Torcoin: Crypto's latest scam

https://blog.toine.io/torcoin/

by toinetoine • 9 years ago

68 49 9 years ago

blog.toine.io

al2o3cr• 9 years ago

The cryptocoin motto: "From each according to his gullibility, to each according to his greed"

geogra4• 9 years ago

man, whoever is left holding the bag on these is going to be seriously screwed after the tulips run their course

davidgerard• 9 years ago

Every one of them thinks "man, so close, next time for sure"

coldtea• 9 years ago

If only the second part was true...

Taek• 9 years ago

Is a $500k market cap scam even worth discussing? What about all the ethereum projects raising 6-7 figures with little more than a whitepaper? And often even with heavy criticism about a broken security model.

There is no latest scam in cryptocurrency. By the time you've finished writing the article another has already popped up.

If anything you are helping these guys by giving them visibility.

Kinnard2• 9 years ago

Perhaps the author bought her(his?)self some Torcoin before publishing?

bhaak• 9 years ago

A $500k market cap is really nothing to write about. Market cap is a broken metric anyway.

But the article is a nice how-to for your own crypto coin and there were lots of worse coins he could have forked off than shadowcoin. :-)

timdorr• 9 years ago

Crazy part is this guy didn't even come up with the name!

https://github.com/torcoindev/torcoin/issues/4 You can see he changed the title in that issue, indicating he was taking over the abandoned name.

The original project is at least nearly 3 years old: https://github.com/torcoindev/torcoin/issues/1 (Git timestamps can be forged, but not Github issues)

And for the pièce de résistance, there's a backdoor in the code: https://github.com/torcoindev/torcoin/issues/3

brilliantcode• 9 years ago

It never ceases to amaze me how gullible people are with all these questionable "crypto" coins being traded on Poloniex.

Price is manipulated but because these don't fall under SEC's turf it's being looked the other way...

but if anything should keep the Poloniex and Ethereum guys awake is that the SEC has traditionally retroactively applied a law however far back they need to.

This means that you should start treating cryptocoins under the assumption that the SEC would retroactively view it as equity therefore violation of trading laws.

danmaz74• 9 years ago

Just out of curiosity, why are you singling out Poloniex? AFAIK there are exchanges with way more alt coins.

lisper• 9 years ago

It is ironic that at the bottom of this post on cryptocurrency scams there is this teaser:

"For years bitcoin has offered a reliable and inexpensive way to transfer value around the globe."

Bitcoin is not inexpensive. The cost of mining is actually quite substantial just in terms of the electricity bill. And this is inherent in the design: bitcoin's security depends on mining being expensive. If it were cheap, anyone could mount a 51% attack.

Also, Bitcoin is currently teetering on the brink of a community split which could lead to a hard-fork of the blockchain, though very few people outside the community seem to be aware of this. As the old adage goes, past reliability is no guarantee of future reliability.

zanny• 9 years ago

Except BTC has been "teetering" on the "brink" for 3+ years on the block size issue. When everyone's value is in the consensus, nobody is going to break it, no matter how much they complain about it. You can't rock the boat too much or you lose all your money.

That also means bitcoin is never going to get better, so it is pretty much destined to always be cryptogold. Which isn't even a bad thing, it just isn't competing to be a real money. But it has never been valued for any potential monetary use - it has always been valued as cryptogold.

jstanley2• 9 years ago

Bitcoin is not inexpensive. The cost of mining is actually quite substantial just in terms of the electricity bill.

As you point out, this is on purpose. And the cost of mining bears almost no relation whatsoever to the cost of using Bitcoin.

fpgaminer• 9 years ago

It probably does. I mean, we pay miners 12.5 BTC to verify ~1800 transactions. It's not like that BTC is free. When new BTC are created, it devalues existing BTC.

Put another way, the miners will sell that 12.5 BTC on the market. Selling on the market puts a downward pressure on the price.

Another way still: If the market cap for Bitcoin remained constant, then it's obvious to see that for every block reward generated, the price per bitcoin goes down.

I don't think it's unreasonable to think that that means we're paying miners $16.5k USD per block, which would be about $9.22/transaction. Plus transaction fees. It's probably just hard to see that because the market cap for Bitcoin keeps increasing faster than Bitcoin's natural inflation. Basically, investors in Bitcoin are paying the transaction cost right now.

esMazer2• 9 years ago

"For years bitcoin has offered a reliable and inexpensive WAY TO TRANSFER value around the globe."

the quote is not referring to the intrinsic value of BTC, is referring to the cost of TRANSFERRING value which is low with bitcoin.

Analemma_2• 9 years ago

Cryptocurrencies are a brilliant scam. They are to the libertarian-ish programmer crowd what MLM pyramid schemes are to the working class: perfectly crafted to exploit the particular tendencies of its target. I mean, just think about the properties of the typical software engineer who gets into these things:

1. They tend to have more disposable income, i.e., they're fat marks

2. The Dunning-Kruger effect means they think they're too smart to fall for a scam

3. Their libertarian attitude means they probably won't make a fuss once they realize they've been scammed, and just passively accept it instead of involving law enforcement

4. Because every one uses different code, any anecdotes about past scams can always be waved off with "This one is different"

It's all so perfectly tuned to draw in an endless supply of suckers that I'm almost kicking myself for not thinking of it first.

pc86• 9 years ago

I take issue with your third point. Libertarianism does not in any way mean you won't avail yourself of law enforcement if you've been the victim of a crime.

I'm not a cryptocurrency guy, but what exactly about them would someone involve law enforcement for?

geofft2• 9 years ago

Law enforcement is funded by taxation, which is theft. If you avail yourself of law enforcement, you are benefiting yourself from the proceeds of crime for personal gain.

Analemma_2• 9 years ago

geofft's answer is funnier, but I think the more likely answer is this:

Realistically speaking, cryptocurrency-related crime is never going to stop being easy and profitable unless there is a massive increase in both a) government control over the internet and b) coordinated international law enforcement, since these crimes are usually international. Since libertarians typically oppose both, they are incentivized to make crypto-related crimes-- even when they're the victim-- seem like no big deal to avoid helping to fuel an outcry that might cause politicians to take action and bring about a) and b).

Granted, that's all quite speculative, but empirically, I have seen quite a few people get robbed blind of their cryptocoins and be remarkably sanguine about it, and I'm struggling to come up with another explanation.

uncletammy• 9 years ago

I can't wait until I grow up and get the power to downvote comments like this which contribute nothing of value to the discussion. Your horse could not be more dead.

$34 billion dollars and many of the biggest names in finance and technology seem to think there's a little more to the story.

cloakandswagger3• 9 years ago

The original commenter belongs to a very persistent faction of people who openly mock and malign cryptocurrencies despite being completely unaffected by them

My only theory to date is these are sour grapes type folks who are upset that they've missed the bus in terms of crypto's fantastic investment value.

The only comfort these people get is jeering from the sidelines in hopes that an eventual collapse will prove them "right"

shrimp_emoji• 9 years ago

https://en.wikipedia.org/wiki/Satoshi_Nakamoto#Development_o...

Timestamps for subsequent blocks indicate that Nakamoto did not try to mine all the early blocks solely for themselves in an effort to benefit from a Ponzi scheme.

But they could have.

The public bitcoin transaction log shows that Nakamoto's known addresses contain roughly one million bitcoins. As of 7 February 2017, this is the equivalent of over US$1 billion.

Starting your own cryptocurrency doesn't seem like a bad way to make a buck (particularly provided it becomes as successful as bitcoin), all thanks (eventually) to "the biggest names in finance and technology".

Granted, there's a strong difference between "potential scam" and "scam" (hell, it's the difference between Torcoin and every legitimate, well-regulated non-crypto currency).

pikzen• 9 years ago

If that can make you happy, I used that power to downvote you, as your does not add anything of value either. I also upvoted him, for being right :>

"X billion dollars can't be wrong" is also a dead horse. Appeal to authority and wealth is a terrible argument.

corysama• 9 years ago

IMHO, Bitcoin is a more brilliant scam than GP gives it credit for. It was a scam that was designed to end up not a scam. IIRC, Bitcoin being a pyramid scheme was explicitly stated in the original design doc from Satoshi. The problem was that even though bitcoin could work well once it was widely adopted, it had a chicken-egg problem in the beginning. It had no value until it was widely adopted, but no rational person would adopt it until it had value.

The solution was to prime the pump with a pyramid scheme. By structuring the system to highly reward risk-taking early adopters, Bitcoin motivated millions of dollars of high-risk early investment which is worth billions today.

But, return on investment was only a nice side effect on the way to the end game. The end game was to get Bitcoin up and running as an exchange medium --only coincidentally as an investment vehicle. As an exchange medium, Bitcoin is not yet 100% solid. But, in general the plan has already worked. Someone in Haiti can exchange value with someone in the Ukraine and for once there is little that the games of the politicians or the banks can do to stand in their way. That was the real goal. A bunch of nerds gambling was just a necessary bit of fun on the way to setting that up.

throwaway6556• 9 years ago

Is anything of what he said untrue?

Yeah, I didn't think so either.

mmcwilliams• 9 years ago

You understand that the figure you quote, "$34 billion dollars" might seem like it carries a lot of weight, but it's also about $2B short of the amount invested in the largest Ponzi scheme uncovered in US history[0]. A lot of people seemed to think that investors in this scheme were too savvy to be duped, as well.

This doesn't mean that crypto currencies are inherently scams, but it is a terrible way of defending them.

[0] https://en.wikipedia.org/wiki/Bernard_Madoff#Size_of_loss_to...

enraged_camel• 9 years ago

>$34 billion dollars and many of the biggest names in finance and technology seem to think there's a little more to the story.

I'm sorry, but so fucking what? MLM was a $178 billion industry in 2013 and it has been growing. This doesn't make it Not A Scam.

nyolfen• 9 years ago

It's all so perfectly tuned to draw in an endless supply of suckers that I'm almost kicking myself for not thinking of it first.

well, clearly it's not too late to get in on the game ;)

Kinnard2• 9 years ago

Cryptocurrencies are a brilliant scam.

Quite a bit too broad of a generalization.

celticninja• 9 years ago

Generalising all cryptocurrencies as a scam kind of shows up your lack of knowledge.

mmjaa• 9 years ago

You may as well just be describing software, in general.

This isn't a "crypto thing", yo.

All software has such utility.

You either care or you don't.

hectorr• 9 years ago

A lot of them are, for the reasons you point out. But they really are not that different than other financial instruments in kind, just in maturity.

What does it mean to own a share of Snapchat, Facebook, or Google? You can't influence these companies, they don't pay dividends, so the value of a share is just whatever the mob wants to pay for it. Goes up on good news, down on bad. Bonds are even worse, that's just someone saying sure, I'll pay you back later. These things have law developed around them now, but didn't when they first emerged.

It all depends on your risk profile. If you have high risk tolerance, and think that you can mitigate some risk with being ahead of the market in technical and/or business skills, there is no reason not to get involved in these.

max_• 9 years ago

Cryptocurrencies are a brilliant scam. They are to the libertarian-ish programmer crowd what MLM pyramid schemes are to the working class: perfectly crafted to exploit the particular tendencies of its target.

How is this different from the way Twitter makes no profits but lists on the stock exchange?

Or are startups also a scam?

Sami_Lehtinen• 9 years ago

There are many rumors circulating around OneCoin being a scam. Afaik it hasn't been (yet) proven to be a scam. https://www.onecoin.eu/en/

martinko• 9 years ago

Are you kidding me?

sireat• 9 years ago

If you consider that most EU equivalents of SEC have issued warnings against OneCoin I would say that counts as a scam.

The amazing thing is that OneCoin does not even have a public blockchain or any chain.

Probably just an Excel spreadsheet with periodic applying of *2 formula.

It is just a regular pyramid which has nothing to do with cryptocurrencies besides the name.

I get regular questions from non-technical people who have been asked to "invest" in OneCoin.

It is hard to tell people to stay away.

chatmasta• 9 years ago

Just want to say this has absolutely nothing to do with the research I did for my senior thesis [0] which was quite popular on HN when I posted it a few years ago.

We never moved beyond the research / theory phase, which is admittedly frustrating, but we never intended to scam anyone.

That said, the idea of incentivizing routing is one I think about every day. In college I ran a successful business selling proxy servers, which opened my eyes to the unoptimized economics of small/medium scale IP transit. Major cloud providers are making a huge racket by charging for transfer rather than capacity. This presents an opportunity for a marketplace.

My next product is going to be a global L3 routing-fabric-as-a service with developer pluggable routing and filtering rules. I'm going to bootstrap it by offering outbound http proxies with hourly charging and an API. Then I will develop the more generalized routing fabric, with the eventual goal of creating a marketplace for bandwidth and routing.

If that piques anyone's interest, feel free to email me - address in profile.

[0] http://dedis.cs.yale.edu/dissent/papers/hotpets14-torpath-ab...

Torcoin: Crypto's latest scam

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