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Author Topic: Warning signs of financial fraud  (Read 2301 times)
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June 28, 2011, 11:19:58 AM

Standard list of warning signs of shills with an agenda, as applied to the bitcoin forums.

1) Sensationalist or alarmist topic titles designed to grab attention.

2) Fancy financial/legal jargon and sneering verbosity designed to give an appearance of authority and competence.

3) False analogies, appeal to authority, guilt by association.

4) Paranoia, mud slinging, FUD, conspiracy theories about secret developer cabals and exchanges that will run off with your money any day.

5) General lack of understanding of the underlying principles of the bitcoin technology and how it matters to society; lack of interest to even learn about those principles; lack of positive and constructive forum contributions.
Say, Nagle... I think you forgot a warning sign.

Quad XC6SLX150 Board: 860 MHash/s or so.
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June 28, 2011, 08:20:23 PM

*sigh* Go away troll.

The post that started this thread is one of the more informative, better posts for new investors and traders I've seen on the Bitcoin Forum.  It's the kind of advice that financial advisers are always giving to new clients: basic principles on which you build with experience.  If you're smart, you gain at least some of that experience by learning from other people's mistakes instead of your own.

The post that questions Mt. Gox, Tradehill, and presumably other Bitcoin exchanges also appears reasonable to me; it asks the questions that any investor ought to ask when considering an investment in a new and volatile market.  That doesn't mean that Mt. Gox, Tradehill, or other exchanges are crooks, or are doing anything wrong.  The Bitcoin market is new, and these exchanges are new and still finding their way.  However, because they're new, the government (whichever government, depending on where you are and where the exchange is located) isn't looking out for new investors in the same way that it would with an established stock or commodities exchange.  Since "the experts" aren't investigating the Bitcoin exchanges (yet), those who invest need to do so.  These exchanges are the epitome of "buyer beware"; there is risk and people need to know that and have some idea of what those risks are before they get in over their heads.

I'm not much of an investor, let alone an expert in the field, but I understand the basics of risk management and investment strategy.  My activity on the Bitcoin exchanges will be limited to acquiring a small sum of them that doesn't cost me more than I can afford to loose, and then using that small sum to do business.  In my opinion, somebody who isn't spending a lot more time than I do understanding currency trading, new currencies, markets, and investment strategies would be wise to do the same, at least until they learn more.
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