Investigating the Top 50 Cryptocurrencies, Part 2/50: FirstCoin

FirstCoin is the #49 token in the world by market cap… what is it? SPOILERS: it appears to be a SCAM! Read on for more info…

Normally I wouldn’t come out of the gate so strongly about a token. I try to maintain a neutral perspective and give people the benefit of the doubt. However, after doing research on FirstCoin, I am absolutely convinced that it is a scam.

I could be wrong. It would be great if other experienced blockchain people could read some of this post and double check my work. I just want to be super clear upfront that it appears to be a scam, because I don’t want any Steemians to get fooled.

About This Series + Disclaimer

This post is part of a new series where I investigate each of the top 50 coins by marketcap. My goal is to help steem’s userbase become the most knowledgable blockchain community in the world.

Disclaimer: I am not an investment expert and will not be providing investment advice. I will teach you about the top 50 coins, and you can do what you want with that info.

What Does It Do?

Near the top of the FirstCoin official home page, there is a five-part basic explanation - “elevator pitch,” if you will, of the currency.

First, they explain that FirstCoin is inspired by BitCoin, but offers faster transactions. Secondly, they suggest that the purpose of the coin is to “support start-ups.”

I want to provide two chunks of text straight from their site, because it gives me a bad feeling and I can’t quite put it into words without first showing you the text. Here are the sections that concern me:

(1) “Next-generation digital currency inspired by the success of Bitcoin. FirstCoin is an alternative digital currency that differs from Bitcoin, characterized by faster transactions. FirstCoin’s authenticity is supported by its presence on the exchange: www.livecoin.net. Find out more about FirstCoin.”

This part feels weird to me for a few reasons - it’s not inspired by bitcoin, it’s inspired by ”the success of bitcoin”, a subtle but important difference. True contributors to the blockchain space are inspired by what bitcoin makes possible - by changing the world. Not by the possibility of success.

Here’s another paragraph from the site:

(2) ”The FirstCoin membership allows you to be part of the success story of the newest crypto currency. Popularizing the club provides you with rewards. The more club members help popularize the club, the more your FirstCoin will be worth. Join now: [URL]“

This… does not sit right with me. If I wanted to paraphrase this paragraph, I would do it this way: “Get more people in on this token so we can all get rich!”

My first impression was that this token would be over-centralized and too focused on generating profits for early adopters, rather than creating a healthy long-term currency… yet, even with that idea, I was not prepared for how bad this token would look upon closer inspection.

Firstcoin Value Protection Program

This program is advertised on several firstcoin-related websites, but details are scarce. The link to this program on Firstcoin’s main home page just sends me to the “firstcoin.club” page (more on the “club” later).

In fact, there is no clear information that I can find about this “program.” The entire idea of a “value protection program”, as it relates to cryptocurrency, is ridiculous - you can’t protect yourself from the risk. If you buy into a token and that token goes down, you lose money.

Here’s the closest thing I can find to an explanation of the program: https://firstcoin.pro/firstcoin-value-protection-program-fvpp/

The explanation of the program is nonsense. It’s not a “Value protection program,” it’s just… an explanation of what cryptocurrency is.

At this point I was feeling extremely suspicious.

What is FirstCoin Club?

This site is plastered all over the FirstCoin official homepage and FB page - it seems clear that it’s owned by whoever the official team is (more on them later). I signed up for an account so I could see what was inside.

The interface for FirstCoin Club is a bloated, bizarre combination of referral programs, educational courses for sale, and business features. Here are a few photos to give you an idea:

That first photo has “competition” right in the center - what is that? Here’s another photo from their Facebook page:

Putting together the clues, here’s what it looks like:

You have to sign up for the “Firstcoin Club”, where you can purchase tokens and use them to buy “educational packages.” The more tokens you buy, by the way, the more likely you are to win fabulous prizes.

The competition ended in September - there is no information whatsoever on who won prizes, if anybody.

I don’t think it takes much to understand what’s going on here. The entire system is set up to encourage people to buy in and try to win big, and there’s no evidence that any “prizes” are even being paid out.

So far it appears that FirstCoin is a scam of a coin, convincing as many people as possible to buy in so that they can “get rich quick”.

Who Is Involved in FirstCoin?

Looking at the home page of FirstCoin, http://firstcoinproject.com/, one thing becomes clear: You can’t find any information about the team that built FirstCoin.

Anonymity isn’t necessarily bad - after all, Satoshi is anonymous - but in the case of a sketchy token, it adds yet more doubt. There is no information about the current dev team or anything.

Another site, https://firstcoin.pro/, is the only firstcoin-related website with a human name on it, which gave me a chance to try and figure out who the hell is behind this currency. Firstcoin Pro is run by: MOLNÁR GERGELY DÁVID, whose Facebook page says that he is the Team Leader for the Firstcoin Support Team.

Has anybody met this guy? If so, please tell me in the comments!

My next idea was to look at the official Facebook page. Unfortunately, the page has no names on it. Here’s the about page:

…yeah. It’s more of a “get rich quick!” sales pitch than anything. A quick look at the comments for a recent post did not improve my opinion:

Affiliate links for days! Look at the Facebook page yourself to get a sense of what’s going on - and remember, this is the OFFICIAL page. https://www.facebook.com/firstcoinofficial/

If you have any information about the team behind FirstCoin, please let me know! You can contact me via telegram at @heymattsokol if you want to share any info anonymously / off-the-record.

How Were/Are Tokens Issued?

99.9% of the current tokens were pre-mined. This info comes straight from the homepage:

Centralization is not always a bad thing. In fact, Steem was pre-mined to some extent (I need to learn more about this, BTW). My other favorite token, LBRY, is a bit over-centralized right now as well… this is a flaw, but not always a fatal one.

In the case of FirstCoin, though, it’s a huge problem. This is an extreme pre-mine for a coin with little, if any, utility. It supports my hypothesis that this token is a scam designed to make a few early adopters rich at the expense of everybody else.

Price/Market History (including: Where is it Traded?)

To the moon! Considering that 99.9% of coins in existence were pre-mined, it’s really impossible for me to say what these prices reflect… Can any trading experts weigh in on what they think this means?

My assumption is that the bubble “pop” is just around the corner. Based on everything else I’ve learned about FirstCoin, I see no reason to think that it can maintain its current market cap.

My Thoughts

Holy shit! I knew there would be some weird tokens in the top 50, but nothing like this. FirstCoin appears to be a straight-up scam with no actual utility.

There isn’t much more to say. Every single piece of information I can find about this token is bad news. Everything is a red flag. I am astonished that this token is #49 right now.

All I can do right now is ask for help. Experienced cryptocurrency people: Please double check my reasoning. Let me know if I’m getting this wrong.

To the less experienced folks: BE CAREFUL! AVOID FIRSTCOIN AT ALL COSTS! If you click any of the links in this post, do so with caution.

With all that said…

What Do You Think?

Do you have any experience with FirstCoin?