Cryptocurrencies, as far as bubbles are concerned, have become tulips and dot-coms. Bitcoin is up more than 400% for the year, and recently eclipsed the $4,700 mark. Meanwhile, cryptocurrency as a whole is worth more than $166 billion.


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Currency-without-government has become one of the year’s big stories. But where there is no government, thieves rule.

Law enforcement cracked Bitcoin anonymity and some black-market sites using it, but the bad guys simply switched to another coin called Monero, whose value is up 500% just in August.

The more common scams on the crypto-market, however, involve “initial coin offerings,” or ICOs. They’re sold as something like the public offerings companies do on the stock exchange but, again, without the public or private regulation that should interest any conservative investor.

Many are variants on the old Gordon Gecko saying, “A fool and his money were lucky to get together in the first place.” (Thanks, Stanley Weiser.)

All the SEC can do about this action, as our William White notes, is to warn public companies from getting involved. Don’t open that door, there’s a tiger in there … too late.

Usually, these are a variation on the old pump-and-dump routine from the 1860s from which we get the Daniel Drew saying, “He who sells what isn’t his’n, must buy it back or go to pris’n.” A scammer touts a new coin offering, people bid up its price, the scammer sells out, and profit — for the scammer. It’s like a penny stock scam without the paperwork.

Chainalysis, which provides anti-money laundering software for Bitcoin, estimates $225 million in real money has been lost to these scams this year. Here is one example from a week ago: Empire Coin, which has collected coins worth $35,000, has a fake phone number, and its “executives” are photos of minor celebrities, just reversed.

Scams also can happen over the heads of an ICO sponsor. Enigma, which sought to develop security for blockchain developers, planned an ICO for Sept. 11. Hackers used a stolen administrative password and a lack of two-factor authentication to steal $500,000 from the site’s backers.

They say a conservative is a liberal who has been mugged. Maybe a liberal is a conservative who finds there’s no cop or court he can turn to after he has been mugged.

Hackers know the big gains in cryptocurrency have small investors rushing into the area, and are taking advantage of it. The top Google result for Bittrex, a coin trader, was, for a while this month, a phishing site called Biltrexx.

When reporters write about these things, they’re often careful not to damn the whole industry, telling you to make sure you use encryption and to be careful. Me, I’m not so careful. An “industry” that lets scammers and hackers get away with their crimes, which brags about being beyond the control of lawful authority, is not an industry I think you should have anything to do with.

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