Several days ago I wrote a post about Octoin Coin, a new cryptocurrency project that seems to becoming very popular in Indonesia, Nigeria, and many other parts of the world. In that post, I advised against putting money into Octoin Coin and the Octoin platform, because I don't like its lack of transparency and its overly optimistic promises of consistent high returns on investment.
Since then, I've looked more closely at some Octoin materials, and I am even more sure that no one should give these people any money. In fact, if you can, pull your money out -- NOW! Octoin looks like Bitconnect, episode 5, and will die a similar death.
The two items I checked were a webinar by Octoin "staff" and the Octoin news reports on its website. Both items suggest that the Octoin people really do not understand much of anything about cryptocurrencies, because they provide false or misleading information.
YouTube has many videos about Octoin, but most are made by promoters who may not know all the details about Octoin Coin and the investment platform. So, I decided to watch an Octoin-authored webinar, assuming the presenters would be the most knowledgeable about it.
They seemed OK when talking about Octoin in general, but when the subjects came around to technical aspects, they were clearly making stuff up.
I should note here that comments were turned off on that video, so there was no way to address specific concerns with the creators.
Problems I saw:
Although General Manager Kate Grace and Analyst Mike Kutcher have very English-sounding names, neither is a native English speaker. How do I know? I'm a native speaker myself and teach English as a Second Language. Both Kate and Mike have non-native accents, and throughout the video often pause as if they were searching for the right vocabulary to express themselves. In general, their English is pretty good, but not 100% fluent -- probably worth a score of 6 or 7 on the IELTS speaking exam scale (PDF) of 1-9. Kate's accent sounds Russian, or at least Eastern European. Mike's I cannot place exactly -- perhaps French, but he speaks less than she does, so I'm just guessing. CONCERN: Octoin could be more honest about the nationality of their spokespeople. Not being a native English speaker is not a bad thing. Pretending to be one, though, makes people doubt your honesty.
We don't see either Kate or Mike during the video. Neither is listed on the Octoin website as part of the team.
Kate and Mike both cannot accurately describe what cryptocurrency mining is. While Octoin supposedly has cloud mining services, which Kate says are temporarily suspended, both staff members say Octoin will offer "Proof of Stake mining," using a "Proof of Stake mining algorithm," such as Ethereum and other cryptocurrencies use. CONCERN: This is just plain wrong. Cloud mining services, such as Genesis Mining or Hashflare, offer contracts for Proof of *Work* coins, like Bitcoin, Litecoin, and -- yes -- Ethereum! Proof of Stake does not require expensive mining equipment; you "stake" a certain number of coins on your hard drive in a wallet, and are rewarded for processing transactions in proportion to the number of coins you hold. There's no need to let someone else hold those coins for you.
While explaining the mining services, Mike says Octoin is talking to the PR (public relations) departments of various crypto projects about "Proof of Stake mining." I'm not clear what is meant by this, and I am pretty sure Mike isn't either. CONCERN: Octoin is suggesting that it can somehow negotiate with other cryptocurrency teams for them to switch (?) to Proof of Stake algorithms. I'm quite sure most of them would tell Octoin to take a hike. Further, you would not be talking to the PR department, but the developers and the tech people.
They also offer some confusing news about their mining farms in northwestern China, and how the Chinese government might shut them down. As a result, Kate says mining operations in China are suspended, and Mike adds that they are suspended in Hong Kong, as well. Octoin may move their mining farms to another country, but they cannot say now which coins will be mined. (I guess only PoS coins will.) CONCERN: The Chinese government is tightening regulations about crypto mining, and some outfits (like Bitmain/Hashnest) *are* looking to move overseas, but only a few mining operations in Sichuan (central China) have been shut down. Also, Hong Kong operates under different laws from the mainland, so no mining operations there are threatened and would not need to be moved.
A minor issue, but Kate does not seem to understand (or be capable of explaining) what a bear trader is. She says bear traders buy when prices drop. In fact, every wise trader buys low, and sells high. Bear traders, though, sell first by borrowing from the broker or exchange, hoping that they can later buy back shares or coins at a lower price. That's called a short sell. CONCERN: The GM of an investment project should understand investment basics.
Mike and Kate talk about the Qt-wallet for Octoin and how it's nearly ready for release. (See below.) Mike says it's been difficult to create the wallet for such a different platform as Octoin Coin. CONCERN: Qt-wallets have been widely available for several years. Octoin Coin uses the Scrypt algorithm, according to its website. Creating a Scrypt Qt-wallet should be child's play.
THE NEWS REPORT ABOUT THE WALLET
Yeah, about that wallet. If you take a look at the news story above, Octoin's "Iron Shop"(??) proudly announced the beta release of its wallet three days ago on its website. After the beta version is tested, the article says the final "alpha" version will be released.
No. Just no. Alpha is pre-release, beta comes next, then final production version. Every developer knows this jargon. Even non-developers do.
Second, the wallet is described as a "cold wallet." But a cold wallet by definition is off-line, so if it really is a cold wallet then how is an Octoin Coin hodler going to process transactions and get his PoS rewards?
There are also some concerns about the code itself. I'm not a dev, and my coding skills are now very poor, but I can tell the vaunted Octoin Coin wallet is nothing more than the Bitcoin Core 0.13.0 wallet. The doc files still refer to Bitcoin. Further, there are no easy-to-use packages or installers for newcomers to retrieve. I did not install the OCC wallet myself, because I don't trust the code. I have not inspected the source; perhaps a reader can and leave comments below.
Finally, the Octoin github has only one contributor, who has only contributed one project in the last year. Granted, Octoin is a new project, but it seems weird Octoin would premine 700,000 OCC before creating a suitable wallet for investors to hold them.
For these and several other reasons, I doubt Octoin is a legitimate project and I would plead with our friends in Asia and elsewhere to avoid it completely. They are taking advantage of people who know little about cryptocurrencies and who are probably going to lose their money when Octoin inevitably fails.
If you are an Octoin promoter or dev, please address my concerns in the comments. I would like to hear your side.
