Fools’ gold: Chavit announces a cryptocurrency
Credit to Author: BEN KRITZ, TMT| Date: Mon, 31 Dec 2018 16:17:04 +0000
EARLY this past Sunday morning, while I was still waiting for the water boil to make that all-important first cup of coffee, the first headline that greeted me was this mind-bender: “Is Chavit Singson the new face of cryptocurrency?”
Haha, what?! I shook my head and rubbed my eyes, but no, the headline was still there. With coffee now in hand and vital caffeine now beginning to restore me to a conscious state, it occurred to me that the headline was unintentionally brilliant, because it is somehow appropriate that the dubious concept of cryptocurrency be personified by the Philippines’ Walking Euphemism.
The story actually first appeared in a few news outlets about two weeks ago but was largely lost in the holiday shuffle. Details about what the Singson Group intends are vague, and that should be the first warning sign. The various reports – carried in at least two newspapers here and several online cryptocurrency news sites – are almost all copies of each other, and so were obviously derived from a press release; thus the lack of detail is intentional.
What was divulged is that the Singson Group will introduce a new cryptocurrency called the Gold Chavit Coin (GCC) by mid-year, and it will be complemented by a mobile application that will allow GCC holders to transfer remittances and make digital purchases. The GCC will also be tradable for regular money or other cryptocurrencies on local exchanges, Singson said.
The GCC will be based on the Etherium ERC-20 standard, and is reportedly being developed by Japan’s Billing System Corp. (one paper here misreported it as “Billion System Corp.”), “a Japanese fintech company that previously developed the PayB payment app.”
Although Singson’s press release doesn’t say so, the GCC will likely be launched by way of an initial coin offering (ICO), as this is the way things are normally done. As ICOs have not yet (and perhaps never will) really taken off in the Philippines and Japanese rules governing ICOs are somewhat looser, the GCC ICO may actually be planned for Japan instead of the Philippines even though its intended market is here.
The lack of disclosure about a planned ICO, the connection to the PayB app, and the general connection to the Japanese Fintech underworld are also all warning signs.
The reason the lack of information about an ICO raises suspicions is because an ICO is practically unavoidable if the developers of a new coin expect it to have any initial value. This is particularly true in the case of a coin intended for use as a currency substitute like the GCC. In order for an ICO to be successful, it is heavily marketed, usually beginning months in advance of its planned launch date. In order to hedge against crypto investors treating the new coin like a hot turd and depressing its exchange value below its initial offer price, coin developers aggressively pursue “pre-sales,” leaving as little volume as possible to the mercy of volatile open exchange markets.
The truth of the claim that Billing System Corp. developed the PayB app is also questionable. Billing System Corp. is an electronic payments solutions provider for Japanese retailers and money transfer agents; in other words, their business is selling electronic payment system packages to outlets like convenience stores and remittance centers. Billing System Corp. does handle and promote the PayB app, but it also offers solutions using the WeChat Pay and Alipay apps as well.
The provenance of PayB is a bit murky. Whoever developed it, the app as a business entity is actually registered in Riga, Latvia, with a business address in a dilapidated office block and registered capital of 3,000 euros, according to the Lursoft business registry database.
As digital wallet apps go, the prevailing opinion among users of PayB is that it is frankly terrible; the app has a rating of 1.9 (out of 5.0) on Google Play Store, and 2.6 on Apple’s App Store. Complaints range from extremely slow transaction times, to frequent instances of not functioning at all, to concerns about the unusual amount of personal information collected by the app.
If Singson’s GCC app is to be based on the PayB platform as the press release implies, usability issues seem likely. Putting that together with inescapable factors that recommend against the use of a cryptocurrency as a money substitute — extreme fluctuations in exchange value and comparatively slow transaction times — and one begins to question whether there are other motives behind Singson’s idea.
The fact that an unremarkable Japanese Fintech company with no other obvious experience in cryptocurrency is being tapped for the project does nothing to allay suspicions. While Japan is one of the most supportive and energetic environments in the world for cryptocurrency, the flip side of that is that fraud has grown to epidemic proportions. One of the most common scams is the introduction and pre-sale of new cryptocurrencies on the basis of their application to some businesses to be developed from the proceeds – digital money and remittance system, beach resorts in another country, and various forms of insurance are common examples — with the proposed project evaporating shortly before or after the ICO, leaving early investors holding completely worthless electric fairy tokens.
To be sure, there is certainly no clear evidence that Singson’s bright idea is a scam. On the other hand, there is certainly no clear evidence that it is not. Prudence suggests that would-be investors — including the man himself, who needs to be at the center of another controversy about as much as a fish needs a bicycle — stay far, far away from this one.
ben.kritz@manilatimes.net
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