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WSJ mocks shitcoin hodlers

Even when a cryptocurrency calls itself “useless,” the money...
impertinent knife
  01/17/18


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Date: January 17th, 2018 2:47 PM
Author: impertinent knife

Even when a cryptocurrency calls itself “useless,” the money floods in.

Regulators have warned that investors who rush to buy freshly created digital tokens could end up holding worthless tokens. The creators of a cryptocurrency launched last July pretty much promise that.

“Seriously, don’t buy these tokens,” Useless Ethereum Token announces on its website. “You’re going to give some random person on the internet money, and they’re going to take it and go buy stuff with it.”

Though it has been a volatile ride, investors have jumped into a host of virtual currencies, including bitcoin and ether. Last year, bitcoin soared more than 1,300%, and exchange groups Cboe Global Markets and CME Group launched futures contracts on the cryptocurrency, stoking hopes among its fans of a lasting, institutional following.

That has sponsored a side industry in joke cryptocurrencies, including one named after a meme featuring a Japanese hunting dog.

Hunger to buy assets that started as a joke is a sign of how overvalued and risky these currencies have become, some analysts say. Bitcoin fell back under $10,000 on Wednesday, a drop of about 50% from its December record, illustrating how cryptocurrencies remain a volatile and speculative investment.

The joke currencies also show how easy it has become for promoters of new digital currencies to raise money on short notice. A single weekend can be enough for a computer programmer to modify lines of open-source code, create a website and put new tokens up for sale.

In its online logo, UET literally shows the middle finger to its buyers.

Yet, despite the myriad warnings issued by its own promoters, the total value of UET rose as high as $350,000 earlier this month as buyers jumped in. At $0.04490 apiece, UET has risen by more than 240% in the past three months, against bitcoin’s 70% rise, according to CoinDesk.

Its market capitalization declined to around $230,000 Tuesday, according to online tracker Coinmarketcap.com, moving in lockstep with other cryptocurrencies.

According to data provider Autonomous Research, in 2017 more than $4 billion was raised in initial coin offerings, or ICOs, where tech startups raise money in exchange for freshly created digital coins, or tokens.

UET’s offering appeared generous in the amount of worthless assets it was willing to exchange. Investors were required to buy the tokens using the virtual currency ether—now trading at roughly $900—and got 100 UET for each, as well as an additional UET an ether as long as more than one UET was bought. There were even some bonus UET allocated randomly to buyers.

Currently, 254 different holders own the 4 million UET tokens, data from online tracker Etherscan show.

“If [UET] does get picked up by any of the major exchanges, I promise to use some of the ICO proceeds to constantly and incessantly manipulate the market,” the token’s creator says on its website.

UET didn’t return requests for comment.

As virtual currencies have flourished, so have imaginative ways to join in the boom.

Among other recent successful ICOs is HydroMiner, a cryptocurrency mining company that uses eco-friendly hydropower in the Austrian Alps to generate the energy needed to create these currencies; the Legends Room, a Las Vegas gentlemen’s club with its own cryptocurrency; and Dentacoin, which describes itself as “the blockchain solution for the global dental industry.”

To be sure, many buyers are in on the UET joke.

Juraj Kontuľ, a Slovak cybernetics student, has been trading cryptocurrency for four years, and bought a few dollar cents worth of UET this month when it briefly traded on HitBTC, a Europe-based cryptocurrency exchange.

He did it “to reward the guy for the work he did and the laughs he brought with the project, surely not only for me,” he said.

Mr. Kontuľ says he has made $300 from his tiny initial punt.

“I believe that the price was driven up mainly by the ‘crypto millionaires’ that were just having fun like anyone else, and maybe some speculators that wanted to make a quick profit,” Mr. Kontuľ added. “Let’s face it, the crypto community can pump up the price of anything.”

UET isn’t the only digital currency created for humor that has received generous inflows of money. The most popular one is dogecoin, named after an internet meme that depicted a Shiba Inu dog lying on a couch.

Dogecoin had a burst of popularity after its creation in 2013. Oliver Rynkiewicz, 26 years old, went as far as co-founding a burger joint in east London in 2014 that accepted both bitcoin and dogecoin.

“I like the idea, you’re your own bank,” he said.

The currency then languished for years, and some users of internet chat rooms speculated that the dog-themed coin could be put down. But at the start of January, its market cap swelled over $2 billion. It has since fallen to around $700 million.

“It worries me that such a volatile space attracts so many new users right now who might have a hard time grasping just how much risk they are taking in investing,” said Maximilian Keller, one of dogecoin’s developers.

—Georgi Kantchev contributed to this article.

Write to Jon Sindreu at jon.sindreu@wsj.com

https://www.wsj.com/articles/beware-even-joke-cryptocurrencies-are-going-through-the-roof-1516201883

(http://www.autoadmit.com/thread.php?thread_id=3862866&forum_id=2#35177117)