Random Coin Talks #1 – LEOcoin

This is the first post of the so-called Random Coin Talks. Each time I will discuss a single cryptocurrency and give my personal opinion about this coin. I don’t want my choice depend on popularity, good-looking charts or any other prejudices. Therefore, I generate a random number between 1 and 200 and based on the market capitalization rankings of coinmarketcap.com this will lead to the ‘random coin’.

I use the tag #randomcointalks, so you can find them at any time. If you like my posts, don’t hesitate to upvote or comment!

I got LEOcoin assigned by the random number generator. Let’s start!

General information

LEOcoin has been around for quite some time. LEOcoin launched on March 25, 2015 and picked up the gauntlet by competing with Bitcoin, claiming they had enough registered entrepreneurs to become the second largest digital currency. Nevertheless, the first block was already created a year before. By the way, LEO is an abbreviation of Learning Enterprises Organisation and they identify themselves with the lion, since ‘leo’ is the Latin word for this animal.

Regarding mining, in July 2016 they changed the proof-of-stake and proof-of-work algorithm with modified nFactor in scrypt-Jane to a sole proof-of-stake procedure, which makes the network more secure and mining will cost less energy in the future. The cost, though, is that proof-of-stake users are asked to prove ownership of a certain amount of LEO.

They are a non-profit organization, but I doubt whether I should consider that a plus. Companies who aim to make profit are, for example, more innovative and efficient than their non-profit counterpart.

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Stats

(August 19, 18:30 CET)

• Rank: 83
• Market capitalization: USD 44.3 million
• Price: USD 0.5016
• Maximum price: USD 2.15 (November 11, 2016)
• Maximum number of coins: 1 Billion LEO
• Circulating supply: 88.2 million LEO (8.8% of maximum number of coins)
• Premined coins: 50 million LEO (5% of maximum number of coins)
• First block: June 15, 2014
  

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Features

Why do we need LEOcoin in the broad range of cryptocurrencies? The foundation mentions six reasons:

• Open for everyone
• LEO can be exchanged for other cryptocurrencies or major fiat currencies
• Pseudo-anonymity
• Security
• User friendly
• There is a growing community of entrepreneurs in which LEO can play a role

It’s positive that there is still a lot to mine. On the other hand, mining is only relevant for a small fraction of investors in cryptocurrencies and besides, given the price of one LEO, you need to mine significant numbers. LEOcoin claims to be more secure and more anonymous than Bitcoin, but nowadays this is not a special feature at all. Monero, for example, is completely anonymous. They claim to have a large number of merchants accepting LEOcoin, but this number is way smaller if we should believe leocoinmerchants.com. I did not see any large retailers and can’t imagine that merchants only accept LEO and not Bitcoin, for instance. Up to this point, it simply looks like a copy of Bitcoin.

What about the usability? There are no commissions, which is definitely interesting for small- or medium-sized firms as they often face relatively large fees. On the other hand, Bitcoin only charges small transaction fees, which is already a big step forward compared to fiat currencies. An advantage over Bitcoin, though, is that they offer a chargeback once payments are made. They mention usage of LEOcoin does not require specialized knowledge, but this is the case for most cryptocurrencies. I bet that a sufficient amount of Bitcoin investors does not know anything about the code behind the coin.

Pre-mining

They have pre-mined 50 million LEO (5%) as company stock, but further they mention to hold 10 million. Where are the other 40 million? In general, they try to keep you uninformed about the pre-mining, while there is nothing wrong with it, in my opinion. Before ICO’s, this was simply the way to obtain a start capital.

Deflationary currency or not?

LEOcoin claims to be a deflationary currency, just like Bitcoin. However, the two are different. The characteristic of a deflationary currency is a limited supply, while fiat money is being created continually. So, theoretically, if demand is stable or increases, your purchasing power goes up as time goes by. The Bitcoin issuance rate declines over time until no more Bitcoins are produced, but the mining of LEOcoin does not decline; at least not theoretically. Almost 80% of all Bitcoins are already mined, but LEOcoin can only reach such a percentage at the end of this era. So, yes, it is a deflationary currency, but this fact is much less relevant than for Bitcoin.

LEOcoin has committed to releasing a maximum of 28,800 LEOcoins per day for a limited period of 99 years, equating to a total of one billion LEOcoin, after which no more will be generated. This means it is designed as a deflationary currency that will increase in value as demand increases, the firm noted.

(source)

Selfpromotion and shady activities

In my opinion, it is a plus if the people behind the coin just state the facts and features of their coin and limit their press releases: let the crowd decide whether this coin is an enrichment. CNBC gave them the stage. Many questions were raised, when they mentioned the specific number of 131,175 merchants who were willing to accept LEOcoin as a currency. They were asked to back this up, but they did (or could) not. On top of that, they stated to be the ‘second largest digital currency’ claiming that no other currency except Bitcoin would have more than 100,000 users.

Besides, the developers, Dan Andersson and Atif Kamran, have been warned by the Security and Exchange Commission in Pakistan for a potential pyramid scheme in 2012. This concerns me. Forgive me for saying, but if you get this warning in Pakistan, there had to be something wrong. Essentially, LEOcoin does also have a characteristic of a pyramid scheme as participants get compensated with LEOcoins for specific sales targets.

Kamran, however, was fired in February, which is surprising given the role of Kamran in the start of the coin and his connection with CEO Andersson. It can’t be a coincidence that the police had just shut down LEO’s operations in Pakistan with the accusation of money laundering. Maybe Kamran did take the illegal route? Maybe he was ‘sacrificed’ by Andersson to save the rest? Who knows, since LEOcoin itself did not comment on this. Funny fact: after his dismissal, Kamran started a real estate project in Germany and called it... LEO.

Why is everyone positive on bitcointalk.org?

Talking about their personal bitcointalk thread. It surprises me that there is a lot of positive talk, often by ‘newbies’. I am not accusing them of creating a positive ‘vibe’ by making those comments by themselves, but the lack of different views certainly looks strange. I get the feeling other opinions are simply removed, which they justify by saying the posts contain ‘unjustified statements’.

With regard to deleting a few posts; you have people capable to a sensible discussion and you have trolls. Sorry, if some of your replies to trolls got deleted too, but they contain their unjustified statements and it would be sad to let that stand. These trolls have nothing positive to contribute, just ignore them and I will regularly remove their 'opinion'.

If you feel you have been marked as a 'troll' without reason, please send me a PM, as I am always open to reason.

(source)

With such a reasoning you can simply mark comments like “LEO will go down soon. Now is the time to sell” as unjustified. On the other hand, there are a lot of posts like “LEO to $1”. Moreover, I haven’t seen any post criticizing the features of LEO; there is only praise.

Conclusion

I went in blank, but found it hard to mention any positive things about this coin. There are many criticists and most of them have valid points. I would not dare to call it a scam, it simply does not add anything to the current spectrum of digital coins. LEOcoin has no future and therefore I discourage you to invest in it.