Look out for snake oil

The space is new, hyped and full of misleading information

So I mean for today, you could have, some Bitcoin business have a tab, so you pay them and then you work your tab there and presumably you cash your tab out if you don’t use it.

If you have repeat custom… or maybe the shops in the local area could make a shared tab or something in anticipation of… you know somebody in the local area … technology expert could make a local Bitcoin tab that’s interoperable between the shops and some sort of app to do it.

A snake oil salesperson sells, or promotes, a valueless or fraudulent solution. The cryptocurrency space is full of such people and broken solutions.

Not really cryptocurrencies

There are many projects in the cryptocurrency space which, curiously enough, aren’t actually cryptocurrencies. Some even go so far as to call them cryptocurrencies even though they don’t fulfil the criteria. For example I don’t consider these real cryptocurrencies:

Some might be useful but they don’t have the same properties as cryptocurrencies like Bitcoin, and they don’t work the same way.

For example stablecoins depend on a third party issuer and redeemer—the very thing cryptocurrencies are meant to remove. Sidechains have fundamentally different security trade-offs and they work differently. They are built on top of—but they are not—a cryptocurrency.

The blockchain hype

There’s the phenomena where a technology gets hyped up and businesses all over rush to adopt it in any way they can, even if it’s totally the wrong solution for their problems.

Removing the consensus mechanism from a cryptocurrency, so they can just use the blockchain, removes what makes cryptocurrencies useful. The blockchain data-structure by itself is neither new nor interesting.

Be aware of “the blockchain” being used only as a buzzword.

Warning signs to look out for

When evaluating cryptocurrencies here are some red flags to look out for:

There are many traps to fall into in this space. I think the best antidote is to try and learn as much as possible, and never be afraid to question.