After the launch of bitcoin, many virtual currencies strive to be the next bitcoin. OneCoin is such digital currency that wants to capture a piece of bitcoin’s dominant market share.
OneCoin claims that it improves the lives of people or investors worldwide, and provide instant access to financial services. It helps investors by providing the educational tools that demystify and simplify digital currency and helps merchants and individuals understand and use the OneCoin cryptocurrency.
However, the burning question across the internet today is that is it a scam or not?
What is OneCoin?
OneCoin is a virtual currency, based on cryptography and created via a process known as mining. According to the company, the primary objective of their business is spreading educational material about exchange trading. The company uses the principle of Multi-level marketing for the implementation of OneCoin.
Each digital coin is unique, just like the serial number on a paper bill. Unlike money issued by governments, there is a limited number of OneCoins, certifying that they cannot be affected by inflation.
Since cryptocurrencies are not tied to any central bank or country, the value of the coin hinge on factors such as demand, usability, and supply.
Above all, OneCoin promoters also claim they are a business rather than a crypto-currency. In other words, it is a scheme, which raises many questions in the system community about its legality.
How does it work?
OneCoin Ltd functions as a multi-level marketing network through which members receive commissions for recruiting others to buy cryptocurrency packages. This multi-level marketing structure appears to have influenced the rapid growth of the OneCoin member network.
OneCoin Ltd has claimed to have to have more than 3 million members worldwide including victims living and working within the Southern District of New York.
But, to earn more tokens, you need to lure people from your social network into the onecoin chain. With time, these new members, in turn, will recruit others. As the baseline rises, so does the number of tokens you make.
However, law enforcement agencies and financial regulatory authorities in various countries have termed OneCoin as a pyramid or Ponzi scheme. This dubious distinction is reserved for offerings and companies that offer no guarantee of payment to investors.
Instead, it functions on the principle of upward movement of funds. Therefore, as you register members, part of the money they pay gets deposited into your account. In other words, once this registration ceases, so do your earnings.
Is OneCoin a Scam?
Many red flags indicate that OneCoin is a Ponzi scheme and a scam.
Firstly, US authorities arrested the founder of Onecoin saying it was nothing more than a pyramid scheme designed to defraud users. Reports say the law enforcement arrested Konstantin Ignatov over a fraud charge relating to OneCoin.
Ignatov and his sister Ruja Ignatov and others allegedly fabricated a multibillion-dollar pyramid scheme where investors received commissions for persuading people to purchase OneCoin packages that themselves were fake. The company reportedly rigged prices, sold people non- existent coins and didn’t even have valid blockchain to manage the currency.
Secondly, over the last years, Ignatova lied to investors about the way OneCoin functions and the return it offers. Her brother, who initially served as her assistant, later assumed more prominent roles for the company. Thus the siblings were able to control the cryptocurrency supply and price; they falsely claimed the market determined.
Thirdly, the biggest challenge is that the company does not give any explanation on how to use onecoin if you want to buy something. It does not even specify which retailers accept OneTokens or can they buy anything?
Lastly, the only way to make money via OneCoin appears to be through its binary compensation plan. The binary compensation plan implies that you pay to join the company and then hope you can persuade other people to spend thousands of Euros on registering fees. Therefore, if you can convince people to participate, then you will make a 10% cut of their joining fee.
NB For all of these reasons listed above, the company appears to function as a Ponzi scheme or scam with no real substance or value.
Conclusively, if you commit yourself to join OneCoin, I strongly recommend doing thorough research before you think of investing in this crypto. Wait and see if the company gains any traction or becomes less secretive.
Otherwise, you could invest thousands of Euros for nothing.