Today we’re going to talk about a coin that is controversial for a very good reason. Doing some reading into Platincoin, it is clear there is definitely something strange afoot here. Last week, we talked about Apollo Currency and made the distinction between scam and “big promises”. This week, we’re going to point out a coin with a similar structure to a multi-level marketing scheme, and talk about what you can do about this.
The Lowdown on Platincoin
The basics of Platincoin is they offer a “minting” service that is very similar to mining except they have found a way to make it much more accessible. Similar to the claim of “bringing crypto to the masses”, their mission is to make it possible for everyone to benefit from mining their coin, PLC.
To do this, they offer 36-month rental agreements for a PlatinCoin minter, which ends up essentially being like a long-term proof-of-stake algorithm. Users are putting down money, and receives coins in return over a longer period of time.
PLC can then be sent and received over PlatinCoin’s crypto messenger service at what PlatinCoin claims is an “unprecedented security level”. You can install a PLC wallet on any Android or iOS phone.
Where are the Issues?
The coins are said to be backed by gold and profit from startups, although no proof has been provided yet. Additionally, the use of “profit of other businesses” as a backing mechanism makes it sound like this could be a Ponzi scheme rather than a legitimate asset-backed currency. Taking the funds of “minters”, investing them in risky assets, and valuing PLC based on the payoffs is a very risky endeavour.
Finally, there are a lot of strong accusations regarding the affiliate fees that are paid out to the referring parties. This does tend to occur in early-stage crypto startups as they try to build a community, but it is still notable.
Is There an Investment Case?
On February 6th, Platincoin went through a massive price spike that actually put it in the top winners for the week. The spike was over 30% and PLC has maintained its price since then. No news emerged supporting the price jump since then, but that is common in the crypto world. Now ranked 179th in terms of market capitalization, this scam could no longer be considered not insignificant.
In fact, that is the most solid point in their favor. Very few coins could get to this point while being completely illegitimate. That may sound like flimsy logic, but it definitely supports the idea that just because nothing concrete has been delivered yet, they aren’t a full out “scam” or multi-level marketing scheme. What is more likely is they have a coin that lacks a utility case. This is an issue that can be fixed if the tokenomics are amended and a natural demand can be created. So in the short-term, feel free to trade based on the technicals. But in the long-term only invest if a solid utility or demand case emerges for their coin.
Disclaimer: The author owns Bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
Featured image courtesy of Shutterstock.