FirstCoin: A Ponzi scheme cryptocurrency from a technical point of view

in bitcoin •  2 years ago 

What is Firstcoin?

There are no technical white papers explaining the technical decisions
nor any form of community developing this cryptocurrency except:

  • 1 minute block targets
  • subsidy halves in 2.5M blocks (~5 years)
  • 110 million total coins
  • 6 confirmations
  • 1 Satoshi per block

Most important (and missing in this description): 109,999,999 coins are already mined.

Bad design or Fraud by design?

FirstCoin has a supply of 110,000,000 coins. I suspected the mining algorithm is similar to Bitcoin, where the number of coins generated per block is set to decrease with a 50% reduction every 210,000 blocks (Starting with 50 Bitcoin for the Genesis block).
Bitcoin has chosen this decreasing-supply algorithm because it approximates the rate at which commodities like gold are mined.

But things are different in the world of Firstcoin: The reward is fixed to 1 Satoshi (0.00000001 FirstCoin) for every single block to be mined!

If you wonder how the supply of 110M coins can be reached: There is a special case for block 2 coded in the GetBlockValue function:

int64 static GetBlockValue(int nHeight, int64 nFees)
{
    int64 nSubsidy = 1;

    if(nHeight == 2)
    {
        nSubsidy = 109999999 * COIN;
    }

    if (nHeight > COIN + 1)
    {
        nSubsidy = 0;
    }

    return nSubsidy + nFees;
}

So there is only 1 Coin left to mine and the inventor of Firstcoin sent the 109,999,999 to
himself.

This is obviously not the way a healthy cryptocurrency should be designed. There is no incentive to mine because there is actually no reward. This is also reflected in the current mining difficulty: 0.0042.

There is no mining software available for download (nobody would use it anyway) and I suspect only the inventor keeps mining blocks to keep the network alive.

So taking over the mining (to prevent transactions to happen or reverting history) should be easy.

FirstCoin.Club: Ponzi at work

Funnily you can invest in Cloud-Mining and other fake packages to get monthly rewards (between 3% and 7.5% of the invested coins) in the so-called FirstCoin.Club.

The reason Firstcoin increases in value is the fact, that still people get fooled by the Firstcoin marketing to buy Firstcoins at the LiveCoin exchange to "invest" in FirstCoin.Club.

Most likely the promoter/inventor of Firstcoin will vanish once investment slows down and the scheme collapses. He will have made enough profits selling some of his remaining 109,900,000 Firstcoins!

Authors get paid when people like you upvote their post.
If you enjoyed what you read here, create your account today and start earning FREE STEEM!
Sort Order:  

Congratulations @lisperati! You have completed some achievement on Steemit and have been rewarded with new badge(s) :

You got a First Vote

Click on any badge to view your own Board of Honor on SteemitBoard.
For more information about SteemitBoard, click here

If you no longer want to receive notifications, reply to this comment with the word STOP

By upvoting this notification, you can help all Steemit users. Learn how here!

Very informative write up. Was about to invest in FRST but seemed sceptical due to the fact I couldn't find the whitepaper or an adequate explenation of services. Not even google fetches anything useful!

·

Yes you are right. If you will find on internet for firstcoin then you will not find any good comments , information and content about firstcoin. You will listen good words from the people who have firstcoins and selling. Well I also bought few coins but I am still confused on my investment. :)

·

It is valid to be sceptical on this coin, the fact is that it is there are not any analysis about what are the Proof of Staking rewards programs, there are several coins with that rewards as NavCoin, Cloakcoin, Peercoin, Mintcoin and others, this post is very old and I do not agree it be a ponzi or scam, also in this momment i had not heard about somebody who did not the promised reward, neither about lost their money in this project, it looks very serius if you check that it started in Dubai and there is heavy consecuences for any scam, i guess that it is better to research more

Congratulations @lisperati! You have completed some achievement on Steemit and have been rewarded with new badge(s) :

You got a First Reply

Click on any badge to view your own Board of Honor on SteemitBoard.
For more information about SteemitBoard, click here

If you no longer want to receive notifications, reply to this comment with the word STOP

By upvoting this notification, you can help all Steemit users. Learn how here!

here is the whitepaper that you need:

https://github.com/firstconn/firstcoin

Can join us here:

https://firstcoin.club/AFFILIATE/200622

·

This is not a whitepaper!

This is the source of a bitcoin fork they copied from somewhere (undocumented) and changed it to turn it into a pre-mined-ponzi-coin. I suspect you didn't read my post.

Don't share links to this scam. Bitconnect has already ruined enough people!

Congratulations @lisperati! You have received a personal award!

1 Year on Steemit
Click on the badge to view your Board of Honor.

Support SteemitBoard's project! Vote for its witness and get one more award!