Art by: Jing Jin
Paycoin was announced back in November and became a media darling, thanks to backing by Josh Garza's GAW Bitcoin mining company and a promised feature set that was longer than a rich kid's Christmas list.
Then it all came crashing down. The most exciting feature, and the one many people cared about, was the promised US$20 price floor. Other alleged promises never came in, including Amazon partnerships,100,000 merchants being lined up to accept the new digital currency, and technological innovations that were either nonexistent or poorly implemented.
Most cryptocurrencies are fueled by speculative investment, so it was the US$20 floor that had people excited, and then angry when it fell through. Everything else could have gone awry, but if investors could have still pulled out the promised US$20 price point, there would have been no harm and no foul. People could have left with their promised ROI and everything else, including the Amazon and Walmart deals, would have gone unnoticed by anyone but the hardcore. Most investors would have been too busy counting their money to care where they could have spent Paycoin.
Investors are pissed, as they should be. GAW and Garza have gone back on promise after promise. Although investors should have been cautious about things that sounded too good to be true, the coin was either pumped with promises the founders never intended to deliver on, or it was developed with such naivete and incompetence that it remains doubtful that anyone could trust developers again.
Which is where the story about Paycoin and GAW currently sits. Promises haven't been delivered, investors rightly feel duped, and thanks to the mainstream media attention for Paycoin before it fell apart, the entire affair has reflected poorly on Bitcoin as a community. Well-meaning members of the community have taken it upon themselves to organize a protest of Garza's upcoming speech at The North American Bitcoin Conference (NABC) in Miami later this month. The protest has extended to Bitcoin media companies that advertised Paycoin or GAW, and even to TNABC itself.
Let me first start by saying that an organized protest against Garza is a commendable thing. Too many coin developers get a pass on questionable business practices simply because Johnny Law is rarely found in the current marketplace. If we want to avoid stringent regulation, we need a to start self-policing, and we are currently doing a terrible job. It seems like every week a scam is exposed, usually too late to save investors. Untold more scams wait just below the surface, and even more are likely attempted but never take off.
This is a problem, and one of the biggest problems facing the Bitcoin—and particularly the altcoin—space. Investors, and those concerned with the reputation of the Bitcoin community, should try their best to make Garza's life as uncomfortable as possible (without resorting to violence or threats of violence) until answers are forthcoming and amends are made, or justice is otherwise served. We should do our best to turn Bitcoin from a scammer magnet to a scammer repellent. That is, after all, much of the point of moving away from the banking industry and toward bitcoin in the first place.
While we do that, however, we need to make sure we aren't also negatively affecting those who work toward advancing the space. Standards for where you consume media are important. If standards didn't exist, we would all watch Fox News. They do have the best-looking anchors, after all. But standards, or rather the lack of them in the mainstream media, are what has helped accelerate the media revolution that is currently taking place here on the Internet.
But standards can be set too high. And it may be too much to expect every Bitcoin media company to correctly predict every scam that comes out of the crypto community.
First let’s talk about what needs to be done about Garza’s speech at TNABC, and whether they should let him speak at all. GAW sponsored the event, so TNABC may have a financial interest in letting Garza speak. But they also have an obligation to the public, who are paying US$200 to attend, and that needs to come above all else.
At the same time, we could argue that it is critically important that Garza's speech is not canceled. The North American Bitcoin Conference signed Garza on to talk because he is a big figure in the community, not because he was well-liked. Now that he is (for the most part) hated, the importance of his speech doesn't change. To the contrary, canceling on him would let him, if he is guilty, take the easy way out. There is nothing a scammer likes better than being able to slink away into darkness without anyone noticing, so they can jump back in later with their next scam.
Protestors should make it clear to Garza that they are not looking forward to his time there. If Garza himself cancels, it is he who broke the contract, not the organizers of TNABC, and it is he who will look guilty to any remaining would-be investors.
So how do outraged investors place that pressure on Garza without boycotting TNABC? By pressuring conference organizers to lower or eliminate the $200 entry fee for Paycoin and GAW investors and customers. The organizers of TNABC could offer free entry to anyone who could prove they invested more than US$200 into Paycoin, or purchased more than US$200 in cloud mining or mining hardware. The effect on Garza's speech would be obvious. The speech would go from being attended by a mixed bag of general bitcoin holders to one dominated by the people who allege Garza scammed them.
The pressure this would put on Garza – as opposed to simply canceling his speech – would be palpable. The crowd could turn his entire speech, rather than just the recently added 30-minute Q&A session, into a speech about Paycoin. Disgruntled investors could warn the crowd and interrupt the speech, forcing him to speak exclusively about the controversy.
This is what the organizers of TNABC should do if they want to prove they are serious about addressing the concerns of the community, while also adhering to any contractual obligations. If, as they say, they want to give the community “the chance to confront Josh and voice their concerns,” then they need to lower the barrier of entry for those with legitimate concerns. Ticket prices for Bitcoin events are already outrageously overpriced, and asking people who may have already lost their shirts investing in Paycoin to now pay for flight, hotel and a ticket to the event, just to ask Garza questions, is a high barrier. TNABC can't do anything about the price of flights and hotels, but they can change the price of admission, at least for those affected.
I proposed the idea to Moe Levin, organizer of the event. He told me it was ”just too difficult and time consuming and resource-heavy” and beyond their abilities “as a conference.” I don’t understand why it would be so difficult to simply set up a Paycoin wallet, and the sender of any email that comes through asking for free tickets could simply be asked to send 0.1 XPY to TNABC’s address. Someone at the TNABC could simply verify through the Paycoin blockchain whether the sender’s wallet ever held a significant amount of Paycoin. Feel free to leave comments about the feasibility of this plan.
If Garza does speak at TNABC, it will be the most scrutinized speech at the event. Every word will be recorded and poured over by the media and the hoards of investors who lost their investment. It isn't hard to imagine that even people who weren't burned by Paycoin or GAW would come just to watch the spectacle. Forcing TNABC to cancel Garza's speech lets him take the easy way out, while letting him speak forces him to answer the tough questions.
For his part, if Garza wants to regain the trust of the community and make the argument that he shouldn't be made into a crypto pariah, then facing the heat is exactly what he must do. Anything else, other than the organizers of TNABC giving him the easy way out by canceling his speech, makes him look guilty. I can't speak for Garza, but if I were him, I would not be looking forward to facing that heat, especially if I knew I was guilty.
Community anger has extended past TNABC to media companies that advertised for Paycoin. These media companies can be broken down into three levels of involvement with Paycoin and GAW: Those that continue to advertise Paycoin and GAW, those that carried advertising for either of them in the past, and those advertising TNABC.
Let's get one thing clear: Media organizations should do some vetting of the companies that advertise on their site. However, they cannot be expected to catch every scam before everyone else does. It is not as if no one besides media organizations fell for it. Holding organizations to such a standard would mean that nearly every organization that has advertised anything would be suspect. Every time you watch television, you see ads for weapon manufacturers, militaries, dangerous prescription drugs, disreputable charities, and an uncountable number of products made by slave labor or in sweat shops.
Every time you browse the web, you come across Google AdSense, which is responsible for, among other things, malware being installed on potentially millions of computers.
Yet, according to some of the outraged, the protest should extend to CoinTelegraph itself—simply because we advertised GAW in the past, before the issues with Paycoin became apparent. One of our partners, Coinmarketcap (CoinTelegraph does not own them, as alleged in a Reddit thread), also advertised Paycoin at one point.
Because of this, an article of mine, one that exposed another scam that involved a major exchange artificially pumping its own coin, was down voted on Reddit. There were some issues with the article, but that isn't why it received hate. It received hate because we are partnered with someone who took money from something that – unbeknownst to them – turned out to be a scam. Essentially, we are being asked to not only vet our advertisers more thoroughly than people investing thousands of dollars into them, but also extend that investigation to the advertisers of anyone we ever had any association with. If we fail to do this, according to at least one redditor, all our articles should be ignored, even ones that are exposing other critically important scams involving major exchanges. That is just an impossible standard to live up to.
If every mainstream company was held to the standard that some of “the outraged” would like Bitcoin media companies to be held to, the protest motto would have to be “Down with Everything Associated with Anyone.” Guilt by association would eventually spread across the globe.
A more reasonable request would be for media companies to immediately cease advertising for a company when questionable business practices become apparent. Certainly, any outlet still accepting money from Paycoin or GAW is fair game for criticism. Sending more people to the heavily censored Hashie forums—where they will find themselves reading carefully curated comments about how “Gawsome” the experience has been—is irresponsible at best, and complicit at worst.
So, media organizations, even if they post an article critical of Paycoin and GAW, owe it to their readers to pull all visible ads. Those ads will also run next to articles that aren't related, and just as media organizations can't be expected to catch every hidden scam, readers can't be expected to keep up with every exposed scam. It is our job to catch scams and protect readers. We will fail at that sometimes, but ignoring questionable businesses once they are known is unacceptable.
Go ahead, attack Josh Garza (in a non-violent way) and the organizations that continue to advertise his questionable companies. But don't attack the writers who are attempting to expose scams and the organizations trying to magnify Bitcoin's presence through conventions. That only amplifies the negative effects of the scandal.
One thing I am sure of, is that the next cryptoscam is right around the corner. There is a real issue in the Bitcoin Talk forums. The spreading of FUD and worse, the false accusations of spreading FUD when difficult questions are asked, has muddied the waters. It is up to media organizations like this one to wade through that and catch these scams before they happen, not after. We will do our best, but GAW was a respected company (at least as much as a cloud mining company can be respected) at the time CoinTelegraph advertised them. We will miss scams in the future, so will most everyone else, but we are in this together, let's not tear each other apart looking for the parasites that hide inside.
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