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When I recently did a little experiment for an article to highlight a corner of the cryptocurrency world, I knew I was creating something that would live on after the article was published. But what happened still surprised me.
As a business reporter based in London, I have been captivated by the booming popularity of so-called hype coins in recent months. These are the downward-facing, volatile cousins of Bitcoin, the gray beard of the cryptocurrency world. There are more than 70,000 of these coins – with names like Klaytn, Chiliz, Helium, and others you’ve never heard of – and a few dozen new ones are created every day.
At first glance, the hype coin phenomenon is one of the most startling financial craziness in history. At least if you went broke during the 17th century tulip mania, you could end up with tulips. Hype coins have no intrinsic value. But investors and venture capitalists have swooned for them. More than 80 have a market value of over $ 1 billion.
To educate readers and myself, I made my own hype coin. I spent about $ 1,000 of the New York Times money – yes, I settled those expenses with editors first, and we discussed the legal issues of this project with Times attorneys – to create and promote it.
I named it Idiot Coin. The name was only part of an effort to prevent anyone from hoping that they would “moon” or increase in value. I wanted this thing to flop, and for very solid legal reasons. Two attorneys who specialize in cryptocurrency law explained to me that hype coins are securities and that anyone marketing one with the intent to get rich could get unwanted attention from the Securities and Exchange Commission.
I made 21 million idiot coins and put seven million up for sale. This is where I was really trying to sabotage this company. New cryptocurrency developers will boost trade by putting money in a “liquidity pool”. The details here get complicated, but suffice it to say that most coin manufacturers put around $ 10,000 in their pools. I spent $ 30.
I had essentially designed a car that had two gulps of gasoline, max. It was about demonstrating how easy it is to make and mine a completely useless good. Then I would watch this product fade into oblivion. That didn’t happen.
After the article was published online, a few dozen people showed up in the Idiot Coin account on Telegram, an encrypted messaging platform. A handful started making very amusing memes. Someone named DragonX posted a picture of a big-eyed toddler licking a window with the words, “Who [sic] I don’t leak windows, I buy Idiot Coin! “
Others wanted to make a fortune with the coin. “Let’s get on that idiot moon!” IceMaster0x wrote. It will never be moon, I kept replying to would-be boosters. That didn’t stop a few dozen people from getting hold of coins, often in the hundreds of thousands.
On the morning of August 10, the total market value of the coin was around $ 6,000. That evening it had risen tenfold. By the next afternoon, almost all of the coins were sold and the market value had reached $ 108,000. It went down, then to a new high. On Monday afternoon it was $ 68,000.
Selling the coins would likely drive the price up. That humble pot could go away in a frenzied few minutes. But if the surge continues, the money will go to charity.
For now, a strange kind of camaraderie has formed on the Telegram account for Idiot Coin with voices and opinions from all over the world. (Call Rusty from Kazakhstan.) “Only buy if you’re an idiot” is a meme that is posted over and over again. Some are pushing for strategies that could cause the coin to appreciate. Others argue that such a notion is far from the mark for a currency called Idiot Coin.
As I write this, I have no idea what will happen next. What is certain is that some people will invest in almost any business, even if it is doomed to fail.