After Bitcoin’s advent, people conjured countless cryptocurrencies, which at their peak carried a value of more than $1 trillion. But scant regulation has led to scams and Ponzi schemes that have cost investors billions. Crypto expert Erica Stanford offers an enlightening look at some of these major frauds and scandals. Yet she’s not anti-crypto: Stanford believes blockchain and the cryptocurrencies it enables are transformative technologies that will live long after the scams and swindles, helping those otherwise excluded from the financial system.
Cryptocurrency is an innovation that made huge gains for early investors – but it quickly became a “Wild West” of deception.
Cryptocurrency started out as an authentically radical technology. Bitcoin, the inaugural and still central cryptocurrency, also provided its early investors with mind-boggling returns. When Bitcoin launched in 2009, it was worth less than one cent; eight years later, one Bitcoin had a value of more than $1,000.
By 2016, it wasn’t difficult to launch a new cryptocurrency – the necessary code was open source, and enough people knew how to use it. This was especially the case if you didn’t care whether you were doing something technologically significant or socially beneficial. Blockchain – the foundation for crypto, which provides a noncentralized, secure, transparent method of storing data and transmitting value – seemed as if it might disrupt both industry and finance. Launching a new cryptocurrency with an initial coin offering (ICO) became a new way to raise large amounts of money.
Many early ICOs were honest efforts to provide something useful...
Erica Stanford is the founder of the United Kingdom’s top-rated crypto networking and events organization, the Crypto Curry Club, and she is a guest lecturer on the subject of cryptocurrencies at Warwick Business School.