Blockchain - SCAM? Some Perspective

New technologies have always enabled new criminals. Mail fraud laws in the United States date to 1872, suggesting that the first hundred years of national mail service in the country included a few felonious hiccups. Just 4 years later the telephone was invented. A new platform for new forms of fraud to which my grandparents’ generation is still particularly susceptible.

The first quarter of the 20th century introduced radio and television. These broadcast technologies proved less useful as a tool for criminals, since broadcast media largely removed the element of anonymity that letters and phone calls can afford.

Then came the internet. Your dad might have called the whole thing a scam in the 90s, since he had a perfectly good set of encyclopedias in his study.

The internet wasn’t a scam, and it turned out to be a profoundly powerful technology. One which afforded more anonymity, with a broader global reach, than ever before … which did empower a whole lot of scammers. In the 25 years since you closed your first AOL account, we’ve gotten a lot more savvy about how to use this powerful tool. Our email service providers have developed spam filters that work pretty well. We learned that PASSWORD is not a good password. We know not to download files from sources we don’t know and trust.

In the 21st century, the scary new technology is blockchain. Some call it a scam, suggesting that blockchain is just a pyramid scheme where the creation of value is purely dependent on newcomers foolishly throwing more money into the funnel. Blockchain is a little more confusing than other technologies, since it’s the first one that has an alternative form of money baked into the recipe. However, don’t let this confuse you: all the impactful technologies of the past had money in the winning recipe as well - it was just recognizable fiat money, dollars and cents.

You pay for your phone, you pay for your internet, and you might even still buy stamps to mail a letter. It’s not because you are a sucker; it’s because you are paying for a service you find valuable.

In the first years of blockchain, a lot of the money pouring into it has been from investors; speculators who either believe in the technology, or are just feeling the FOMO. Those investments will only pay off in the long run if blockchain becomes a real tool: a powerful, useful technology that provides value to its users.

In the story of blockchain, today is like the late 90s: V1 tools, rudimentary user interfaces, a crowd of skeptics, and a large number of investors hoping to get lucky. It is maturing quickly, and becoming a paradigm-shifting way to decentralize power, putting users in charge of their own data, and their own destiny. On our way to that “becoming”, bad actors will try to take advantage of under-informed new users - a story as old as time.

So what does it look like to stay safe from scammers in the early days of blockchain? Just like we learned there is no Nigerian Prince that needs our help, we can learn what it means to use this technology safely. It looks like all of us collectively doing our research, raising up educational resources, and sharing good information with each other. Look up the “Blockchain - SCAM?” tag on Lido Nation to find the articles we publish to contribute to our collective knowledge on this topic.