Here's a scenario to which cryptocurrency fans are accustomed: An influencer praises the merits of or evokes a token on social media. And the token value immediately flies to the moon.
But for neophytes, who are wondering whether they should buy cryptocurrencies whose prices have plummeted, it will be an additional reason to stay away. And regulators will see this as a reason to speed up the regulation of the crypto space.
Opportunists created a cryptocurrency based on a McDonald's (MCD) joke on Twitter. The currency's value then rose 285,000% before falling back somewhat.
The fast-food giant joked on Twitter that it would accept meme dogecoin as a means of payment for its burgers and fries "[only] if Tesla accepts grimacecoin." That's a reference to the purple character that's known to tag along with Ronald McDonald in the popular McDonaldland commercials.
McDonald's tweet was a response to Tesla (TSLA) Chief Executive Elon Musk, who earlier had challenged the Big Mac owner to take dogecoin as payment.
Getty/McDonald's
Scam Coins
Hours later, people from all across the globe flocked to create fake Grimace tokens on the cryptocurrency marketplace. It's worth noting that there was no Grimace Coin in the crypto world at the time of the tweet. McDonald's tried to promote the idea as a joke, but some saw an opportunity and started making fake coins with that name.
One of these newly created tokens started trading at $0.0007 and reached $2 at its peak before tumbling to 60 cents, according to Coindesk. Its market value rose to almost $2 million.
Another Grimacecoin surged 56,000%, reaching 1,000 holders and a $6 million market value.
The creation of these fake tokens has led to social-media criticism of McDonald's, accusing the Chicago burger giant of promoting "scams coins."
Anyone can create a token: Several blockchain platforms explain how to create your own cryptocurrency, whether it's to make a community coin for fun or for any other purpose.
These platforms - ethereum, Binance, etc - make the creation of a cryptocurrency as simple as filling out a survey on the internet. You need to fill in your name, the number of crypto assets to be created, a few other details and that's it.
For specialized companies and savvy nerds, it takes only a few hours to set up a cryptocurrency. The presence of decentralized exchanges then facilitates things. This means that the tokens can be issued and exchanged immediately.
In December, the U.S. House Committee on Financial Services held a hearing on cryptocurrency.
"The number one threat to cryptocurrency is crypto," began Rep. Brad Sherman (D-California). "Bitcoin could be displaced by ether, which could be displaced by doge, which could be displaced by hamster coin and then there's cobracoin."
"What could mongoose coin do to cryptocoin?" he joked, explaining how he just made it up.
Shortly after, hundreds of moongoosecoins were created. Within just a few hours, the prices of these moongoosecoins skyrocketed, but have since fallen.
