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When I recently ran a little experiment for an article highlighting a corner of the cryptocurrency world, I knew I was creating something that would live after the article was published. But what happened took me by surprise anyway.
As a London-based business journalist, I have been fascinated in recent months by the growing popularity of so-called hype pieces. They are the low-end and volatile cousins of Bitcoin, the gray beard of the cryptocurrency world. There are over 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 baffling financial crazes in history. At least if you went bankrupt during the tulip mania in the 17th century, you could end up with tulips. Hype coins have no intrinsic value. But investors and venture capitalists have passed out for them. Over 80 have a market value of over $ 1 billion.
To enlighten myself and readers, I created my own hype coin. I spent about $ 1,000 of the New York Times money – yes, I approved that expenditure with the editors first, and we discussed the legal issues of this project with the lawyers for The Times – for the create and promote it.
I named it Idiot Coin. The name was only part of an effort to dissuade anyone from hoping it “moon” or rise in value. I wanted this thing to fail, and for very solid legal reasons. Two lawyers specializing in cryptocurrency law explained to me that trendy coins are securities and anyone who markets one with the intention of getting 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 really tried to sabotage this business. Developers of new cryptos will initiate trading by putting money into a “cash pool”. The details here get complicated, but suffice it to say that most parts makers put around $ 10,000 into their pools. I put $ 30.
I had basically created a car that had two gulps of gasoline, max. It was about showing how easy it is to manufacture and promote a totally useless commodity. Then I would watch this merchandise wobble into oblivion. This is not what happened.
After the article was published online, a few dozen people took to the Idiot Coin account on Telegram, an encrypted messaging platform. A handful have started making very funny memes. Someone by the name of DragonX posted an image of a wide-eyed toddler pulling up a window, under the words “Wen [sic] I don’t lick the windows, I buy Idiot Coin! “
Others wanted the coin to make a fortune. “Let’s go on that stupid moon!” IceMaster0x wrote. There will never be a moon, I kept responding to future boosters. This did not stop a few dozen people from buying parts, often in the hundreds of thousands.
On the morning of August 10, the coin’s total market value was approximately $ 6,000. That evening it had increased tenfold. The following afternoon almost all of the coins were sold and the market value reached $ 108,000. It came down, then to a new high. As of Monday afternoon, it was $ 68,000.
Selling the parts would probably crack the price. This modest pot could disappear in a few frantic minutes. But if the increase persists, the money will go to charity.
For now, a curious form of camaraderie has taken shape in the Telegram account for Idiot Coin, with voices and opinions from all over the world. (Shout at Rusty from Kazakhstan.) “Only buy if you’re an idiot,” reads a constantly published meme. Some advocate ploys that could make the play appreciated. Others argue that such a notion is far from the hallmark of a coin called Idiot Coin.
As I type this I have no idea what will happen next. What is certain is that some people will invest in just about any business, even one designed for failure.