In the 90s, you had to take your entertainment where you could get it. Sometimes that place was the home shopping channel in the middle of the night. My brother and I would tune in to a fuzzy broadcast to watch a man in a cheap print shirt, who a short time ago had been selling knives, stand in front of a colossal rainbow mound of stuffed animals.
He’d pick up three or four in a fist, shake them at the TV, and—in a coked-up sales pitch that left his mustache covered in spittle—yell things like, “You could pay for your kids’ college tuition with these!”
That man was Don West, and he was selling Beanie Babies for hundreds of dollars. Of course, we now know that the former wrestling hypeman was not offering the most solid financial advice. Humphrey the Camel, once worth $2,000, can now be had for $15.99 on eBay. (Call now while supplies last.)
There is a modern-day corollary to Beanie Baby madness and the current cryptocurrency frenzy. Headlines about Bitcoin millionaires like 19-year-old Erik Finman are reminiscent of stories about people like 9-year-old Cameron Johnson, who in 1994 was making $50,000 a year reselling Beanie Babies.
Finman tells Business Insider that “if you do not become a [Bitcoin] millionaire in the next 10 years, then it’s your own fault.” This surely makes some long for a heavy dose of karmic schadenfreude, but many have cryptocurrency FOMO and are making risky financial moves.
Students thinking about betting their college funds on Bitcoin should watch filmmaker Chris Robinson’s short documentary about his father’s obsession with Beanie Babies. He wanted to use his earnings to put Chris and his younger brother through school, but ended up losing $100,000 instead. Because while every pyramid scheme and lottery drawing features at least one person who makes it rich, very rarely is that person you.
Early Bitcoin investor and millionaire Grant Sabatier, who runs Millenial Money, cautions against the high stakes of Bitcoin; it’s gambling, not investing, he says. That’s rare; in the cryptocurrency world, you’re more likely to encounter people like James Altucher. A self-described “cryto genius,” Altucher is one of the many people peddling cryptocurrency advice and schemes as if they were royal-blue Peanut the Elephants. While he makes his money from books, newsletters, and a podcast, he also pushes people into far less secure investments.
It’s important to separate cryptocurrencies and their underlying blockchain technology from disingenuous and overblown marketing. The value of Bitcoin and other cryptocurrencies is falling, but its volatility is one of the factors that can make this sort of marketing so enticing. Of course there will be those who say now is the time to go all-in. But that’s the same impulse that fueled the purchase of armloads of soft stuffed toys in the 90s; feverish economic groupthink can overtake good sense.
One of the latest ways to peddle cryptocurrency is through initial coin offerings (ICOs), which is much like an IPO but without any regulatory oversight (for now). A startup will raise funds by accepting Bitcoin or other cryptocurrencies to get itself off the ground, in rapid sales that can last hours or even minutes. Facebook is not known for taking swift action against advertisers or others on its site, but there have been so many ICO scams that the social network’s cryptocurrency ad ban was a no-brainer.
Beanie Babies might be gone, but their spirit lives on in Bitcoin. Where there once was Don West on a UHF channel, there’s now boxer Floyd “Money” Mayweather on Instagram. When you look at those stacks and stacks of cash Floyd is about to invest in an ICO for Stox.com, know that it’s throwing good money after bad.
If you still want to invest in Bitcoin, PCMag.com has a guide to buying, selling, and keeping track of it.