https://statmodeling.stat.columbia.edu/2023/09/13/crypto-scam-social-science-thoughts-the-role-of-the-elite-news-media-and-academia/

SHA256: b359fb6942094f6fa5cf20e270fbcae774e27394052eea5a2af4b8eec1b2238a

Crypto scam social science thoughts: The role of the elite news media and academia
Posted on September 13, 2023 9:33 AM by Andrew
Campos quotes from one of the many stories floating around regarding ridiculous of cryptocurrency scams.

I’m not saying it should’ve been obvious in retrospect that crypto was a scam, just that (a) it always seemed that it could be a scam, and (b) for awhile there have been many prominent people saying it was a scam. Again, prominent people can be in error; what I’m getting at is that the potential scamminess was out there.

The usual way we think about scams is in terms of the scammers and the suckers, and also about the regulatory framework that lets people get away with it.

Here, though, I want to talk about something different, which is the role of outsiders in the information flow. For crypto, we’re talking about trusted journalistic intermediaries such as Michael Lewis or Tyler Cowen who were promoting or covering for crypto.

There were lots of reasons for respected journalists or financial figures to promote crypto, including political ideology, historical analogies financial interest, FOMO, bandwagon-following, contrarianism, and plain old differences of opinion . . . pretty much the same set of reasons for respected journalists or financial figures to have been crypto-skeptical!

My point here is not that I knew better than the crypto promoters—yes, I was crypto-skeptical but not out of any special knowledge—; rather, it’s that the infrastructure of elite journalism was, I think, crucial to keeping the bubble afloat. Sure, crypto had lots of potential just from rich guys selling to each other and throwing venture capital at it, and suckers watching Alex Jones or whatever investing their life savings, but elite media promotion took it to the next level.

It’s not like I have any answers to this one. There were skeptical media all along, and I can’t really fault the media for spotting a trend that was popular among richies and covering it.

I’m just interested in these sorts of conceptual bubbles, whether they be financial scams or bad science (ovulation and voting, beauty and sex ratio, ESP, himmicanes, nudges, UFOs, etc etc etc), and how they can stay afloat in Wiley E. Coyote fashion long after they’ve been exposed.

Crypto is different from Theranos or embodied cognition, I guess, in that it has no inherent value and thus can retain value purely as part of a Keynesian beauty context, whereas frauds or errors that make actual scientific or technological claims can ultimately be refuted. Paradoxically, crypto’s lack of value—actually, its negative value, given its high energy costs—can make it a more plausible investment than businesses or ideas that could potentially do something useful if their claims were in fact true.

P.S. More here from David Morris on the role of the elite news media in this story.

https://statmodeling.stat.columbia.edu/2023/09/13/crypto-scam-social-science-thoughts-the-role-of-the-elite-news-media-and-academia/ SHA256: b359fb6942094f6fa5cf20e270fbcae774e27394052eea5a2af4b8eec1b2238a Crypto scam social science thoughts: The role of the elite news media and academia Posted on September 13, 2023 9:33 AM by Andrew Campos quotes from one of the many stories floating around regarding ridiculous of cryptocurrency scams. I’m not saying it should’ve been obvious in retrospect that crypto was a scam, just that (a) it always seemed that it could be a scam, and (b) for awhile there have been many prominent people saying it was a scam. Again, prominent people can be in error; what I’m getting at is that the potential scamminess was out there. The usual way we think about scams is in terms of the scammers and the suckers, and also about the regulatory framework that lets people get away with it. Here, though, I want to talk about something different, which is the role of outsiders in the information flow. For crypto, we’re talking about trusted journalistic intermediaries such as Michael Lewis or Tyler Cowen who were promoting or covering for crypto. There were lots of reasons for respected journalists or financial figures to promote crypto, including political ideology, historical analogies financial interest, FOMO, bandwagon-following, contrarianism, and plain old differences of opinion . . . pretty much the same set of reasons for respected journalists or financial figures to have been crypto-skeptical! My point here is not that I knew better than the crypto promoters—yes, I was crypto-skeptical but not out of any special knowledge—; rather, it’s that the infrastructure of elite journalism was, I think, crucial to keeping the bubble afloat. Sure, crypto had lots of potential just from rich guys selling to each other and throwing venture capital at it, and suckers watching Alex Jones or whatever investing their life savings, but elite media promotion took it to the next level. It’s not like I have any answers to this one. There were skeptical media all along, and I can’t really fault the media for spotting a trend that was popular among richies and covering it. I’m just interested in these sorts of conceptual bubbles, whether they be financial scams or bad science (ovulation and voting, beauty and sex ratio, ESP, himmicanes, nudges, UFOs, etc etc etc), and how they can stay afloat in Wiley E. Coyote fashion long after they’ve been exposed. Crypto is different from Theranos or embodied cognition, I guess, in that it has no inherent value and thus can retain value purely as part of a Keynesian beauty context, whereas frauds or errors that make actual scientific or technological claims can ultimately be refuted. Paradoxically, crypto’s lack of value—actually, its negative value, given its high energy costs—can make it a more plausible investment than businesses or ideas that could potentially do something useful if their claims were in fact true. P.S. More here from David Morris on the role of the elite news media in this story.