Aug 17, 2021

Letter #34: Scamcoins are a Dime a Dozen

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Joshua Guest
Your one-stop shop for Bitcoin education!
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Dear Readers,

The rise of Bitcoin over the past decade has been nothing short of spectacular. From humble beginnings on a cypherpunk mailing list, Bitcoin has shown millions of users around the world that value can be transferred digitally anywhere at any time without needing the permission of a bank, government, or anyone else.

Bitcoin’s success has spawned a worldwide movement. But, perhaps unsurprisingly, it has also spawned an army of alternative cryptocurrencies. After all, its software code has been open-source from day one, meaning that anyone in the world can access and tweak the code to make their own cryptocurrency.

Ethereum, the second-largest cryptocurrency by market cap, has put the creation of new cryptocurrencies into overdrive by introducing the ability to easily and cheaply create and release ERC-20 tokens, alternative cryptocurrencies in their own right. ERC-20 cryptocurrencies run on top of the Ethereum blockchain, meaning that issuers of the tokens don’t have to build a blockchain of their own.

Creating a cryptocurrency has never been easier. As a result, there are thousands of different cryptocurrencies currently in existence. If you spend enough time in the cryptosphere, you’ll realize that not all cryptocurrencies fulfill what any society might commonly recognize as a “worthwhile” purpose and that others are downright malevolent. The worst of these have been given a name to match the gravity of their crimes: scamcoins.

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