In the world of hype coins, developers in the highly speculative end of the cryptocurrency market promise riches to potential investors with appealing-sounding assets that in reality have little intrinsic value or are outright scams. To explain and explore that world, a reporter for the New York Times created Idiot Coin, Business Insider reported.
"The point was to demonstrate that creating a hype coin doesn't take expertise and that many are flimsy and dangerous," reporter David Segal wrote in a feature entitled "Going for Broke in Cryptoland".
His report said dozens of hype coins are created every day by developers who operate with little oversight and draw in millions of people looking to make some quick money.
"It usually ends poorly," with most tokens becoming worthless within a couple of weeks while the developers can rake in tens of thousands of dollars or more, he wrote.
Britain-based Segal in creating Idiot Coin consulted two lawyers - one in London and one in the US - about the legality of establishing what sounded like a security and putting it up for sale. Both said regulators in either country could sue coin creators. Avoiding trouble meant making sure Idiot Coin would be a flop, he said.
He said estimated losses from hype coin investments range from hundreds of millions of dollars to $1 billion a year.
Segal eventually paid about $300 in fees in getting to the point where 21 million Idiot Coins were minted. The reporter worked with Dan Arreola, a man based in Taiwan who, in a warning to would-be investors, posted a YouTube tutorial about how to make and promote a "scam coin."
Segal also hired a web designer to build the Coinforidiots.com website. The site contained a White Paper that's supposed to outline the coin's appeal. "Mine implores investors to scram," he wrote. He hired a TikToker to hype up Idiot Coin, a job he did by fanning fake $100 bills in a parody of opulence. Segal also wrote an announcement for CryptoMoonShots, a Reddit page on which new crypto is unveiled. "Def NOT going to the moon!" Segal wrote. "Might not get an inch off the ground!"
His marketing efforts also included a social media post to links to the Idiot Coin Telegram account. He said about 300 people worldwide showed up and some were left confused by the pessimistic pitch.
"I was letting down these people by refusing to promise them riches," Segal wrote.
The market's most prominent meme currency is dogecoin which was started in 2013 by two programmers spoofing the cryptocurrency craze. The price so far this year has surged by nearly 4,300%, trading around $0.21 to bring its market capitalization to about $27 billion.