Lawrence Hall, HSG
Jack and the Magic
Cryptostalk
As we are so often reminded in life, there are no magic
beans. Still, the lesson is often not taken: The Dutch Tulip Bubble in the 17th
century, the South Sea Bubble and the Mississippi Bubble in the 18th
century, the original Ponzi scheme in 1919, fools’ gold, emus, Enron, Madoff, cryptocurrency,
the Texas State Lottery [State lottery advertising tells players half of the story |
AP News], Theranos, and any number of other get-poor-quick schemes that
victimize people with cruel tricks to separate them from their savings.
We all read about these historical ripoffs in our history
classes and wondered how anyone could be so naïve as to mortgage the house to
buy, say, tulips, or maybe shares in a gold mine in Peru.
In the future people will read about cryptocurrencies and
marvel even more. How is it that people invested in something that didn’t even
exist? A machine or series of machines generate secret codes that have no
reference to anything in reality, and some clever people then sell these secret
codes for money. The idea is that the secret codes acquire value and can later
be sold for a profit.
Magic beans indeed.
The first few code owners in any given scheme do make a
profit; they tell their stories which in turn entice others to buy some of the
magic beans – codes – and so the originators accrue fortunes which they filter
to a foreign tax haven before discreetly disappearing with almost all of the
investors’ money into another nation which for a generous fee will ignore any
attempt at extradition.
The recent dramatic failure of a cryptocurrency [Crypto Stocks Teeter Near Abyss as Fink’s Warning Adds to
Angst (yahoo.com)] and [Why Hasn’t Sam Bankman-Fried Been Arrested Yet? (nymag.com)]
has let the metaphorical cat out of the bag with regard to the others. The beanstalk is falling; the marvel is that
it stood as long as it did.
The first few investors might or might not be required by
an inquisitive federal court to give their winnings back, and while Poncy
Clever, MBA, is lounging on a tropical beach (as long as a host government will
want to put up with him), the thousands of investors will be left with nothing
but self-reproach.
Poncy Clever, MBA, with an umbrella drink in his hand and
a Rolex on his wrist, might paraphrase Marie Antoinette and say mockingly, “Let
them eat fungible tokens.”
Or magic beans.
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