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So there's a Tor hidden site which offers you double your money back if you send it some bitcoins. Obviously a scam, right? Well, it is a scam, but it's not quite the scam it looks like. This is a particularly interesting scam because if you look at the comments, there is a comment from someone claiming that they tried it and the way the scam worked was that it doubled your money the first time you sent it some bitcoins, but then kept anything you sent it subsequently; the idea being that the first transaction will be a 'test' by suspicious users, who will then send a 'real' transactions which can be stolen in toto.
This is reasonable enough - Ponzis are careful to allow withdrawals early on, and runners of Ponzis like the EVE Online scam I discussed a while ago record how people would do 1 or 2 test transactions and then deposit large 'real' sums with the Ponzi.

Except... the person claiming it worked for them is an unused account, and so are the people expressing skepticism of him! It gets more interesting when you note that the scam as claimed is trivially exploitable (or scammed) by anyone who knows how it works (send a large amount the first transaction, and never send again), and more interesting still when you remember that Bitcoin transactions are public and so the first commenter could have partially proven that the scam worked as they claimed it worked for them yet has not provided any evidence despite being challenged to do so and given 9 days' grace, and finally, we see 2 Redditors sending in token amounts and claiming they received nothing back.

So what are we looking at here? I can't know this for sure, but this is what I think is going on.

We are looking at a meta scam: the scam is that you think it's a scam that you can scam, but you get scammed as you try to scam the scam. The original scammer puts up a scam website, makes 4 shill accounts to claim it works and lay out the rules - send it X it sends you 2X back, and then the second time it keeps your money when you presumably sent it 2X+Y - but actually, the site simply keeps any money sent to it, and so the people who planned to scam the scam wind up being scammed.

If we think of deception as having levels, this is a little confusing, but basically, the site will either return your money or not. The first level is that the site works as it claims: it returns your money, it doubles any money you send it. (This is understood by anyone who can read the page.) The second level is that level 1 is a lie: it does not return your money, it simply steals any money you send it. (This is understood by anyone with a brain who has read the page.) However, then we get to a third level: level 2 is not quite right, the site will either return your money or not, depending on how many transactions you've done - the site is a scam which will steal your money, but it will do so only after 1 successful transaction. (Understood by anyone who reads the Reddit comments and blindly trusts them.) The fourth level, the level originally above mine until I became more suspicious, is that level 3 is a lie too, and actually, level 2 was the real truth - the site simply steals your money.

Phew! How fascinating! Honestly, I almost feel like sending the dude a buck or two just for implementing such an interesting little scam for me to think about.

So in a way, this scam embodies the old saw "you can't cheat an honest man". Well, of course in the real world honest men get cheated all the time, so I prefer to think of it as Nash equilibriums:
"'Nash equilibrium strategy' is not necessarily synonymous to 'optimal play'. A Nash equilibrium can define an optimum, but only as a defensive strategy against stiff competition. More specifically: Nash equilibria are hardly ever maximally exploitive. A Nash equilibrium strategy guards against any possible competition including the fiercest, and thereby tends to fail taking advantage of sub-optimum strategies followed by competitors. Achieving maximally exploitive play generally requires deviating from the Nash strategy, and allowing for defensive leaks in one's own strategy."

#bitcoin #fraud  
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11 comments
 
Aren't most scams actually meta-scams? At least as told by such movies as The Sting or The Grifters or House of Games or Sleuth...
 
I don't think so, or rather, I think that's a comforting lie scammers tell themselves and others to blame the victim - 'really, the victim deserved it, you can't cheat an honest man!' - and which makes for funner fictional (ie. 'not true') stories.

But I think the sordid reality looks more like simply good people being ripped off as they lose their life savings because they aren't specialists in an area and trusted an expert. I think it's relatively rare that you get a complicated setup like this scam, or like the Madoff scam in which people assumed Madoff was simply frontrunning the people he was trading for; although now that I think about it, only the savviest investors with Madoff understood the sheer impossibility of his returns and concluded he was scamming by frontrunning, most of the people who gave him money were just ordinary middle-upper-class folks.
 
Of course, even a shill could have actually proven that the first doubling transaction had taken place.

It is also possible that the scammer simply stopped using the initial strategy once it became public.
 
Of course, but that's more work to set it up in advance rather than simply write the appropriate claims for the shill.
 
I don't see how, since Bitcoin exchanges are zero-sum, while Prisoner's Dilemma is not.
 

+Ashley Yakeley Nothing to do with Bitcoin specifically.
It's about the back-and-forth of promises and deliveries of any good or currency.
 
Well, there are Nash equilibriums for trading without recourse, but they look relatively exotic and like the mutually-assured-destruction thing I posted a few weeks ago. I don't think that Prisoner's dilemma result (however weird and fascinating it is) is relevant, because people certainly do have memory and theory of mind.
 
I'd just like to point out that this scam of doubling even the meta scam, is common in games such as runescape.
 
Really? Could you link something on that topic? (I've never played MMORPGs.)
 
http://darkrunescape.wikia.com/wiki/Doubling_money_scam
http://runescape.wikia.com/wiki/Scams#Doubling_money

I've not actually played the game, but heard from word of mouth from friends that there tend to be 2 types, those that take everything, and those that wait a few rounds. It's possible to scam the scammers by pulling out early for the multi-tier strategy. they often advertise that due to a "flaw in the system" they are unable to make a straight swap, it needs to happen in 2 separate trades so they can "hack" the game.
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