Is Onecoin the Next Bitcoin?
There’s a new thing out there called Onecoin. Apparently it’s the greatest thing ever:
OneCoin is more than just a cryptocurrency. To make it successful and unique, we have created a whole concept and universe to make One a market leader in the crypto world. We offer core financial education on crypto-currency in the OneAcademy, an online exchange, and we partner with one of the hottest and newest hybrid crypto-currencies – the Aurum coin. OneCoin uses the latest cryptographic technology and security standards and has a solid marketing concept – enhanced by the OneLife Plan. The page of their wonder
I have been asked this question a lot recently – Should I invest in Onecoin? I’ve done some research into it and my honest opinion is no and here’s why:
Onecoin appears to be counter to what a cryptocurrency is – decentralized and open-source. Onecoin appears to have barriers to entry, either in the form of a financial transaction or handing over of personal information, which wouldn’t make it open source in the strictest sense. Also, I would not classify 3 or 4 servers as decentralized, most traditional banks and payment method operators run some form of fail safe system which would consist of multiple server locations, this would not make them “decentralized”.
The sheer lack of information on their website is troubling – nothing regarding the nature of the algorithm and nothing regarding the people behind onecoin.After doing some research, it would appear that the people involved have been accused of fraudulent activity in the past.Other things ring alarm bells: the WHOIS registration details are set to private, with the website itself based out of Sofia, Bulgaria. If any company, especially one that is focusing on finance (and what appears to be multi-level marketing), is not completely upfront about the identity of those in charge, I would walk away.
The “Aurum” coins aspect of OneCoin looks like such BS – they claim it’s backed by 1mg of gold, stored in a vault in Dubai. But then there’s nothing to back those claims up. It’s like me walking into a shop, going to the counter to pay and handing them a piece of paper, with “There’s €50 worth of gold in a vault in Dubai that is now linked to this piece of paper” scrawled on it in crayon.Personally, this whole thing looks like nothing more than a ponzi scheme and it’s a shame that people are using the “cryptocurrency” name as a buzzword to generate interest, when in the end, it’ll serve to dirty that name.
We asked Ruja Ignatova (the super awesome businesswoman behind Onecoin) some questions:
- So as I understand, Onecoin is mainly centralised cryptocurrency? Centralised mining, centralised blockchain and centralised public exchange? Which components of the Onecoin system are decentralised?
OneCoin will have two phases in development. One is “centralized” while we mine. As we sell the mining rights we have to make sure that everyone who pays let us say 100 EUR also receives the same amount of coins as someone who pays 100 EUR too. So in the beginning we will mine for the network. Once we reach a good development and number of coins, we will open the exchange for other people. The end goal is to make the whole coin public so people can trade on all exchanges, but it has to be fair to the network. We are discussing now with some of the big names if they can audit the blockchain – so that the members and people outside have trust in it
- This is more philosophical question maybe but you are saying that one of the main reason why Bitcoin is bad, is his decentralised form, many exchanges and because of that volatility and lack of liquidity? In my opinion, volatility is very normal in small mass of usage like Bitcoin today is, compared with fiat currencies. But it has already improved as the usage and trading numbers getting bigger. You think, that you solve liquidity and volatility with centralised exchange? So basically you’ll make another central bank which has theoretical possibilities to control or even change the price, limit transaction or other kind of activities? If so, then how are those possibilities avoided?
Now one of the big issues in my opinion is that Bitcoin’s target group is an elite. This are either peple who are very sophisticated (IT knowledge) or people who have enough money to diversify in other assets. It is not a coin for “small” people. So in my opinion targeting this target group and making the coin useable can create liquidity to the market. In the beginning we need the central exchange, as we cannot reach the numbers of bitcoin within a short time if we do not do any central planning, marketing and education of people
- How you are doing KYC?
This is the benefit of the centralized approach we choose in the beginning. KYC is done on our website. Whoever takes out more than 2.500 EUR of the system needs to upload the needed documents
- Who holds the private keys of the Onecoin? Onecoin company, or user itself?
Currently the company
- What consensus method are in used to process the transactions? Is it POW, POS, POB or something else or is it any? If not, is a mining somehow related with consensus algorithm at all?
- About mining difficulty. In Onecoin presentation has said that mining difficulty depends on the amount of the onecoins has already mined. So it doesn’t depend amount of mining computation resource? How is regulated variable computation resource and algorithm difficulty then? I mean, how is regulated calculation time of the mining problem?
I am not sure I understand the question here correctly. We definitely try to explain the topics as simple as we can for the network as most people do not understand the technical background – can we specify the question
- How much will be transaction time of the Onecoin transactions? Confirming time?
- How opensourced the whole project is? I haven’t see any github, codes or any other technical materials. One of the main Bitcoin success reasons was its opensource form and big community behind that. If you are closed then how you plan to get together the critical coin usage mass?
see answer on point 1
- Why you don’t accept Bitcoins or any other cryptocurrencies as a payment method? They are not support by KYC is a wrong answer :).
We are thinking about this actually – but until now there has been no demand for this from the members
- Regarding the MLM system, as I understand, the main product what you are actually selling is the educational materials?
So this is why I have no faith in Onecoin and I do not suggest anyone investing in it. Also the Onecoin people are spreading rumors that the members of the Estonian Cryptocurrency Association have invested more than €20 000 into it – which frankly is not true. We posted our opinion on the Estonian Cryptocurrency Association website and received an angry letter from them shortly after publishing it. So if this really is a legit money making machine that will solve all of the problems of society then why do they need to make things up, I wonder…
P.S. Steemit is pretty f*ing cool!
Member of the Board
Estonian Cryptocurrency Association