The Bitcoin Bermuda Triangle: Properly Defining a Project's Status

In the highly speculative world of crypto projects, gamblers, degens and DOGE traders, there exists one zone of intense debate: a triangular zone of mystery in which tens of thousands of investors and speculators argue viciously over what they feel to be the truth. Ben calls this, “the Bitcoin Bermuda Triangle,” and within it, the three sides joust for supremacy over a project’s narrative.

1. Sailing Lost Amidst the Seas of Crypto

Investing is gambling with your future, or so I am told. Individuals practicing this art/science of patience and stamina are told frequently enough by me that nine of ten will lose rather than win, a number far greater in the speculative world of digital assets even than stocks.

However, that does not accurately reflect the nature of the business here.

As many of my dear readers certainly know by now, one of the most common refrains besides #NotYourKeys is #DYOR: do your own research. What, exactly, does your own research entail?

  • Are you talking to project developers, personally, asking them about mechanisms and tokenomics? Did they block you for doing so?
  • Are you in chats asking critical questions and being banned by the moderation staff for being a FUDDER?
  • Are you investigating the possibilities of future price action, alone, hoping to flip an asset for higher than you bought it for, regardless of its designed utility?

Whatever your reasons, it’s less important than the functional reality of any business trying to design and release a product:

If you buy into something before it’s finished, you need to follow the classical investment rule of ‘not investing what you cannot afford to lose.’ Buying a project before it is completed is risky; just as risky in fact as any game among Steam’s early access collection. If you buy into one of them, there is zero guarantee that the developer will ever be able to finish the product. Many never achieve a level of success or funding required to enable that reality.

Now, all of this raises an incredibly important question:

If you buy a crypto project, a video game, or a piece of software… anything that is in the process of being constructed, engineered, and later deployed for consumers for use… at what point do you consider the investment a SCAM?

With that in mind, I present a common warning PC gamers might see if they're shopping for titles. Many of them are as careful with their money as we are, as you can see:

Early Access Game

On Gabe Newell's PC game distribution platform Steam, many users consider an "Early Access" game a scam if it does not follow-through on its roadmap. Funnily enough, this same bar and barometer of success applies to speculative projects in the cryptocurrency world, as applied by the United States Securities and Exchange Commission.

How do I know this for a certainty? In early 2022, the first NFT scammers were charged and criminally prosecuted for a number of charges, wire fraud among them.

Now that we have a testable metric for success versus failure, let’s dive into the triangle.

2. The Triangular Colosseum

The Bitcoin Bermuda Triangle

Who among my readers has engaged in calling a project a scam? It’s okay, just raise your hands. I won’t call anyone out by name… this time.

I am imagining a vast number of you raised your hands. Even I’m doing it, right now!

The likelihood that we have all called something or SOMEONE a scammer, either justly or unjustly, is insurmountably massive. The reason I’m writing this is to emphasize one overshadowing dichotomy:

Are you calling the project a scam because you lost money, because it never finished its roadmap, or because the creators exit-scammed and disappeared?

This is the Colosseum in which speculators vie for argumentative supremacy. The critics are called fudders, the apologists are called shills, and the rest of us react like Picard: with a facepalm.

Who’s right in these scenarios? Who wins the argument?

Naturally, it depends ENTIRELY on the project in question! However, I have a short if somewhat fictionalized anecdote (names and project developers have been changed to protect their identities) to illustrate what I’m talking about here.

Before I dive into the setup for my hypothetical fiction, however inspired by a true story, I must clear the air about certain concepts.

In the world of business, the focus of a company is on selling a product to its customers and generating new sales leads and customers in other market regions. In the world of crypto as well as the world of video gaming, the internet rules the space, now; as a consequence of that inevitable reality, the market zone and distribution potential for a product sold online is effectively infinite. It maxes out at the maximum number of people using the internet.

A small business can now use the internet’s reach as company leverage to expand into new markets and discover new product niches for filling up with gooey, delectable choices in their offerings.

The same, fundamentally, remains true of any crypto project. Its value is tied up in its utility to a crypto investor, trader, or hodler. Interest gains, staking tokenomics, future returns… All of these are just hooks to get you involved and supporting the product.

If the company cannot deliver the end-product, then the investment value will go as close to zero as is feasible in this market environment.

Finally, for the purposes of argumentation, there is zero uncertainty in this anecdote. The probability of success, failure, and fraud, is equally likely across all intervals, perhaps weighted more heavily into the negative by the preponderance of unknowns such as:

  • a scenario in which a malicious developer creates a backdoor exploit and uses it (many projects)
  • a scenario in which the leadership team never intended to follow through on roadmapped promises (many projects)
  • a scenario in which the project accidentally built an exploit, and an anonymous black hat pulled the liquidity (many projects)
  • a scenario in which the founder allegedly allows a RAT [maybe a tipcc rat!] (remote access terminal) to steal their entire treasury (Hi, Martin!)
  • a scenario in which a lone, anonymous speculator controls an excessive quantity of the supply and pulls not just the rug but the entire price floor out from underneath a project (many projects)

To be completely clear: none of these scenarios happened to the actual project I am referencing. However, to illustrate my point, I need to set this up in a manner that encompasses a wide range of projects that did face these scenarios.

Hundreds of nonmalicious developers have risen to the occasion and fought to save their projects in a sinking ship scenario, but they carry the stain of an unearned infamy; their work was abused and their trust breached by persons over which they had little control.

As previously discussed in several of my posts, I do sincerely believe the crypto project startup failure rate rests comfortably between 80 and 90 percent; that means between eight and nine out of ten crypto projects shall not successfully deploy a functional end product.

These words, and how we use them to accurately describe project working conditions, matter a great deal; it is important that we wield them with all the accuracy of a professional sniper.

Now, let’s dive into how we assess exactly where, on the Bitcoin Bermuda Triangle, a project has charted a course.

3. How to Avoid Big Sinking Ships

The events that happen inside the Bitcoin Bermuda Triangle aren’t mutually exclusive. It’s possible for a project to succeed first by releasing a product, only to fail later on the follow-through. It’s also possible for a project to succeed, and still be a scam! Carlos Matos and BitConnect can attest to that possible destination.

Take a project, any project, and plot it somewhere along the triangle. You might find that the spectrum of success, failure, and scam goes far wider and more colorful than you would expect.

Truthfully, every single crypto project has been called a scam by skeptical folks who haven’t handled a satoshi before. It doesn’t make them correct; and with that, it’s storytime!

Once, long long ago, in the age before viral pandemic restrictions and even-more-viral videos, there was a little project called “Thomas the Tank Engine.”

Thomas was built as part of a system to allow people to swap their crypto in an era when that wasn’t really easily on the table, and he accrued quite a fanbase very quickly. Vast numbers of crypto traders were desperately fighting to get their assets off central exchanges, and still be able to trade them with other traders. Thomas was a promise of this future reality.

However, Thomas wasn’t built correctly; the parts that made the train up were unsustainably expensive to maintain, and this was still in the project’s infancy. Thomas was abandoned in the yard.

Several wandering degenerates discovered his guts, and decided he might make a good Frankenstein’s monster. They set about building ThomasV2, fully equipped now with laser eyes and the clearest of goals in mind on his final utility.

ThomasV2, like ThomasV1, encountered problems, albeit of a different variety. Developers were failing to deliver on promises, and the leadership aspect of the wandering degenerates seemed lacking. When several investors came to inspect the work, they withdrew their investments in disgust, and the project again found itself sinking into the ocean void of dead blockchains.

At this exact moment, however… fortune turned. A new challenger has appeared!

Captain Bob Ahab the Builder, first of his name, discovers ThomasV2 as a project. Bob was a real builder; he had technical knowledge and connections in the world of technology at his disposal. Bob was displeased with the lack of leadership, and decided he was the captain, now.

Bob told the community loudly and proudly his plans, goals, and intentions for the project. He KYC’d and audited new developers. He staked a goalpost, and directed the team to get the vessel that was ThomasV2 over that finish line. He acted as a pathfinder, clearing the obstacles out of the team’s way, and ensuring they possessed the time and tools they needed to achieve that goal.

Thomas, as it stands, is nearly finished. Captain Bob the Builder has stepped down from his shepherd’s role, and receded back into the contributing “crew,” and soon the steam engines shall blast the horns of speculation.

Did Bob fail because he took over a scrapped engine? Does the fact that the vessel has been rebuilt three times over affect its continual progress on the open ocean? Will Captain Bob and his team sail out of the seas of uncertain outcomes?

Only time, and a successful product launch, can ever tell.

Thomas the Tank Engine is just one of many projects that falls in an uncertain void, somewhere in the midst of a spectrum of outcomes plotted inside the Bitcoin Bermuda triangle. My relatives, whom I love dearly, would likely place crypto entirely in the bucket of scams, although I suspect they might come around, some day.

To the builders, the entrepreneurs, and the small businesspeople of the world: I salute you. Your pathfinding and risk taking enables the future success of yourselves and your employees, and you face criticism at an exposure level never before seen in the history of business. The internet, after all, did not just revolutionize our money, my dear readers; it also revolutionized your ability to shout at people you disagree with, and more frequently than any human has ever communicated before.

To be on the receiving end of this barrage of messaging, rhetoric, frustration, defamation, accusations of impropriety and fiscal mismanagement is a Herculean task, if not a Sisyphusian one, and one I do not envy.

The point of all this is far easier to state than it is to comprehend:

Failure is never as simple as it seems, and just because you haven’t seen year-2000-Amazon deliver anything besides books does not mean that they don’t have plans to expand into your market and run your retail shop out of business within ten years.

In the end, you should not call something a scam unless it fits some specific criteria, and to the shitcoin speculators out there, allow me to confirm one final thing: no, DOGECOIN is not a scam just because you lost money. You’re just a bad trader.

Thank you all for reading, and as always, stay curious out there.