WEBVTT - Detecting Scams Through Critical Thinking 0:00:04.440 --> 0:00:12.360 Welcome to tech Stuff, a production from iHeartRadio. Hey there, 0:00:12.360 --> 0:00:15.840 and welcome to tech Stuff. I'm your host job and Strickland. 0:00:15.840 --> 0:00:19.159 I'm an executive producer with iHeart Podcasts and how the 0:00:19.320 --> 0:00:22.239 tech are you? You know? Since we're wrapping up my 0:00:22.520 --> 0:00:26.000 run as host of tech Stuff, I thought it might 0:00:26.040 --> 0:00:28.480 be a good time to revisit one of the guiding 0:00:28.560 --> 0:00:33.400 principles of this show, that being critical thinking. I've always 0:00:33.440 --> 0:00:37.360 said Tech Stuff really has two guiding principles, critical thinking 0:00:37.400 --> 0:00:40.320 and compassion. That only with both of these can you, 0:00:40.760 --> 0:00:44.600 in my opinion, live an accountable and decent life. You 0:00:44.680 --> 0:00:47.400 need to have compassion so that you're not a total jerk, 0:00:47.720 --> 0:00:49.920 and you need to have critical thinking so you're not 0:00:49.960 --> 0:00:53.559 a total dip. And critical thinking is absolutely important in 0:00:53.680 --> 0:00:56.440 all aspects of life. I like to bring it up 0:00:56.480 --> 0:01:00.760 within the context of technology because tech is both incredibly 0:01:00.920 --> 0:01:05.280 complicated and it also touches our lives every single day 0:01:05.440 --> 0:01:08.679 in hundreds or thousands of ways. And if we don't 0:01:08.720 --> 0:01:13.000 think critically, we can make some pretty darn huge mistakes, 0:01:13.040 --> 0:01:17.560 either through incorrect assumptions or because someone has led us astray. 0:01:17.959 --> 0:01:22.880 Tech is one of those disciplines that is well suited 0:01:23.360 --> 0:01:30.600 for misunderstanding and for misdirection. Because of that complexity, there's 0:01:30.600 --> 0:01:33.120 stuff we can do in tech that seems almost magical, 0:01:33.400 --> 0:01:38.920 and the jargon around tech can be really difficult to 0:01:38.959 --> 0:01:42.160 parts like. That's not to say that all the jargon 0:01:42.319 --> 0:01:46.440 or the terminology is inherently bad. That's not really the 0:01:46.480 --> 0:01:50.400 case either. There are lots of terms that are very specific, 0:01:50.600 --> 0:01:53.120 and the reason why we use them is so that 0:01:53.160 --> 0:01:57.880 we communicate clearly what we mean and we avoid ambiguity. 0:01:58.160 --> 0:02:01.080 But then there's the flip side of it, where if 0:02:01.080 --> 0:02:06.160 you laiden something down with enough jargon, it becomes indecipherable. 0:02:06.240 --> 0:02:09.080 You can't even understand what's being said. I think the 0:02:09.480 --> 0:02:16.040 ultimate expression of how jargon can become gibberish is the 0:02:16.760 --> 0:02:23.160 humorous script for the fictional turbo incabulator. This was a gag. 0:02:23.400 --> 0:02:27.760 This was just a fake thing, a fake piece of technology, 0:02:28.320 --> 0:02:32.919 with a script that was intentionally made to be comedically 0:02:33.520 --> 0:02:37.400 dense with jargon meaningless jargon. So I did an episode 0:02:37.440 --> 0:02:39.320 about this ages ago. But let me do a quick 0:02:39.440 --> 0:02:43.960 excerpt from that script. So here's how it typically starts. 0:02:44.080 --> 0:02:46.799 And there are multiple versions of this online. By the way, 0:02:46.880 --> 0:02:51.680 if you search turbo incabulator on YouTube. You should come 0:02:51.760 --> 0:02:54.440 up with quite a few different versions of it, and 0:02:54.800 --> 0:02:57.799 they are all variations on this same theme. So here 0:02:57.800 --> 0:03:00.440 we go. For a number of years now, Yorick has 0:03:00.440 --> 0:03:03.280 been proceeding in order to bring perfection to the crudely 0:03:03.320 --> 0:03:06.240 conceived idea of a transmission that would not only supply 0:03:06.320 --> 0:03:09.880 in verse reactive current for use in unilateral phase detractors, 0:03:10.040 --> 0:03:14.440 but would also be capable of automatically synchronizing cardinal grameters. 0:03:14.639 --> 0:03:18.160 Such an instrument is the turboincabulator. Now, basically the only 0:03:18.200 --> 0:03:21.079 new principle involved is that instead of power being generated 0:03:21.120 --> 0:03:23.640 by the relative motion of conductors and fluxes, it is 0:03:23.680 --> 0:03:28.120 produced by the modial interaction of magneto reluctance and capacitive directants. 0:03:28.480 --> 0:03:32.120 The original machine had a base plate of prefamulated emultes 0:03:32.160 --> 0:03:35.240 surmounted by a malleable logarithmic casing in such a way 0:03:35.240 --> 0:03:37.680 that the two sperving bearings were in a direct line 0:03:37.720 --> 0:03:41.200 with a panametric fan. Now the piece goes on from 0:03:41.280 --> 0:03:44.480 there a little bit longer, and you get the point. Though. 0:03:44.680 --> 0:03:47.840 This is a send up of those technical manuals that 0:03:47.880 --> 0:03:50.400 would have so much jargon in them as to become 0:03:50.480 --> 0:03:55.920 almost meaningless that you can't really parse what is being said, 0:03:56.120 --> 0:03:58.120 and you feel like you have to look up every 0:03:58.160 --> 0:04:01.240 other word just to try and figure out what the 0:04:01.320 --> 0:04:04.040 meaning is, and you might ultimately come to the conclusion 0:04:04.080 --> 0:04:06.400 that even the person who wrote it doesn't really know 0:04:06.440 --> 0:04:09.680 what the meaning is. That's the joke, but it's based 0:04:09.720 --> 0:04:13.240 in reality. You know, there are those technical manuals out 0:04:13.280 --> 0:04:15.960 there that are so jargon heavy as to be almost 0:04:16.200 --> 0:04:20.520 a self parody, and this opens up opportunities for people 0:04:20.560 --> 0:04:25.800 who have underhanded motivations to try and mislead folks in 0:04:25.839 --> 0:04:29.640 an attempt to get something out of them, usually money. 0:04:30.040 --> 0:04:32.719 That's typically what it is, is that you have someone 0:04:32.760 --> 0:04:37.760 who is leaning on ignorance to pull one over on 0:04:37.800 --> 0:04:40.480 a victim. So I've really been thinking again about scam 0:04:40.560 --> 0:04:44.360 artists and investment schemes. Now that's something that spans well 0:04:44.400 --> 0:04:47.239 beyond the tech sector. It's not just tech that sees 0:04:47.320 --> 0:04:48.920 these sorts of things, but I think it's safe to 0:04:48.960 --> 0:04:53.280 say the tech world is particularly prone to such shenanigans, 0:04:53.520 --> 0:04:57.880 largely because a clever huckster can convince people that something 0:04:57.960 --> 0:05:03.640 that is implausible or perhaps even impossible, is actually achievable 0:05:03.920 --> 0:05:07.320 just through the wonders of technology. And again it's easy 0:05:07.360 --> 0:05:11.200 to understand how this could happen, how people could fall 0:05:11.360 --> 0:05:14.800 for these kinds of things, because consider the technology that 0:05:14.839 --> 0:05:18.520 you interact with on a daily basis. Our computers are 0:05:19.160 --> 0:05:22.960 phenomenally powerful these days. You can have a computer that 0:05:23.040 --> 0:05:26.000 has processors in it that allow it to do AI 0:05:26.240 --> 0:05:30.960 processing on your machine. That is something that was unthinkable 0:05:31.400 --> 0:05:34.279 only a few years ago. And most of us carry 0:05:34.279 --> 0:05:37.440 a small computer around in our pockets, and you can 0:05:37.520 --> 0:05:40.000 use that computer to do everything from make a phone 0:05:40.040 --> 0:05:42.640 call if you're an old fuddy duddy like me, or 0:05:43.080 --> 0:05:45.880 use it to look stuff up online. Or you can 0:05:45.960 --> 0:05:48.440 use it to take photos or video. You could even 0:05:48.600 --> 0:05:51.880 edit those images and those videos and then upload them 0:05:51.960 --> 0:05:54.800 to social platforms. You know, there's a lot of cool 0:05:54.839 --> 0:05:57.240 stuff you can do with that one device. Or you 0:05:57.240 --> 0:05:59.760 can jump in a car. Now, your typical modern car 0:05:59.800 --> 0:06:03.240 has remarkable technology in it, and depending on the car, 0:06:03.279 --> 0:06:06.440 it might even be able to drive itself under specific conditions. 0:06:06.600 --> 0:06:09.719 We've also got things like home automation, and then they're 0:06:09.800 --> 0:06:13.600 scary stuff like targeted advertising. We've got things that can 0:06:13.640 --> 0:06:16.880 be either cool or scary, depending upon how they are 0:06:16.920 --> 0:06:19.760 made and what they're supposed to do, like drones and 0:06:19.800 --> 0:06:22.680 all sorts of other things that you know. Back when 0:06:22.720 --> 0:06:25.000 I was a kid, I would have thought belong in 0:06:25.040 --> 0:06:29.560 science fiction, But today they're commonplace. So we've become used 0:06:29.600 --> 0:06:32.920 to technology being able to do incredible things. So it's 0:06:33.000 --> 0:06:36.120 understandable that if someone were to come to us with 0:06:36.200 --> 0:06:39.200 an extraordinary claim about tech, we might be tempted to 0:06:39.240 --> 0:06:41.880 believe in the dream right from the start. I mean, 0:06:41.920 --> 0:06:43.520 when I was a kid, I certainly didn't think I 0:06:43.520 --> 0:06:45.599 would see a day where I would be carrying a 0:06:45.640 --> 0:06:49.479 computer around with me everywhere I went. So why can't 0:06:49.640 --> 0:06:52.440 we have a device that's the size of a desktop 0:06:52.480 --> 0:06:55.599 printer that could run more than one hundred medical tests 0:06:55.680 --> 0:06:59.200 on the tiniest drop of blood. That, of course, was 0:06:59.360 --> 0:07:05.960 the point of Thernose, the biotech company that was purporting 0:07:06.279 --> 0:07:11.640 to create a desktop medical analysis machine, one that ultimately 0:07:11.720 --> 0:07:15.600 could end up being sold to consumers. Not just something 0:07:15.640 --> 0:07:18.120 that would be found in clinics or whatever, but you 0:07:18.200 --> 0:07:20.480 could own one of these things and you would take 0:07:20.520 --> 0:07:23.560 a very tiny pinprick of blood, and then you could 0:07:23.640 --> 0:07:26.000 run tests that not only would tell you if there 0:07:26.040 --> 0:07:29.400 was anything currently wrong with you, but also analyze your 0:07:29.400 --> 0:07:32.280 blood to look for potential things to look out for 0:07:32.400 --> 0:07:36.120 down the road, right conditions or diseases that you might 0:07:36.240 --> 0:07:40.360 be prone to developing in the future, so you could 0:07:40.360 --> 0:07:41.960 be on the lookout for that kind of stuff, like 0:07:41.960 --> 0:07:44.240 you could say, hey, you know, you could be pre 0:07:44.400 --> 0:07:47.760 diabetic or something along those lines. The problem was, of course, 0:07:47.960 --> 0:07:50.880 it just didn't work. It certainly didn't work the way 0:07:51.160 --> 0:07:54.600 it was being advertised. Even while it was under development, 0:07:54.920 --> 0:07:58.920 the company Theranose was found out to be using other 0:07:59.240 --> 0:08:03.080 companies technologies to analyze blood samples. They were taking larger 0:08:03.120 --> 0:08:05.160 samples of blood than what they were supposed to do, 0:08:05.320 --> 0:08:07.320 because again, it was supposed to be a microdrop of blood, 0:08:07.320 --> 0:08:09.080 but they couldn't get that to work. So they would 0:08:09.080 --> 0:08:12.000 take larger samples of blood or sometimes small samples, and 0:08:12.040 --> 0:08:14.280 then they would dilute it with water, hoping that that 0:08:14.320 --> 0:08:17.400 wouldn't mess things up too much spoiler alerted mess things 0:08:17.480 --> 0:08:20.080 up too much. Then they would run those samples through 0:08:20.520 --> 0:08:25.360 other companies analytic technology, not their own one. They would 0:08:25.360 --> 0:08:28.000 make it seem like it was in their own technology, 0:08:28.000 --> 0:08:30.400 but it really wasn't. They never really cracked the code 0:08:30.480 --> 0:08:33.160 on this, and in fact, there were plenty of people 0:08:33.160 --> 0:08:37.560 who were concerned that it was inherently impossible. That people thought, well, 0:08:37.559 --> 0:08:40.800 of course technology should be able to do this, without 0:08:41.240 --> 0:08:43.640 really taking the time to understand the limitations of the 0:08:43.640 --> 0:08:47.240 technology they were talking about. And there still stands a 0:08:47.320 --> 0:08:50.560 question to this day as to whether the founder, Elizabeth Holmes, 0:08:50.720 --> 0:08:56.040 whether she truly believed in the technology or if she 0:08:56.240 --> 0:08:59.199 was aware early on that she was running up against 0:08:59.240 --> 0:09:01.439 a brick wall, but of going because at that point 0:09:01.480 --> 0:09:04.680 she already had huge amounts of investment behind her. This 0:09:04.880 --> 0:09:07.040 was one of those examples of the fake it till 0:09:07.080 --> 0:09:10.080 you make it strategy, where you come up with an idea, 0:09:10.400 --> 0:09:12.640 you think the idea is really cool, you don't have 0:09:12.720 --> 0:09:14.800 the foggiest notion of how you're going to make that 0:09:14.880 --> 0:09:17.760 idea reality, but you go ahead and you create a 0:09:17.800 --> 0:09:20.680 business around it, and you get investment behind it, and 0:09:20.720 --> 0:09:24.240 then you figure somewhere along the way, we'll figure it out. 0:09:24.520 --> 0:09:27.080 We'll get the smartest people, We'll put them to work 0:09:27.120 --> 0:09:29.840 on this problem. They'll engineer a way out of it 0:09:30.160 --> 0:09:32.640 and will be good. In the case of THERAPNHOS, that 0:09:32.760 --> 0:09:36.960 just didn't happen. Instead, it was a business built around 0:09:37.160 --> 0:09:42.240 an ideal, but it was also built around lies and 0:09:42.360 --> 0:09:45.200 smoke and mirrors, and ultimately it all came crashing down. 0:09:45.520 --> 0:09:47.880 And that's kind of what I wanted to talk about. 0:09:47.880 --> 0:09:50.120 That's why I want to talk about critical thinking, because 0:09:50.600 --> 0:09:52.679 critical thinking would have saved a lot of people a 0:09:52.720 --> 0:09:54.920 lot of money if they had been willing to ask 0:09:55.280 --> 0:09:58.200 the right questions to the right people and to really 0:09:58.440 --> 0:10:03.040 heed those answers, could have, you know, saved themselves millions 0:10:03.040 --> 0:10:06.400 of dollars of losses. And I don't particularly feel the 0:10:06.480 --> 0:10:10.440 need to cry over rich people losing some percentage of 0:10:10.520 --> 0:10:13.000 their mass amount of wealth. It doesn't really bother me 0:10:13.040 --> 0:10:17.080 that much. But when it falls to people who can't 0:10:17.120 --> 0:10:20.800 afford to lose money, that's where I get really concerned. 0:10:21.080 --> 0:10:24.800 And I also just worry that the complacency, the tendency 0:10:24.840 --> 0:10:29.160 to accept things at a surface level, trickles down economics. 0:10:29.200 --> 0:10:33.400 I don't think trickle down properly, but ignorance certainly can. 0:10:33.800 --> 0:10:37.199 And that's where the opportunity comes in for scam artists, 0:10:37.200 --> 0:10:40.480 whether they are purposefully attempting to fool victims into handing 0:10:40.520 --> 0:10:44.079 over large amounts of cash, or they've actually deluded themselves 0:10:44.160 --> 0:10:47.520 into believing in an unproven technology. The tech world is 0:10:47.720 --> 0:10:51.560 complex and amazing enough to provide the perfect environment for 0:10:51.679 --> 0:10:54.839 a con. So in this episode, when we come back 0:10:54.840 --> 0:10:56.600 from this break, we're going to talk about a couple 0:10:56.640 --> 0:11:01.240 of notable examples of cons and scams that have happened 0:11:01.280 --> 0:11:05.160 in and around the tech industry and why critical thinking 0:11:05.400 --> 0:11:08.720 is so very important. But first, let's take a quick 0:11:08.800 --> 0:11:22.200 break to thank our sponsors. So a lot of scams, 0:11:22.280 --> 0:11:25.840 not just in the tech world but elsewhere, follow a 0:11:25.960 --> 0:11:31.040 pattern like the pyramid scheme, or more specifically, the Ponzi scheme. 0:11:31.280 --> 0:11:34.160 The Ponzi scheme is named after a guy who was 0:11:34.320 --> 0:11:37.640 named Charles Ponzi scheme. Oh no, I'm sorry, it's just 0:11:37.720 --> 0:11:40.400 Charles Ponzi. He was not the first to come up 0:11:40.440 --> 0:11:42.920 with this particular scheme. By the way, there was a 0:11:42.960 --> 0:11:47.000 woman who pulled essentially the exact same thing, but you 0:11:47.080 --> 0:11:49.640 know what, she had the gall to be a woman, 0:11:49.920 --> 0:11:52.720 So obviously we need to name the scheme after a 0:11:52.800 --> 0:11:55.360 dude who did it years later. That's just me being 0:11:55.400 --> 0:11:59.360 a little snarky, But anyway, the basic concept is you 0:11:59.440 --> 0:12:04.719 convinced people to invest in your business idea and then 0:12:04.760 --> 0:12:07.440 they're going to get some sort of insane return on 0:12:07.520 --> 0:12:13.000 their investment, typically on a very aggressive timeline. So Ponzi, 0:12:13.200 --> 0:12:16.520 for example, claimed that people who bought into his business 0:12:16.559 --> 0:12:20.040 proposition would start getting a fifty percent return on their 0:12:20.080 --> 0:12:24.120 investment within a month and a half, like forty five days. 0:12:24.400 --> 0:12:27.040 That's a crazy amount of return. And the way he 0:12:27.160 --> 0:12:31.439 would guarantee this, the way he would cover those returns 0:12:31.480 --> 0:12:34.240 because like his business wasn't a business, it was just 0:12:34.600 --> 0:12:37.960 robbing Peter to pay Paul. Essentially, he would use money 0:12:38.320 --> 0:12:42.960 from subsequent rounds of investors to show his earlier rounds 0:12:43.000 --> 0:12:45.840 of investors how well the plan was going. So let's 0:12:45.840 --> 0:12:49.320 break this down with a really simplified explanation of what 0:12:49.520 --> 0:12:52.200 was going on. So let's say that you are a 0:12:52.240 --> 0:12:56.280 low down, no good crook and you have convinced me 0:12:56.920 --> 0:13:00.200 to put one hundred of my American dollars in our 0:13:00.280 --> 0:13:04.600 business proposition. And in the meantime, after I have already 0:13:04.640 --> 0:13:07.480 put one hundred dollars in, you then turn to convince 0:13:07.600 --> 0:13:11.040 other people to give you money in a subsequent round 0:13:11.120 --> 0:13:14.400 of investments. And forty five days after you hooked me, 0:13:14.720 --> 0:13:17.559 you say, hey, good news, Johnny boy. Your investment has 0:13:17.600 --> 0:13:19.880 a fifty dollars return on it. Already do you want 0:13:19.920 --> 0:13:22.079 your payout. Do you want to get your fifty bucks 0:13:22.240 --> 0:13:24.960 and keep your one hundred dollars in as your initial investment. 0:13:25.200 --> 0:13:27.560 And what you're counting on is what a lot of 0:13:27.559 --> 0:13:30.559 people actually would do. I see an opportunity to get 0:13:30.600 --> 0:13:33.880 filthy rich, Right, I just got fifty dollars back on 0:13:33.960 --> 0:13:37.360 a one hundred dollars investment. That's still good. The investment 0:13:37.440 --> 0:13:39.880 is still in the business. The fifty dollars is like 0:13:39.960 --> 0:13:42.120 a dividend being paid out to me. So what I 0:13:42.200 --> 0:13:44.360 say is, oh, you know what, No, no, no, just 0:13:44.600 --> 0:13:47.960 hold on to that fifty dollars, reinvest it back into 0:13:47.960 --> 0:13:51.000 the business because I'm thinking, well, now I'm going to 0:13:51.000 --> 0:13:53.240 have one hundred and fifty dollars invested. I'm going to 0:13:53.320 --> 0:13:55.880 get even more money because the returns are going to 0:13:55.920 --> 0:13:59.320 keep coming in. Meanwhile, you're looking for your next round 0:13:59.320 --> 0:14:02.280 of investors to help cover the returns of not just me, 0:14:02.520 --> 0:14:05.199 but the people you fooled in investment round number two. 0:14:05.520 --> 0:14:08.800 And this goes on and on until it doesn't because 0:14:08.840 --> 0:14:11.280 these schemes ultimately reach a point where there's just no 0:14:11.400 --> 0:14:14.480 way to get enough people to join in order to 0:14:14.480 --> 0:14:17.960 cover everybody who is already bought into the scheme, and 0:14:18.040 --> 0:14:20.480 folks then might start to worry that something might be 0:14:20.640 --> 0:14:23.160 up and they might start to try to pull their 0:14:23.200 --> 0:14:25.880 money out of this business. And then you have to 0:14:25.880 --> 0:14:29.000 figure out, well do I pay out? And if I 0:14:29.040 --> 0:14:31.320 do pay out, how much do I pay out? Before 0:14:31.360 --> 0:14:34.160 I need to just pull up stakes, move out of town, 0:14:34.320 --> 0:14:37.440 change my name, and hide all my wealth away or 0:14:37.480 --> 0:14:39.680 you get nicked by the coppers, you know, and then 0:14:39.720 --> 0:14:41.760 you're put before a judge and then you're fine to 0:14:41.880 --> 0:14:44.280 timbuck to and back and then thrown in the whoscal 0:14:44.400 --> 0:14:47.320 for good measure. So in the tech space, these pyramid 0:14:47.400 --> 0:14:52.440 schemes happen fairly regularly, particularly in realms like cryptocurrency. You 0:14:52.520 --> 0:14:56.000 got blockchain and crypto evangelists out there who will try 0:14:56.000 --> 0:14:59.400 to convince greedy people to pour money into a system 0:14:59.400 --> 0:15:02.920 only to lock down that money and then run off 0:15:02.920 --> 0:15:05.800 with it. And that's just rampant. It's not I'm not 0:15:05.880 --> 0:15:08.320 making a wild accusation here. You can actually go to 0:15:08.640 --> 0:15:14.480 the website DFPI, dot CAA, dot gov and just look 0:15:14.480 --> 0:15:19.400 at their cryptoscam tracker, or you know, just search cryptoscam tracker. 0:15:19.440 --> 0:15:23.320 It'll pull it right up. That tracker lists dozens of 0:15:23.400 --> 0:15:26.240 cases in which victims have been parted from their hard 0:15:26.360 --> 0:15:30.720 earned assets. The stories are pretty similar. Usually it involves 0:15:30.760 --> 0:15:34.880 someone being convinced to put a significant amount of money 0:15:35.280 --> 0:15:38.320 into some sort of crypto scheme, only to have that 0:15:38.680 --> 0:15:42.600 account locked off. Like usually there are steps to it 0:15:42.640 --> 0:15:45.600 where first they're told, hey, in order to do anything 0:15:45.640 --> 0:15:48.280 with this money, you actually need to increase the investment 0:15:48.400 --> 0:15:51.320 by x amount, So like you might put five thousand 0:15:51.360 --> 0:15:53.760 dollars worth of assets into an account and it says, well, 0:15:53.960 --> 0:15:56.200 we need three thousand dollars more in order to really 0:15:56.240 --> 0:15:59.000 do anything with it. Then you might start getting notifications 0:15:59.000 --> 0:16:02.200 that hey, you're your account's doing really well, like its 0:16:02.960 --> 0:16:06.760 increased your wealth by x amount. But you find out 0:16:06.760 --> 0:16:09.280 when you try to withdraw that you're locked out. And 0:16:09.320 --> 0:16:12.560 then next thing you know, the website doesn't even exist 0:16:12.640 --> 0:16:15.560 anymore and someone has made off with your money. This 0:16:15.640 --> 0:16:18.440 happens a lot in the crypto world, and again it's 0:16:18.520 --> 0:16:22.360 understandable why con artists are drawn to crypto. You have 0:16:22.480 --> 0:16:25.440 bitcoin that's trading at near one hundred thousand dollars per 0:16:25.480 --> 0:16:27.640 coin these days. I think today it's down to ninety 0:16:27.640 --> 0:16:30.880 five thousand. It had been flirting with one hundred thousand 0:16:31.160 --> 0:16:34.280 last week. And it's absolutely true that if you had 0:16:34.400 --> 0:16:37.840 bought into bitcoin in the very early days and you 0:16:38.040 --> 0:16:40.800 were able to keep track of your digital wallet and stuff, 0:16:41.080 --> 0:16:43.840 then you would be wicked wealthy today. Let's say that 0:16:43.920 --> 0:16:46.840 you have bought like a dollar's worth of bitcoin back 0:16:46.840 --> 0:16:51.840 in twenty ten, Holy canoli. You know, bitcoin was a 0:16:51.880 --> 0:16:55.400 fraction of a dollar back in those days, so you 0:16:55.440 --> 0:17:00.160 would have a huge amount of wealth represented in bitcoin today. Now, 0:17:00.240 --> 0:17:03.240 set aside all the other stuff about bitcoin that I 0:17:03.280 --> 0:17:07.000 personally find very concerning, like the environmental impact and the 0:17:07.000 --> 0:17:09.840 prevalent use of bitcoin to do stuff like launder money 0:17:09.840 --> 0:17:11.960 and fund a legal activities and that kind of thing. 0:17:12.160 --> 0:17:16.880 The fact is bitcoin made a few people very, very wealthy, 0:17:17.240 --> 0:17:20.480 so it's understandable that people want to jump on some 0:17:20.920 --> 0:17:25.199 other perceived opportunity. And cryptocurrency is complicated enough that a 0:17:25.200 --> 0:17:28.080 con artist can count on a victim's ignorance to do 0:17:28.200 --> 0:17:30.800 a lot of the work for them. The average person 0:17:31.320 --> 0:17:35.680 doesn't really understand how cryptocurrency works, whether it's a proof 0:17:35.720 --> 0:17:38.840 of work or proof of stake system. The average person 0:17:38.960 --> 0:17:42.240 just sees number go up, you know, or sometimes number 0:17:42.280 --> 0:17:45.719 go down. But to the average person, cryptocurrency might as 0:17:45.760 --> 0:17:48.680 well just be a black box. You put money into 0:17:48.800 --> 0:17:51.119 it and then a whole lot more money comes out 0:17:51.160 --> 0:17:55.119 of it. That's an ideal situation to run a scam. 0:17:55.280 --> 0:17:58.399 People see this as an easy way to increase wealth. 0:17:58.720 --> 0:18:02.120 They understand that there's risk, but most people don't think 0:18:02.160 --> 0:18:04.879 that the bad stuff's going to happen to them. You know, 0:18:04.960 --> 0:18:06.920 most people don't live their lives that way, and a 0:18:06.960 --> 0:18:09.640 lot of people can't even imagine that a bad outcome 0:18:09.960 --> 0:18:13.680 will happen. They've seen the evidence of Hey, bitcoin made 0:18:13.680 --> 0:18:17.560 people into billionaires, why not me? NFTs fall into this 0:18:17.640 --> 0:18:20.600 category two. Now, that's not to say that NFTs have 0:18:20.840 --> 0:18:24.879 absolutely no legitimate use cases. I think that NFTs have 0:18:25.080 --> 0:18:30.200 potential use cases. The problem is the incredible saturation of 0:18:30.240 --> 0:18:33.240 the market back in like twenty twenty to twenty twenty two, 0:18:33.520 --> 0:18:39.359 combined with rampant speculation, created a ridiculous bubble that inflated 0:18:39.440 --> 0:18:43.480 so fast and bursts so spectacularly that to this day, 0:18:43.720 --> 0:18:46.720 NFTs are digging out of the hole that was left behind. 0:18:47.160 --> 0:18:49.760 You know, a ton of NFTs that at one point 0:18:49.840 --> 0:18:53.200 or another were being touted as the next big asset 0:18:53.480 --> 0:18:58.199 are now worthless, not virtually worthless. They're literally worthless. So 0:18:58.280 --> 0:19:01.280 let's just talk about NFTs for us a moment to 0:19:01.320 --> 0:19:06.119 refresh ourselves. So NFT stands for non fungible token. It 0:19:06.240 --> 0:19:10.240 is a digital token. It's built on top of the blockchain, 0:19:10.560 --> 0:19:14.120 and purchasing an NFT creates a digital record, and that 0:19:14.160 --> 0:19:18.200 record proves that you are the owner of this digital asset. 0:19:18.520 --> 0:19:22.000 But that asset is effectively a receipt like it's not 0:19:22.200 --> 0:19:24.920 a specific thing. Like if I bought an NFT that 0:19:25.000 --> 0:19:30.040 represents a digital photograph, the NFT isn't the photograph. The 0:19:30.160 --> 0:19:33.000 NFT is a token that represents the photograph. So you 0:19:33.000 --> 0:19:35.800 could think of it as I've got a certificate that 0:19:36.000 --> 0:19:38.960 proves on the owner. That's kind of what it is. However, 0:19:39.280 --> 0:19:42.600 an NFT doesn't mean that you actually control the asset itself, 0:19:42.720 --> 0:19:45.200 nor does it mean you can prevent someone else from 0:19:45.200 --> 0:19:48.320 making endless copies of that asset. So if I did 0:19:48.400 --> 0:19:51.760 buy an NFT that represents a digital photograph, and that 0:19:51.760 --> 0:19:55.480 photograph is up on the web somewhere, nothing stops people 0:19:55.480 --> 0:19:57.920 from making copies of that image. They can make them 0:19:58.000 --> 0:20:00.679 all day long. Plus I don't own the copyright to 0:20:00.680 --> 0:20:05.240 that image. Necessarily unless that was part of the NFT agreement. Otherwise, 0:20:05.600 --> 0:20:07.760 I just own a copy of this photo. I don't 0:20:07.760 --> 0:20:10.880 own the copyright to the photo itself. The original photographer 0:20:11.119 --> 0:20:15.360 or the company representing that photographer owns that. So let's 0:20:15.400 --> 0:20:18.439 say someone minted an NFT representing a digital copy of 0:20:18.560 --> 0:20:22.080 a novel. If I bought the NFT, would that mean 0:20:22.119 --> 0:20:25.200 I actually bought the novel itself? Would the novel belong 0:20:25.280 --> 0:20:28.000 to me? Would I have ownership of its IP? No, 0:20:28.160 --> 0:20:30.280 of course not. It would be similar to me going 0:20:30.359 --> 0:20:33.640 out to a bookstore and buying a hard print copy 0:20:33.680 --> 0:20:35.680 of the book. If I go out and buy the 0:20:35.760 --> 0:20:38.400 latest Stephen King novel at a bookstore, I don't suddenly 0:20:38.480 --> 0:20:41.639 own the intellectual property. I just own a copy of 0:20:41.680 --> 0:20:44.639 a book. That's it. Which is why I, like a 0:20:44.640 --> 0:20:47.680 lot of other people, got really confused when a crypto 0:20:47.760 --> 0:20:52.520 group called Spice dao. DAO actually is an initialism. It 0:20:52.560 --> 0:20:56.840 stands for a decentralized autonomous organization. That's something else we 0:20:56.840 --> 0:21:01.280 could talk about as far as the potential for scam dao. 0:21:01.480 --> 0:21:04.480 Not that all DAOs are scams, they're not, but that 0:21:04.840 --> 0:21:09.360 because they are a little tricky to understand, they are 0:21:09.560 --> 0:21:14.040 a good breeding ground for scams. There's the ignorance you 0:21:14.040 --> 0:21:18.360 can feed off of. Well. Spice DAO got famous because 0:21:18.760 --> 0:21:22.480 this group pulled together a couple of million dollars from 0:21:22.560 --> 0:21:25.679 its various members, and their purpose was to buy a 0:21:25.720 --> 0:21:28.040 copy of a book. It was a book that detailed 0:21:28.040 --> 0:21:33.400 the failed attempt of Alejandro Jodorowski's film adaptation of the 0:21:33.560 --> 0:21:39.639 science fiction novel Doune, and that production failed spectacularly, and 0:21:39.720 --> 0:21:44.200 this book detailed that failure and the vision of that 0:21:44.840 --> 0:21:48.800 original adaptation. Well, the DOAO intended to purchase this book 0:21:49.040 --> 0:21:53.080 and then sell NFTs representing parts of the book, essentially 0:21:53.119 --> 0:21:57.320 slicing the book up into digital segments and selling NFTs 0:21:57.400 --> 0:22:00.119 representing those segments, and then they were going to to 0:22:00.200 --> 0:22:04.080 actually burn the physical copy that they had purchased. So 0:22:04.720 --> 0:22:07.440 their thought was the digital NFTs would be the only 0:22:07.560 --> 0:22:11.359 remnant of this rare book. But here's the wild and 0:22:11.400 --> 0:22:14.040 wacky thing. They didn't realize that buying the book only 0:22:14.080 --> 0:22:17.199 meant that they were buying a physical copy of this book. 0:22:17.320 --> 0:22:20.000 They wouldn't have the right to do what they were 0:22:20.080 --> 0:22:23.239 planning to do. In fact, they expressly did not have 0:22:23.320 --> 0:22:25.600 the right to reproduce the book in such a way, 0:22:25.600 --> 0:22:29.480 because that violates copyright and they wouldn't own the copyright, 0:22:29.760 --> 0:22:32.640 So they ended up spending more than one hundred times 0:22:32.680 --> 0:22:35.639 the estimated value of the book in an effort to 0:22:35.640 --> 0:22:39.440 carry out the scheme that they ultimately couldn't follow through on. Also, 0:22:39.720 --> 0:22:42.880 to add insult to injury, you could actually already access 0:22:42.920 --> 0:22:45.960 the contents of that book online for free. So you 0:22:46.000 --> 0:22:49.880 know that was a huge missed swing right there. Now, 0:22:49.880 --> 0:22:53.679 that particular whoopsie was due to a misunderstanding of copyright 0:22:53.760 --> 0:22:58.879 law more than NFT technology. But the hoopla around NFTs 0:22:59.119 --> 0:23:03.439 fueled the frenzy that led to that goof in the 0:23:03.480 --> 0:23:07.119 first place. People were so excited about the potential for 0:23:07.320 --> 0:23:10.600 NFTs to get rich. Most people were just looking at 0:23:10.600 --> 0:23:14.520 as a way to get rich quick. They weren't asking questions, 0:23:14.560 --> 0:23:16.919 they weren't pausing to say, wait a minute, does this 0:23:17.040 --> 0:23:20.000 make sense? And if they had, they might have come 0:23:20.040 --> 0:23:22.640 to the conclusion of, oh, no, this doesn't. This would 0:23:22.680 --> 0:23:25.200 be an enormous waste of our money, and the auction 0:23:25.280 --> 0:23:29.960