Many cryptocurrency projects have attracted a lot of negative attention over time. The latest venture to face plenty of scrutiny is Hex, a project raising plenty of money since its inception.
Explaining Hex in a Nutshell
On the surface, there doesn’t appear to be anything wrong with the Hex product offering. It is a Certificate of Deposit, according to its creator Richard Heart. Owners of this CD will receive interest payments and be able to make a lot of good money along the way. Many people considered it to be a get-rich-quick scheme, albeit the opinions remain somewhat divided on that front.
Based on the owner’s comments, Hex should be looked at as a high-interest blockchain certificate of deposit. Anyone who owns bitcoin can claim the “free” token balance by signing a transaction with one’s private key.
The same applies to Ethereum users, as their deposits will be converted to the token, which complies with the ERC-20 standard. Interestingly enough, ether users receive more HEX tokens , or reasons that aren’t totally clear at this time.
As is usually the case where new blockchain assets are concerned, there is a chance the value of the HEX token will increase. By actively claiming it could gain 10,000 times in value, however, the project is rubbing a few people the wrong way. Crazy gains are not unusual in the cryptocurrency industry, albeit they haven’t materialized for several years.
Is it Really a Certificate of Deposit?
Claiming Hex works as a Certificate of Deposit and actually issuing such a vehicle are two completely different things. A CD is traditionally issued by a bank and forces investors to lock up a specific sum of money for a certain period. Under normal circumstances, one would receive the base currency originally invested back once this period expires. For example, a Euro CD would pay out investors in Euro.
With Hex, the situation is a bit different. Rather than maintaining the traditional approach, its creator “promises’ how investors will make money only if the HEX tokens they own will increase in value. Whether that will ever happen, will always be a matter of substantial debate.
Another crucial difference revolves around the principal. A traditional CD will give users their principal back, along with the interest earned. For HEX holders, there will be no return of the principal, effectively forcing users to part with their original funds. This seemingly only applies to Ether-based deposits, and not Bitcoin.
One could argue HEX – the token – can act as a Certificate of Deposit. Users who receive this token will stake it, and they will receive the original investment back plus interest. Although that sounds plausible, it won’t matter too much if the value of this token has only decreased by that time.
It’s not a Scam (Yet?)
While some Twitter users will gladly claim the entire project is a scam, that is factually incorrect. It is certainly true that the HEX token is used as part of a somewhat unsavory construction, but that doesn’t make it a scam at this time.
People willingly parting way with their BTC or ETH balances have to hope the token they bought will go through a very bullish period sooner rather than later. Furthermore, there is always a chance the project disappears in the future, for a wide variety of reasons.