Republik DAO envisions cryptocurrencies as a gateway to a world of opportunities, a new frontier in the digital realm built on open-source software that allows individuals to break free from the grip of financial and technological giants such as Wall Street and Silicon Valley.
So why do so many people still believe that cryptocurrencies are full of scams?
This article proposes the “Concentric Circles of the Crypto Industry” model, which explains why many people view the industry as a fraudulent one.
This model aims to equip beginners with knowledge to navigate the often murky waters of cryptocurrency and gain a deeper understanding of the different types of people they may encounter in the industry. By identifying those to avoid and those to pay attention to, investors can make more informed decisions and reduce the likelihood of falling victim to scams.
The article discusses a model for understanding the crypto industry, consisting of four concentric circles. At the center of the model is the Core Developers circle, surrounded by the Crypto Believers and Crypto Scammers circles, with the rest of the world in the outermost circle.
The Core Developers
This is made up of the builders and philosophers who established the industry’s principles. They possess an in-depth understanding of the world’s problems, how cryptography and blockchain technology can address them, and the radical implications for the future. They comprehend the philosophy, code, and moral values that this technology can bring to the world. This is what is referred to as “crypto values.”
The circle includes Satoshi Nakamoto, the anonymous creator of Bitcoin, who birthed the Bitcoin blockchain and then slowly disappeared because he knew that Bitcoin would be better off without a leader.
Vitalik Buterin, the creator of Ethereum, is also part of this circle. Vitalik is a digital monk, expert in cryptography, philosophy, mathematics, and of course, crypto economics. He has a desire to build public goods and social systems that promote global well-being. Even though he is incredibly wealthy, he is known to sleep in hostels and live out of a backpack, as he does not want to consume more resources than necessary.
In conclusion, this model can provide valuable knowledge to beginners in the crypto industry, allowing them to navigate the dark world of crypto with greater ease and comprehend the types of people they may encounter within the industry – those to be watched and those to be avoided.
Becoming a Core Developer can be a selfless job. Building open-source software is often undervalued and compensated relatively limited compared to the value it provides to the world. These people are here because they believe in their mission, they see a better future, and they need to help make it a reality.
Core Developers are the holy people at the center of the crypto universe, and their leadership creates the highest gravitational pull. They are the revolutionaries with good hearts and sound minds, for a future of cryptographic power.
The Crypto Believers
These are the users of crypto power. These people believe in the same future being built by Core Developers and live on the foundation established by Core Developers.
But this circle is not just composed of users! It also includes application developers, DAO members, and companies, all building interrelated layers of products and services around these new protocols.
Ethereum is a protocol, and we are all organized around it.
Applications like Uniswap, Aave, or Maker are built on top of the Ethereum application layer with smart contracts. DAOs like MakerDAO, PleasrDAO, or even Constitution DAO are governed using Ethereum. Companies are also organized around Ethereum, such as venture capital firms, news offices, or media companies… like Republik Rupiah!
This circle is filled with settlers, not tourists.
Here are crypto citizens who are building structures on this new frontier, testing their products in experimental phases, all gradually becoming less reliant on banks by managing their money and property on crypto tracks, and building new digital identities for themselves. These settlers are here to inhabit the open and free metaverse, built using open-source software and ethos.
Here are people like Rune Christensen, the man who saw the need for decentralized dollars and created the vision for MakerDAO, even before DAOs became popular! Now, billions of DAI exist to avoid their mismanaged government currency.
Or Hayden Adams, who single-handedly built Uniswap, a public and free asset exchange system after just learning how to code and with the help of a $10,000 grant from the Ethereum Foundation.
This crypto layer is where values built into the base-level protocols by Core Developers are expressed in applications built on top of them.
Cami Russo, a resident of Argentina, has experienced first-hand the effects of hyperinflation on the Argentine peso, which has created a demand for crypto-industry products. The adoption of DAI, a native crypto stablecoin, has been widespread in Argentina due to its ability to help the country avoid inflation rates of 50-100%. After becoming a crypto believer, Cami studied journalism and established The Defiant, a media publication focused on crypto news.
Anthony Sassano, on the other hand, produces a daily video that informs the world about the Ethereum ecosystem’s latest developments.
This is the crypto layer that broadcasts progress in the industry, as developers and application makers tend not to be good at marketing themselves since they are focused on building the future. The community around the crypto industry solves it, and this community exists because of the shared belief that crypto is here to create a better and freer world.
Crypto Scammers
However, the understanding of the crypto world is hindered by Crypto Scammers who separate it from the rest of the world. Crypto Scammers make it difficult to hear the signals coming from the true forefront of the crypto industry. Scammers are loud and often exaggerate their claims. They use tactics and polarization styles that work well in politics. Crypto Scammers are not foolish – they recognize the wealth that can be extracted in the crypto world and are eager to take shortcuts to make money, regardless of how sustainable or ethical the technology is.
Crypto Scammers often market themselves more than they build technology. They create dangerous products intended to trap naive crypto beginners, such as paid Telegram channels where they share “alpha info” that is nothing more than a sales pitch or convoluted DeFi projects that transfer money from the victim’s pocket to the scammer’s. Most scammers appear in bull markets and mimic what is popular in the market, such as creating fake ICOs in 2017 or poorly executed NFT projects in 2021.
Crypto Scammers share some similarities, such as having a selfish personality, being big, bombastic, and sometimes bragging. They form a small but lively community, often becoming a personality cult. They silence dissent and are a classic mix of human and robot in the modern social media world. The products or systems they create are often unsustainable, despite seeming otherwise at the time. Shiny new crypto products that don’t make sense are created, and they eventually die.
Well-Known Scammers
Alex Mashinsky
The founder and operator of Celsius, a custodial lending service. It is a centralized company that accepts customers’ crypto assets and offers them substantial returns on their deposits. While this type of business model is commonly referred to as a bank, Mashinsky promotes it under the DeFi (Decentralized Finance) banner and espouses the notion that DeFi will disrupt traditional banks. However, it is worth noting that he himself is essentially establishing a bank. Celsius operates by accepting customer deposits, employing a high-risk trading strategy that lacks accountability, and putting other people’s money at stake.
Daniele Sesta
The brain who built the Wonderland ecosystem. Following behind Sesta is a swarm of Pepe Frog accounts that crowd around him wherever he goes on the internet. Whether it’s on crypto Twitter, YouTube comments, or live streaming chat boxes.
They invade and occupy the digital spaces where crypto enthusiasts spend their time, infiltrating their thoughts because of their incessant noise. We have seen this strategy before, both within and outside of the crypto world. However, in the crypto realm, when money is at stake, these internet armies can be deafening.
Nevertheless, Wonderland collapsed when people realized that the unsupported stablecoin was nothing more than a Ponzi scheme. Additionally, the true identity of one of the anonymous founders of the project was revealed to be Michael Patryn, a convicted money launderer and one of the founders of QuadrigaCX exchange, which had a history of its founder’s mysterious death and subsequent discovery of the exchange’s bankruptcy.
Do Kwon
The eccentric and aggressive founder of Terra. The event marked the largest capital destruction in crypto history, where $50 billion in capital turned to zero.
The Terra ecosystem lost all its incoming cash flows overnight, revealing itself as an unsustainable structure that bears a striking resemblance to a colossal Ponzi scheme behind the scenes.
Similar to Sesta, Do Kwon has a large following that portrays themselves as “Lunatics.” As Terra experienced surges, Do Kwon became increasingly outspoken and aggressive on Twitter while simultaneously amassing his followers.
Furthermore, there are many other fraudsters in the crypto world, such as Richard Heart and BitBoy.
Should we coexist with Crypto Scammers?
Yes and no.
We cannot directly stop these crypto scammers. That is the consequence that the crypto world must accept when prioritizing permissionless values above all else.
Universal access is the core value of crypto; this cannot be compromised.
Similar to the internet, no one should need permission to use crypto. Crypto is a public utility in money and finance, available to anyone with an internet connection. And this public utility becomes more valuable over time as the DeFi financial world grows and expands organically with increasing adoption.
Unfortunately, this same permissionless property also means that it is challenging to halt scammers from their actions. Permissionless financial innovation allows us to break free from the financial confinement imposed by banks and financial institutions, but it also means it is difficult to prevent others from attempting to make money through unethical means.
Although we cannot directly stop them, we do not have to coexist with them.
We can fight back through education. As an industry, we need to do better in reaching the masses before scammers do. Massive marketing efforts exploiting grandiose and bombastic tactics are hard to compete with. Crypto is complex, and understanding what makes this industry beneficial is more challenging than simply listening to a few charismatic individuals urging you to buy their tokens.
The good news is that nowadays, most people have basic intuition to avoid email spam and internet viruses.
Ultimately, crypto will not be any different.