The Filecoin mainnet has not yet been launched, and the company that sold me the mining machine has run away

Author: Bu Er Zuo

Editor｜Menren Operation｜Xiao Shitou Feng Qingyang

Filecoin has become popular.

“Comparing the popularity of previous years with this year, it is really incomparable.” Nancy from Interstellar Vision was in the middle of a meeting when she was interviewed by DeepChain.

Amid the epidemic, compared with the bleak cryptocurrency market, Filecoin/IPFS has been thriving in recent times.

On June 14, Filecoin business developer Angie Maguire said that the project's mainnet will be launched this summer. According to the public roadmap, the Filecoin mainnet is expected to be launched in the time window of July 20 to August 20. This is the result of multiple delays.

"It should be confirmed this time." Filecoin.cn founder Xie Dapao told DeepChain, "Filecoin private placement investors have received emails, and the coins will be issued in August."

Although the mainnet is ready to go and good news is emerging, Kevin, a veteran Filecoin player, told DeepChain that he does not plan to participate.

“What’s the deal? The mainnet hasn’t even been launched yet, my mining machine provider is gone, and my money is gone too.”

Previously, due to the delay in the launch of the mainnet, all kinds of evil spirits and scams emerged in the Filecoin ecosystem.

"The mining machine manufacturer ran away, leaving me with a pile of scrap metal"

"I got cheated." The first thing Keivn said when he got through the phone was that he had been fighting against eagles all day and was finally pecked in the eye by an eagle.

As an old hand who entered the cryptocurrency field in 2016, Kevin has developed a pair of sharp eyes through years of experience.

“I can tell at a glance whether it’s a pyramid scheme or not.” Kevin told DeepChain. “Once I understand the model of the Ponzi scheme, I can sometimes be bold enough to take advantage of it.”

Kevin was just a white-collar worker working in Beijing. Later, he accidentally learned about blockchain, Bitcoin and various Ponzi schemes. He focused on Ponzi schemes, entered and exited various schemes, lost less and won more, and accumulated a lot of wealth.

Then, Kevin failed in the Filecoin field.

In 2017, Kevin came to Shenzhen on a business trip and made a friend.

Kevin first came into contact with IPFS/Filecoin mining machines through a friend’s introduction. The distributed storage feature of Filecoin aroused his interest.

On August 10 of that year, Filecoin began its ICO process and raised $257 million in just one month, becoming the largest ICO project at the time.

Surprised by the amazing potential of Filecoin, Kevin took out the 600,000 he earned from other projects and invested in Filecoin.

“At that time, Filecoin officially announced that the mainnet would be launched at the end of 2017, and I joined the game in September of that year.”

The three-month time cost was acceptable to Kevin, so he chose a company that was focusing on Filecoin mining at the time: StarStart.

At that time, Interstellar Starting Point claimed that a 4T mining machine was priced at 4,000 yuan, but because the main network had not yet been launched, it could only mine other tokens. After the main network was launched, the previously mined tokens could be exchanged for FIL (Filecoin tokens), and the previously mined tokens could also be traded and converted into cash.

“It sounded good to me, so I bought about 150 units at once and placed them in Zhejiang.” Kevin told DeepChain, “I invested all the 600,000 yuan.”

Kevin was full of confidence and thought he could achieve great things with this. However, after mining for a month or two, Kevin was told that these mining machines could no longer mine due to technical problems.

What’s even more annoying is that the mined tokens cannot be traded for cash and no one is willing to buy them.

At this time, Kevin realized that he had been cheated.

When I contacted Star Starting Point to express my desire for a refund, they told me that the goods had been sold and no returns or exchanges were accepted. A full refund was impossible, and I had to either give the mining machine a discount and return it in batches, or sell it to someone else.

"This is simply robbery." At that time, I did not accept either of the two options and chose to call the police, and then there was no further news.

"Later, I pulled the mining machine back and sold some of it. I recovered 100,000 yuan from the sale of the mining machine, but the remaining 500,000 yuan will never be recovered."

In fact, in addition to Kevin, there were victims who reported to the police all over the country. Someone he knew lost 7 million yuan.

Today, Star Start has long disappeared, just like those other fleeting Ponzi schemes.

Kevin, due to his heavy losses, did not have enough capital to participate in the Bitcoin craze at the end of 2017, and missed the opportunity to get rich.

The mining machine manufacturer ran away, leaving only a pile of scrap metal.

"A scam that parasitized Filecoin, making 1.3 billion yuan"

Kevin was cheated in 2017, when Filecoin had just experienced its first wave of popularity.

As we all know, 2017 was an extremely crazy year for ICO. In this year, Filecoin also started fundraising.

Starting on August 10, 2017 and ending about a month later on September 7, Filecoin raised $205 million from the public, plus the $52 million previously invested by Sequoia Capital, Y Combinator, Andreessen Horowitz and other well-known investment institutions.

Filecoin raised a total of $257 million in funding, which was the highest-priced ICO project at the time and attracted the attention of many people inside and outside the cryptocurrency field.

However, to people's disappointment, Filecoin started high and ended low. Despite receiving huge amounts of financing, its test network and main network were delayed one after another.

So much so that many people began to doubt whether Filecoin was a scam project.

Filecoin is not a scam project, but scammers and scams have been eyeing the fat piece of meat called Filecoin.

Among them, the most famous scam is the "Snail Interstellar Mining Machine Scam of 1.36 Billion Yuan".

On October 29, 2018, the "2018 Central Plains Silicon Valley First (International) Innovation Technology Festival and the World's Only Storage Application Ecosystem CAI R&D Launch Conference" was held in Zhengzhou.

At this conference, Henan Lianxin Technology Co., Ltd. introduced the protagonist of the day, the "Snail Interstellar Miner", to hundreds of participants on site.

At the meeting, the organizer publicly announced that their mining machines can mine CAI and Filecoin at the same time. Before Filecoin goes online, CAI can be pre-mined and then used to exchange for Filecoin.

This is exactly the same as Kevin's experience mentioned above.

In order to encourage everyone to buy more mining machines, Lianxin Company also used the marketing strategy of "the more mining machines, the more coins produced".

Simply put, a single "Snail Interstellar Miner" can only produce 47 CAI tokens a day. If you buy 100 units together for joint mining, each mining machine can produce 70 CAI tokens a day.

At that time, the price of CAI rose from 0.1 yuan to 2 yuan. Therefore, investors watched the CAI being mined and the rising price of the currency on their mobile phones every day, and no one thought about selling it.

However, one day, a community of an investor suddenly lost power for more than 10 hours. The investor suddenly discovered that although the mining machine had lost power, the amount of CAI was still increasing.

Investors began to realize that the so-called mining machines for CAI may just be a gimmick of Lianxin Company.

On February 14, 2019, two announcements posted by AT Exchange and Lianxin Company respectively exacerbated the investor's concerns.

In the announcement, AT Exchange announced that due to the platform being attacked by hackers, it decided to temporarily suspend all withdrawal operations and freeze related transactions for 3 months until all technical problems were eliminated.

Lianxin Company stated that the company conducted a US roadshow on February 7, 2019, San Francisco time, and was favored by many Silicon Valley high-tech companies and venture capital institutions. It decided to move its headquarters to Silicon Valley, San Francisco, USA, and promised that "American Silicon Valley Technology Company" will repurchase CAI at market price.

However, Lianxin did not fulfill its promise, and the so-called move to the United States was just an open escape. The deceptive face of Snail Star was finally exposed.

In March 2019, the Zhengzhou Municipal Public Security Bureau opened an investigation into the "Henan Lianxin Technology Co., Ltd. suspected fund-raising fraud case."

According to the investigation, the case involved a sum of 2 billion yuan and more than 7,000 victims. However, Huo Dong, the actual controller of Henan Lianxin Technology Co., Ltd., had already fled overseas.

「The reasons behind Filecoin's chaos」

Snail Star is a typical "one machine, two mining" model scam, which is also one of the classic routines of Filecoin ecological fraud.

"In the early days, many manufacturers claimed that one machine could mine multiple items, and that while mining FIL, one could also participate in other mining income. Anyone who understands the principles of Filecoin mining should know that Filecoin mining is packaged within a specified time and requires continuous submission of PoSt verification at a fixed period. The mining machine has no spare capacity to do other work." Will from Interstellar Vision told DeepChain.

In addition, the price of a single Snail Star unit is 5,875 yuan, but if you buy accessories from Taobao, the cost is less than 1,000 yuan.

In addition to Snail Star, Coin Master, who previously spent money in Hong Kong, is also a "predecessor" in the Filecoin mining machine scam.

In June 2018, Coin Master promoted mining machines to his fans and taught them how to trade Filecoin, claiming that buying his mining machines would “return the investment in three months and increase eightfold in two years.”

His mining machine costs as much as HK$25,000.

However, in the purchase contract, he did not mention anything about the configuration except the hard disk capacity. It was not until the fans disassembled the mining machine that they found that the production date of the accessories was actually 2012.

Coin Master’s fake mining machine scam was immediately exposed.

In addition to fake mining machines, there is another Filecoin cloud computing scam on the market. If you can actually get a few hard drives by buying a mining machine, then the cloud computing scam is completely false.

Why are there so many scams in the Filecoin field?

Of course, scams always like to disguise themselves as emerging technologies, and they can be found wherever there is a hot spot.

In addition, Zhou Huan, the founder of IPFS.Fund, believes that on the one hand, the technical principles of Filecoin are relatively complicated, and on the other hand, the Fielcoin mainnet has been delayed in going online. Multiple reasons have resulted in the mixed quality of mining machines on the market today, making it difficult to distinguish between the real and the fake.

As a star project in the blockchain field, Filecoin's technical principles are obscure and difficult to understand. If you want to truly understand it, you need a certain threshold, and this threshold often becomes a stumbling block for investors to distinguish the authenticity.

At this time, scammers take advantage of the situation and use various gimmicks and half-true and false information to build a fake project. Investors with poor vigilance can easily fall into the scammers' trap.

In addition, Filecoin has repeatedly missed its deadlines, so there are no parameter standards for Filecoin mining machines. This has given scammers an opportunity to deceive investors with shoddy or even fictitious mining machines. After all, before the mainnet goes online, no one knows whether the mining machines they have can mine or whether they are real mining machines.

In addition, some people also said that the serious absence of Filecoin officials in ecological governance is also one of the reasons for the frequent scams.

“If you look through Juan’s Twitter carefully, you will find that apart from posting some content about the technical progress of the project, they have not made any statement on the overall governance of the ecosystem.” A Filecoin participant told DeepChain, “The fact that the official does not care is also a reason why scammers are rampant and cannot be ignored.”

In fact, it was only after two Filecoin-related scams occurred in mainland China and Hong Kong in 2018 that Filecoin’s anti-fraud statement finally came out at the end of that year.

External factors such as the hot project, high cognitive threshold, slow progress, and lack of official governance, coupled with the internal factor of rampant scammers, have led to a mixed bag of good and bad in the Filecoin ecosystem.

“There are very few opportunities for retail investors to participate.”

On May 15 this year, Protocol Labs officially announced the launch of the second phase of the Filecoin testnet. Along with the launch of the testnet, there were 1 million FIL rewards. For a time, the topic of Filecoin became the focus of the cryptocurrency field.

In an AMA on May 19, Filecoin founder Juan also listed the Filecoin global miner distribution map with satisfaction at the end of the Q&A session and said, "This looks great."

After two years of silence, Filecoin once again took center stage, especially after the news that the mainnet was about to be launched came out.

According to Xie Dapao, the launch time of Filecoin mainnet is stable between July 20 and August 20, and there will be no more delays.

As a private investor in Filecoin, Xie Dapao said that he had received an email and that Filecoin officials expected to issue the currency in late August.

In addition, it tracks Filecoin's code every day and finds that there are currently no major functional updates. It is basically fixing small bugs and optimizing small functions. It is in the final stage of the project, so the basic online time is relatively stable.

In fact, the market has given due response to the launch of Filecoin mainnet.

Major Filecoin mining machine manufacturers have frequently appeared in the media, and the computing power and block data of the test network have also become a strong proof of the strong strength of their mining machines.

In addition, FIL futures also rose with the good news, and even other project currencies focusing on distributed storage also skyrocketed.

“Compared with previous years, the popularity this year is really incomparable.” Nancy told DeepChain, “Last year, no media was willing to work with us to produce content about Filecoin, but this year, as you can see, we are overwhelmed by various conferences and we are also very busy.”

If it is said that before, because the project did not make much progress, scammers were rampant and investments were easy to be defrauded, then after mining machine scams have been repeatedly exposed, and now that the Filecoin mainnet is about to be launched, is it time to buy mining machines and invest in Filecoin?

The answer is not as optimistic as everyone imagines.

First of all, there are still scams in the market under the guise of Filecoin, but with the passage of time and elimination, these scams have become more covert and difficult to distinguish.

In addition, even if there is no scam, for ordinary investors, the threshold for investing in mining machines is still extremely high.

Take the rankings on the test network for example. Many mining machine manufacturers use rankings as a gimmick to sell mining machines. Although the rankings are public, users do not know how many machines were used and how much it cost to achieve this ranking.

“When examining mining machines, one cannot just look at the ranking, but also how many machines were used and how much money was invested to achieve the ranking. Most ordinary investors are not able to distinguish this. They need some friends with professional operation and maintenance expertise to consult with, and ask the mining machine manufacturers to open the operation and maintenance background of the test machines to see.” Zhou Huan said.

In Zhou Huan's opinion, retail investors have very few opportunities to participate in the Filecoin field, and forced participation will lead to many pitfalls.

Regarding Filecoin futures investment, Xie Dapao said that the exchanges that have launched FIL currently generally do not allow users to withdraw funds, and will only allow users to recharge. After the Filecoin price plummets, the exchanges will buy back the FIL in the hands of users and allow withdrawals.

“Are you willing to jump in and become a leek now? Just wait for the mainnet to go online.” said Xie Dapao.