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In 2009, a new virtual currency, Bitcoin, was born. Subsequently, Baichuan Coin, Morgan Coin, Beta Coin, etc. were born, and there are now numerous virtual currencies in China.
These "virtual currencies" that are under the name of innovation have ulterior motives and huge unpredictable risks from the moment they are born. More and more so-called "virtual currencies" have become "mining machines" that rob users' wallets.
A pyramid scheme in the name of innovation
There are hundreds of "virtual currencies" in China, including Baichuan Coin, Morgan Coin, Beta Coin, Mark Coin, Dark Coin, Carat Coin, Huaqiang Coin, etc. These so-called "virtual currencies" all have a significant feature, which is that they are all under the guise of innovation, promising users high returns, but in fact they are pyramid schemes.
According to the operating model of "Beta Coin", there are two main sources of income for participants:
One is the mining income of Beta Cloud Miner, 100 gold coins can be exchanged for RMB;
One is to double the income by pulling in people, and you will get 120 gold coins for pulling in one person.
For the operating team behind the scenes, it is a sure profit, and the ones who make money are the people who sell the mining machines. The initial price of a mining machine was 500 yuan, and the price has risen to more than 1,000 yuan in the later period. The cost of these mining machines is almost zero.
"These virtual gold coins are worthless. After the participants buy the mining machines, no matter how many gold coins are generated, it is useless. They are just a bunch of visible numbers, but they can never be converted into RMB." Lao Liang said that this is like buying prop chips on Taobao, which can never be exchanged for RMB in a Macau casino.
Lao Liang pointed out that the reason why many people are keen to participate is that they are attracted by the high returns of "virtual currency".
In order to encourage user participation, domestic copycat "virtual currencies" use Bitcoin as an example, from the initial few cents to thousands of dollars, to prove that their "virtual currency" can appreciate in value in the future. On the other hand, they use the guise of the government to fabricate policies and news to deceive users and make them believe in that fictitious future.
"Central Bank Governor Zhou Xiaochuan said: Digital currency is not a pyramid scheme, nor a Ponzi scheme, but a financial investment." This is an article circulating on the Internet. No formal news reports have been found, but it frequently appears in the promotional articles of these copycat virtual currencies.
"This is almost a common trick used by pyramid scheme gangs, impersonating the words of state agencies and leaders to endorse their own model in order to prove the legitimacy of their own model," said Lao Liang.
According to an investor of Baichuan Coin, the Baichuan Coin operating company previously claimed that the Xinyu government of Jiangxi Province allocated 3,000 mu of land to support the company's development. It also stated that after applying to the state, the server of Baichuan Coin has been monitored by the state, and the state will soon issue a franchise license to the operating company. After investigation, it was found that both the land allocated by the government and the franchise license to be issued were fictitious.
"Bitcoin is a bit reliable, but other random coins are undoubtedly scams." Investor Chen Shi told Dige.com that domestic virtual currencies rely on recruiting people, and the profit is basically the first investment. Whether it is selling mining machines or issuing "virtual currencies", they are all laundering the wallets of greedy investors. Some platforms buy with one hand and sell with the other, creating the illusion of being hyped, and once investors get involved, they become the receivers.
Legal loopholes in virtual currencies
In February 2015, the Xuzhou Public Security Bureau Quanshan Branch discovered that the fake "Darkcoin" website was suspected of organizing and leading pyramid schemes, and filed a case for investigation on March 1. On March 19, the defendants Du Ling, Chen Shurong, Hua Jinhe, Deng Xianxiong and others were arrested in Shenzhen, Guangdong Province. On September 23, 2015, the official Weibo of the " Xinjiang Xinyuan County Public Security Bureau Economic Investigation Brigade" released: "Baichuan Coin is a pyramid scheme. The propaganda is exaggerated, but the final result is that the gold coins cannot be withdrawn, and they run away after converting them into money."
"Compared to the numerous fake virtual currencies, the ones that have been caught are just a few, and we need to root them out completely to truly eliminate the harm." Chen Shi believes that the government has not given a clear statement on digital currency, and the central bank's previous statement is also a bit ambiguous, and ordinary people have no way to judge. If the central bank does not make a qualitative assessment of digital currency early, ordinary people will still be deceived, and they will take it for granted that they can participate if the law does not prohibit them. A virtual currency observer told Dige.com that virtual currencies such as Bitcoin have not been recognized by the state. The state is more concerned about the innovation level and has not explicitly banned the emergence of virtual currencies, but it does not allow them to be used as payment currency. Previously, a restaurant said it would accept Bitcoin payments, but it eventually fell through. Virtual currencies, including Q coins, must strictly abide by relevant regulations and cannot replace currency for payment.
"In today's world where virtual currencies are so developed, simply banning them is obviously not conducive to social progress, but the country needs to further regulate them. Rather than banning them, it is better to improve and regulate them."
The person believes that many pyramid schemes are using virtual currency to conduct pyramid schemes in the name of innovation, which has disrupted normal order. Many people do not know the truth and think that as long as it is "virtual currency", it is innovation and can generate added value. This is a cognitive misunderstanding.
The laws and regulations of the country cannot keep up with the pace of the times. This is not only a problem in China, but also a problem in countries around the world. At present, Bitcoin has become the most globalized virtual currency, but it is still not recognized in many countries. The public should be more rational and not be exploited by people with bad intentions. Of course, the country should speed up the improvement of relevant laws and regulations, so that virtual currency has a legal basis and criminals have nowhere to hide.
At the same time, the public should invest in virtual currencies rationally, not be greedy, and not have the mentality of getting rich overnight, which is often easy to be deceived. Although Bitcoin is hotly speculated, it is still immature. The sharp rise and fall in recent years have shown that it is still a hypothesis to replace real currency. Then, more copycat currencies are nothing more than mirages, which look so beautiful but feel hot to the touch. Try not to be deceived and invest blindly.
【】Beware! Some virtual currencies are Ponzi schemes
In 2013, the skyrocketing price of Bitcoin shocked the world, and many investors became rich overnight. The myth of getting rich has stimulated more and more people to flock to the world of virtual currency, although many of them do not understand the unique generation method and transaction logic of virtual currency.
MLM scam?
"It opened on July 21, 2014, with an opening price of 331 yuan. As of August 7, the highest price was 599 yuan. Evaluate the return on investment yourself. If you missed out on Bitcoin and Litecoin, don't miss out on Vbao." Upon opening the Vbao Coin Chinese website, a very provocative introduction comes into view.
The website states that “Vbao is a payment system that can pay, accept and store any currency, including US dollars, euros, RMB, etc., as well as virtual currencies such as Bitcoin and Litecoin, and even metal currencies such as gold and silver.”
According to the introduction on the website, the initial issuance of V coins is 10 million. In the first three years, the issuance rate will be maintained at about 10% per month, that is, 1 million will be issued in the first month, and 1.1 million will be issued in the second month, with compound interest increasing. After three years, the issuance rate of V coins will maintain a monthly increase of 5% until the total amount reaches 1 billion.
A senior virtual currency investor told the reporter of China Business News that according to estimates, approximately 12.1 million V coins have been issued.
What does the scale of 1 billion mean? The total amount of Bitcoin and Litecoin, the most influential virtual currencies in the world, is currently limited to 21 million and 84 million respectively. On August 15, the prices of Bitcoin and Litecoin were 3,100 yuan and 31.03 yuan respectively.
The above-mentioned senior virtual currency investor told our reporter that the virtual currency that is closest to the V-coin, which is expected to issue 1 billion coins, is "BitShares", which is expected to issue 2 billion coins at a current price of 0.0538 yuan each. Based on this, V-coin may be worth 0.1 yuan at most.
So, how did the price of each V coin rise to nearly 743 yuan as of yesterday’s closing?
A person who participated in the investment in Vbao Coin said: "In the 'Account Settings' of the trading platform, users can find 'My Computing Power'. The platform will divide it into Vbao coins according to the computing power calculation. How does the computing power come from? It is your promotion strength, and this promotion strength depends on how many people you attract." The above website shows: V Treasure Coins income = holding income + promotion income. The so-called holding income means that you don’t need to do anything, just hold V Treasure Coins, and the income is determined by the number of coins held. And the promotion income, in short, is that after the user develops downlines, the upstream user can get the corresponding V Treasure Coins as a reward according to the amount purchased by the downline.
"Because the more people recognize VPAL, the more value it can create for society, so everyone needs to promote it. The promoters' efforts can also get corresponding or even huge returns through statistics of promotion efforts!" This is how it is described on Vbao's official website.
The above-mentioned person who participated in the investment in Vbao Coin told our reporter that it is not clear how many investors there are in Vbao Coin, but there are at least 200 related QQ groups. At the same time, Vbao has also widely posted promotional posts in various communities and forums of virtual currencies such as Bitcoin and Litecoin.
Although it has only been online for a month, the daily transaction volume of Vbaocoin is amazing. According to the data of its trading platform, on August 14, the transaction volume on that day was as high as 266 million yuan. In comparison, the transaction volume of OKcoin, the world's largest Litecoin trading market, in 24 hours was only 200 million yuan.
Virtual currency?
Back to the most fundamental question, is V-coin a virtual currency?
Regarding the definition of virtual currency, Xie Ping, deputy general manager of China Investment Corporation , listed four dimensions: first, it is a currency issued by a certain community or online community, which is unregulated or rarely regulated; second, it is in purely digital form; third, the online community must have an internal payment system; and fourth, it is widely accessed and used by members of the online community.
The European Central Bank mentioned in a report entitled "Virtual Currency Schemes (2012)" (hereinafter referred to as the "Report") that regardless of the form of currency, it is generally associated with three different functions, namely medium of exchange, unit of account, and store of value.
The person in charge of a Bitcoin information platform told the reporter of China Business News that there are three elements that define virtual currencies such as Bitcoin and Litecoin:
First, the issuance method. Bitcoin and other virtual currencies are not issued by specific monetary institutions. They are generated through a large amount of calculations based on specific algorithms. They are decentralized issuance methods. Each different terminal node is responsible for maintaining the same ledger, and this maintenance process is mainly the algorithm packaging and encryption of transaction information.
"But on the other hand, Vbao Coin adopts a pyramid scheme of recruiting people. Every time a user introduces someone, if this person invests in buying Vbao coins, the upstream introducer will receive some Vbao coins as a reward." said the person in charge of the above-mentioned Bitcoin information platform.
Second, the transaction method. Bitcoin and other virtual currencies are scattered transactions formed spontaneously in the market. After the scale is formed, third parties gradually establish exchanges to complete the transactions. However, Vbao Coin is issued by itself and has its own platform for transactions.
Third, the implementation method. Bitcoin and other virtual currencies are open source programs and are maintained in the Github community. The parameters and methods of their total limit are all displayed in the open source code. However, the so-called open source of Vbao Coin itself is completely plagiarized from other people's open source code, and no open source code is used to build the program, so its essence is the same as Q Coin and can be controlled by the website.
In addition, the head of the technical department of an Internet platform also raised two other questions about Vbao from a technical perspective. First, most decentralized digital currencies will provide a link to the source code in a prominent position on the official website, in order to openly and transparently display the operating mechanism of the currency system.
"What Vbao focuses on promoting on its website is the recharge and purchase transaction process, but does not mention its operating mechanism. Even domestic websites do not have a link to the source code. It can only be found in an inconspicuous position on the overseas vpallab website." said the head of the technology department of the above-mentioned Internet platform.
Secondly, the addresses of the official websites and trading websites of general decentralized digital currencies all start with https, and the purpose is that such websites can well protect users' data from being illegally stolen. However, several related websites of Vbao, including the official website and trading website, do not start with https.
In fact, after Bitcoin became popular, various virtual currencies have emerged in recent years, including Litecoin, Mastercoin, Dogecoin, Stellar, Ripple, etc. However, for Vbaocoin, researchers believe that it has nothing to do with digital cryptocurrencies such as Bitcoin.
【】Virtual currency claims high returns, but real money is taken away. Be careful
Many virtual currency financial management network platforms have been paralyzed one after another, making it impossible for investors to exchange their money into cash. In response, relevant departments have issued investment warnings. Reporters from Shenyang Evening News and Shenyang.com have learned that most of these virtual currencies are online scams, and the "currency" is just a cover to attract investors to join in the form of bonuses. Through bank transfers or online payments, the investment funds eventually flow into the hands of the behind-the-scenes operators.
Claiming that it is the best time to invest
Earlier this year, Ms. Li, a citizen, attended an investment promotion meeting on "virtual currency". The speaker of the meeting said that only 30 million pieces of this "virtual currency" were issued, and the initial price was 0.1 pounds, close to 1 yuan. Members who have already joined repeatedly mobilized Ms. Li, saying that things are valuable because they are scarce. Now virtual currency is just in the early stage of investment opening, and the investment cost is relatively low. Once the issuance is completed, the investment cost will increase significantly. Now is the best time to invest. The more coins you hold in the future, the more wealth you will have, and the coin has the opportunity to surpass Bitcoin to become the most valuable virtual currency type this year.
However, just a few days ago, the website could no longer be opened. Ms. Li was very glad that she did not invest her money in it. It is said that hundreds of investors across the country invested a total of more than 7 million yuan. Ms. Li said: "The money is gone, and there is no place to find it. Investors must be cautious in the future."
Earn 10,000 yuan a day with virtual currency?
According to industry insiders, the income model of this type of virtual currency is generally divided into static income and dynamic income. The so-called "static income" refers to the income brought by the continuous appreciation of the virtual currency itself. For example, "virtual currency" investors first spend 1,000 yuan to buy a coin-making machine. Each coin-making machine produces 10 gold coins (6.5 gold coins + 3.5 gold seeds) every day. When the total number of gold coins reaches 100, it can be exchanged for cash. One gold coin is equal to 1 yuan. Not counting the reinvestment of gold seeds, the cost can be recovered after 100 days.
"Dynamic income" is the promotion fee. Share this project on WeChat and anyone interested can register. Once registered, the sharer can get a commission. Usually the investment threshold for registration is 1,000 yuan, and the sharer can get a commission of 100 yuan. In addition, the commission is based on each "order" of the investor, that is, the amount of each investment. It is said that "capable people" can earn 10,000 to 20,000 yuan a day after doing it for 3-6 months.
Experts warn investors to be cautious
According to investigations, many different types of "XX coins" on the market are mostly just a cover to attract investors to join in the form of bonuses. An online scam is packaged as an Internet financial compound interest investment product, so it is somewhat deceptive.
Experts warn that investors should be highly vigilant about virtual currencies. For example, a certain "virtual currency" is just a cryptographic currency introduced by overseas regions to help local residents affected by economic recession and reform. Residents will receive a certain amount of virtual currency after participating in volunteer activities, and they can use the virtual currency to collect food at the local food bank. However, after the trader introduced it, he was just betting that the virtual currency would appreciate rapidly. If there is pressure to exchange in the short term, he will simply close the website and run away with the money. (Source: IT Friends, First Financial Daily, Shenyang Evening News, Qianyejia, etc.)
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