Piotr Piasecki || Blockchain || Development || Onecoin
Piotr Piasecki is a master of science and a double bachelor in the field of computer science and informatics. He is currently an Advisor for the Crypto Currency Certification Consortium, Chief Scientist at Provable Inc, and Core Developer at Factom.
There has been a resurgence of news about OneCoin in recent weeks, in what appears to be a high-profile multi-level marketing ponzi scheme disguised as an altcoin.
OneCoin boasts an impressive "ecosystem," consisting of 10 distinct offerings. OneAcademy is an e-learning platform teaching about trading, stock exchange, cryptocurrency, etc. in a 6-level program, boasting over 2,000,000 students.
OneLife Network is "a digital platform with a unique ecosystem of sophisticated products and social networking tools that help members achieve financial independence." They offer you an "Ultimate Trader Package" for the low low price of €118,000, and a tablet to match for €550.
OneWorld Foundation is a charity helping children based in Bulgaria, not to be confused with one world foundation, or One World Foundation or One World Foundation.
Then there is OneExchange, which is currently not online. There’s a payment solution based in Bulgaria,OnePay, a cloud storage service where you can buy 100GB of data space for 1 year for €3,030, CoinCloud, and a gambling website based in Malta, CoinVegas.
There are 195-206 countries in the world. OneAcademy supports 231 of them
From what I can gather, the renewed popularity of the topic was sparked by OneCoin's Coin Rush Global Event. As someone that has been around Bitcoin for 5 years, there are more red flags here than you would see during International Workers' Day.
The video and OneCoin in general are such a good example of how you can bamboozle people by saying just the right thing. It might be a worthwhile exercise to dissect it. Going onto a cryptocurrency website you want to look for a few key pieces of information.
Who is developing the project and code? You want to find at least a competent development team identifying themselves. Examples: Bitcoin, Ethereum, Ripple. For OneCoin, the best resource I found was OneDream Team's "Top Leaders," which only boasts some news.
Where is the company located? This is especially important for exchanges and other companies you're giving money to, but can be useful for identifying the core development team if applicable. Examples: Ethereum,Bitcoin Foundation, BitStamp, Ripple. There’s not as much for Bitcoin Core as it's a more decentralised development, OneCoin mentions Dubai, and Bulgaria.
Where is the source code? If you can't see the code, you can't be sure what you're installing isn't malware or whether the blockchain itself is really there. Examples: Bitcoin, Ethereum, Ripple, but nothing for OneCoin.
Is there a block explorer? If you can't browse the blockchain data and validate it yourself, how can you be sure everything adds up? Examples: Bitcoin, Ethereum, Ripple lacks a proper explorer, but has a public API endpoint. The best you can get for OneCoin is a falsi explorer.
Do any reputable exchanges trade it? A coin that isn't tradeable might not be a currency at all.
For a smorgasbord of examples, you can check out the BNC Market Cap table, indexing things as small as smartcoins bitGBP, with a Market Cap of $208. OneCoin, despite boasting 5.2B USD market cap, is conspicuously missing.
Checking all five of the above points is a good start, but as we can see, even some of the largest coins are missing one or two of them. Lacking all five does not bode well.
Putting all of that aside, let's look at the video and see what the event is about. The big news is that OneCoin is retiring its old blockchain, and launching a new one in October so they can make more onecoins. The justification being that they need more coins to grow, since there might not be enough coins for new merchants.
A cryptocurrency that is not explicitly tied to a fiat currency is running out of coins
The issue is also more complicated than just that. The OneCoin FAQ page claims that the blockchain is mined with a custom solution based on Script and X11. However, you don't mine the blocks directly, "you just sign up on the mining dashboard on the exchange in your back office.”
“Because of its centralized system, the OneCoin blockchain does not resemble a public ledger like the blockchain of decentralized cryptocurrencies,” states the Onecoin Site.
This might remind some people of Proof of Stake or Delegated Proof of Stake, but no, OneCoin does it differently: "People are signed up and assigned to mining pools on a first come, first serve basis. Whenever a place is free you can join a pool."
The process appears to be:
- You send OneCoin money to buy the right to mine the coin
- You sign up to mine
- You wait for your turn to mine
- You get your coins
In other words, it's like purchasing coins from an exchange - send money, get coins - but with an arbitrary wait period - currently 3-6 months - between sending money and receiving coins. As pointed out, the block times are also very strange, and too regular for a Bitcoin-like mining scheme.
The blocks appear to be generated at the 10 minute mark without much variation. If there is any real mining going on, there is no real competition, nor difficulty adjustment. It looks a lot more like Ripple's Consensus algorithm than anything mining-related.
Then there are the splits and tokens. You don't directly buy onecoins, instead you buy packages
Apparently, in order to keep the price attractive you split the tokens as you would company shares. This means that you end up with a higher quantity of tokens, which you can use for mining, but the value stays the same. The splits can only be used on the tokens, it appears, not the coins that are mined, but you can combo the various packages in some "strategy" to receive more and more splits.
This seems to accomplish a few things; Make the process more opaque, incentivise people to buy more and more packages to get the best value for their money, make people feel like they are in control of how to get the most money and get ahead of everyone else, and widen the distance between real money and onecoins by extra few steps in a freemium-like model.
If that wasn't enough, don't forget about the match bonus for people you refer. Nothing inspires more confidence than a pyramid-like structure with the money flowing to the top.
There is also something about not actually purchasing tokens, but instead purchasing training from OneAcademy that conveniently comes with tokens, BVs and what have you, but at this point I think I made my point.
Purchasing any cryptocurrency is simple. You take your money, you get your tokens. With OneCoin, a simple trade is a drawn out process taking many months with zero transparency. Mining is a joke and the numbers are multiplied over and over. But the story doesn't end there.
There were a number of claims made about OneCoin, and others, during the Coin Rush Global Event. After hearing a lot of them, one feels the urge to shout "show us your proof."
OneCoin claims 2 million active users, no other currency has as many. This not only asserts that a lot of people are using OneCoin, but claims to know how many people are using other cryptocurrencies, information that is hard to come by. Someone estimated Bitcoin to have 50M users by 2015, but that's a guess.
OneCoin claims a 4.5B USD market cap, although the coins aren't actively traded at any reputable exchange, and the blockchain is not verifiable.
OneCoin states that almost no merchants take Bitcoin. There are 8000 physical locations taking Bitcoin today, in 2014 BitPay estimated the number to be over 20k.
OneCoin is in 195 countries, it's bigger than Western Union. While there are 195 countries in the world, operating in the North Korea, Iran, and Syria, violates a number of international sanctions.
OneCoin can do more transactions than Visa and Mastercard combined. This would mean it can handle more than 2'000 transactions per second, an impressive amount of data to synchronise in a blockchain.
OneCoin stores all customer KYC information encrypted on the blockchain. Not only would this be a huge customer data protection concern, but also raises the issue of how decryption would be handled under a warrant.
OneCoin, perhaps going in Microsoft's footsteps of wishing their products to be abbreviated into "The One" has raised a lot of red flags on all fronts. It does not instill any confidence in its products, its business strategy, or legitimacy of its creators. It takes money from a lot of people, turns it into a flashy show to boost confidence, and talks about its "community" and "family." The way it does business is overly complicated, intentionally opaque, and unverifiable. It is a blockchain and cryptocurrency only by self-proclamation. Keep as far away as you can from anything related and enjoy the slow-motion train wreck.
According to the BNC indices, at the time of writing:
Steem was trading at $1.9703
bitcoin was trading at $587.29
This article can be found on our website on the following link:
http://bravenewcoin.com/news/how-not-to-blockchain-a-look-at-onecoin/