world is full of kings and queens who blind your eyes and steal your dreams.
(Score: 3, Insightful) by JoeMerchant on Monday December 09, @10:47PM
Nice. I staunchly believe in freedom to practice your religion: in your churches, in your homes, in your private enterprises.
Public facing businesses, governments and schools are NOT your private religious prejudice practice zones, and somebody needs to start championing the separation of Church and State like the ACLU did civil rights before the Supreme Court takes a match to what's left of the Constitution.
🌻🌻🌻 [google.com]
(Score: 2) by ikanreed on Monday December 09, @02:55PM (1 child)
The market can remain irrational for longer than you can remain solvent.
And even though Bitcoin still has yet to pitch a actual use case as a store of value, the fact that it hasn't gone to zero so far is enough for it to never go to zero, in and of itself.
(Score: 2) by aafcac on Monday December 09, @04:54PM
The concern with BTC was never that it was going to go to zero, just about any use of it at all would ensure that it would have some value. The concern was that it was effectively a ponzi scheme due to the way that the new coins were created making it extremely cheap early on and more and more expensive over time with the early adopters being paid by the newcomers.
The other concern was that due to the way the curve was fixed that there is still a real possibility of deflation setting in, right now there's still a bunch of people who are buying and selling it as a way of gambling, but if countries like Russia decide to adopt it as an approved currency, that could increase the demand enough to kick off a deflationary spiral.
https://finance.yahoo.com/quote/BTC-USD/ [yahoo.com] from the looks of it, we're probably on our way. While there are periods of time during which the increases have been given back, there is a bit of a rising floor on how low they fall as people realize that they can just ride things out. Plus, this isn't like a corporation which is generating actual revenue to justify the increasing valuations. A BTC is just a BTC it's only actual value is your ability to trade it to other people and convert it into other currencies.
(Score: 3, Insightful) by number11 on Monday December 09, @03:08PM (3 children)
Wrong metaphor, it's not "puff of smoke", it's "tulip bulb". Except that tulip bulbs did have some (tiny) intrinsic value, since you could plant them.
(Score: 2) by r_a_trip on Tuesday December 10, @01:56PM (1 child)
I think "puff of smoke" is more apt. A tulip bulb is at least tangible. A bitcoin is digital proof you added either heat or heat and CO2 to the atmosphere.
(Score: 2) by number11 on Wednesday December 11, @02:52PM
But it actually happened with tulip bulbs, as people speculated in them. It wasn't because you could grow a flower from one, but because tomorrow it would be worth even more. Their intrinsic value was irrelevant. Just like cryptocurrency.
(Score: 2) by tangomargarine on Wednesday December 11, @08:53PM
Well, except for the part that the most ostentatious breeds that sold for the most, were the ones that had a virus that meant the bulb wouldn't sprout.
"Is that really true?" "I just spent the last hour telling you to think for yourself! Didn't you hear anything I said?"
(Score: 4, Funny) by DannyB on Monday December 09, @03:38PM (1 child)
It can't be a pyramid scheme. I hear that the government is going to make the US (quote:) "the crypto capital of the world." and "we will have regulations, but from now on, the rules will be written by people who love your industry not hate your industry." And that is a quote, not biased in any way. So it's all good.
The Centauri traded Earth jump gate technology in exchange for our superior hair mousse formulas.
(Score: 2) by aafcac on Monday December 09, @04:59PM
Crypto coins aren't inherently pyramid schemes, the issue lies with how those coins are allocated. If it's a major government doing it, the new issues will likely be distributed either the way that cash is or the way that bonds are. As in, either they'll be sold with 1 of those coins being worth a defined number of dollars or put up for bid to establish what the actual value would be.
Where BTC sucked was that it was initially incredibly cheap to mine the coins and increasingly expensive over time, so the early adopters could mine millions of dollars worth of BTC for not that much money, but the later comers are pretty much only able to acquire their own by either buying or using increasingly expensive systems to get the new coins.
(Score: 2) by VLM on Monday December 09, @05:42PM (1 child)
I know the general public likes to say any and all financial scams are "pyramid schemes" but technically this is not even remotely a pyramid scheme (which is a real thing, a real financial scam).
You could run a pyramid scheme using bitcoins...
(Score: 2) by aafcac on Monday December 09, @08:26PM
Yep, a pyramid scheme is a scheme where you need newcomers to pay for the profits of the folks that are already there. The Ponzi Scheme is probably the most famous where the new investments are used to pay the profits for the ones that are already there. But, it can also include things like MLMs where your bonuses are nearly entirely on the basis of signing up new customers.
(Score: 4, Touché) by VLM on Monday December 09, @05:48PM
Note you're describing the entire financial sector of the economy, not just bitcoin. Welcome to tranche bonds, bonds in general, corporate shares, real estate, pretty much everything.
Options are not this; but some fishier option trading strategies are this fishy, probably fishier.
(Score: 3, Insightful) by Thexalon on Tuesday December 10, @03:46AM (1 child)
It's not exactly a pyramid scheme: Pyramid schemes generally operate on the idea that you're selling something that is in theory useful but overpriced.
Crypto and its close relative NFTs are a different scam: Sell something completely useless, with the promise that there's a bigger sucker out there that will buy it off of you. Similar effect, different mechanism psychologically speaking.
"Think of how stupid the average person is. Then realize half of 'em are stupider than that." - George Carlin
(Score: 1) by khallow on Wednesday December 11, @01:42AM
That's classic pyramid scheme territory.
(Score: 0, Offtopic) by EJ on Monday December 09, @02:00PM (2 children)
This is the way. [youtube.com]
(Score: 3, Funny) by DannyB on Monday December 09, @03:39PM (1 child)
The way to remind me of what Cylons looked like 45 years ago.
The Centauri traded Earth jump gate technology in exchange for our superior hair mousse formulas.
(Score: 3, Touché) by EJ on Monday December 09, @06:30PM
Well, to me it seems like the way crypto works.
You fleece people for a quick buck and run.
(Score: 2, Insightful) by pTamok on Monday December 09, @02:55PM
Works on the basis that you put in a stake and encourage fools to put in their stakes, then exit with profits before the fools try to cash out. It's a really, really, old scam.
The spice is that the first fools to 'invest' have a chance of cashing out and making money before the last fools to 'invest', which is what the 'early investors' juggle with. Just like a classic pyramid scheme. Just on a computer, on the Internet, with blockchain, and cryptocurrency and probably added AI sparkles. Did I mention NFTs?
Exploiting the credulous is morally suspect. Sigh.
The psychology driving people who 'invest' in such schemes is likely similare to those who tried to make money in the South Sea Company - the South Sea Bubble [wikipedia.org].
I like the different (apocryphal) enterprise - "a company for carrying out an undertaking of great advantage, but nobody to know what it is - Bubbles and Gullibility, Andrew Odlyzko, Univ. of Minnesota (PDF) [umn.edu]".
The expectation of being able to make large profits without (your own) labour 'simply' by using capital is widespread and pernicious.
(Score: 3, Insightful) by RedGreen on Monday December 09, @03:19PM (1 child)
"a type of cryptocurrency with no purpose or utility beyond financial speculation"
Crapto coins are just that though looking at the gamblers on the stock exchanges these days little is the difference. Though the companies they roll the dice with do at least produce goods and services of value unlike the crapto which does nothing but consume resources making calculations.
"I modded down, down, down, and the flames went higher." -- Sven Olsen
(Score: 3, Insightful) by Thexalon on Tuesday December 10, @03:49AM
Stock prices aren't quite completely gambling, because the results have probably some kind of relationship with the underlying value of the company whose name is on them, and stockholders in theory at least own a tiny percentage of that company's assets. Of course, what those assets actually are is often a mystery, which has led to numerous major losses over the years.
"Think of how stupid the average person is. Then realize half of 'em are stupider than that." - George Carlin
(Score: 0) by Anonymous Coward on Tuesday December 10, @11:06PM