Poor Man’s Bitcoin

The communism withdrew from Bulgaria in 1989 and when the political police became unemployed, all sort of weird new things popped up to fill the gap. Grocery stores and supermarkets. New TV channels. More than one kind of ice cream. Fortune tellers. Horoscopes. Insurance racket. Chainmail too – you rewrite this letter 5 times and put it in 5 mailboxes and you’ll live a long and happy life. You don’t and you’ll die in pain. Multiple testimonials included.

One kind of chain mail had a price tag and wasn’t supposed to work, but worked for a while. Let’s call it The Poor Man’s Bitcoin. Here is roughly how it worked, excuse my faint memories for any inaccuracies.

There’s a sheet of paper, cut from a notebook, handwritten by a person who we can call “The Seller”. That sheet of paper contains the rules of the chainmail and 6 home addresses or PO boxes. Rules are as follows:

  • You need to send 2 Leva to the last 5 people in the chain, and also 2 Leva to the person who invented it (the number varied)
  • The way you prepare new copies is by rewriting the sheet and filling your name at the bottom of the list of 5 people in the chain, removing the first one
  • It contains terrible curses that will reach you if you violate the rules, sell more or less than 5 sheets of paper, or don’t mail money to the people in the chain
  • In order to get your money back, you need to temporarily become “The Seller”.

If you follow the rules closely, you should quickly get your money back – just find 5 people to buy your sheet of paper and letters with money would start flowing. Does it sound familiar?

  • It inflated algorithmically
  • Its intrinsic value was zero
  • The only things that kept it living for some time were people’s feelings and beliefs, mostly greed and fear of missing out
  • Some people loved it and were willing to fight that they’ll become rich once they get back their thousands of letters
  • It worked because people didn’t really understand how it works and look past the first 5 or 25 people who would give them money
  • Each transaction benefitted the author of the scheme + the regular system that guaranteed money transfer (the post)
  • Everyone could start their own chain letter

Once most of us were exposed to it, the number of letters turned out to be disappointing, and most people realized that these curses that guarantee the distribution don’t work, it vanished to be replaced years later by lottery tickets. Same feelings but no need to be able to write.

I find it amusing that so many people consider Bitcoin a form of investment while it’s pretty much like the chainmail from the 90s. At least this is how I see things. I do not understand how it works.

If it looks like a duck, swims like a duck, and quacks like a duck, then it probably is a duck.

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