Richard Heart’s Hex Token is a Brilliant Scam

Richard Heart’s Hex Token is a Brilliant Scam
Please share WantFI.com with your friends!

Updated on August 5th, 2022

Is Hex a scam? Is Hex crypto a pyramid scheme? Is Hex crypto a Ponzi scheme? We answer these questions through an in-depth discussion of this controversial cryptocurrency token. For starters, it’s not a legitimate investment product and certainly not a certificate of deposit as is advertised.

The Hex.com token should go down in the crypto textbooks as one of the greatest cryptocurrency scams in history because it has a high interest rate ‘hook’ to draw investors in, it is heavily marketed with a large shilling army, its main product feature is to create resistance to getting out, and it has a huge market capitalization.

99% of cryptocurrencies are scams, so there isn’t really anything new here, but most cryptocurrencies sell themselves to average crypto speculators as being some utility token for an ecosystem that is going to be the next great thing (which rarely ever pans out) or have some variation of a dog theme all trying to copy the original joke coin, Dogecoin. These buyers are generally aware that they are gambling, and that is fine if they accept that.

Hex is different because it’s being sold as an investment furnishing returns, uses banking terminology, and is heavily marketed out in the real world attempting to draw in people who don’t know what to look out for when it comes to crypto scams.

It’s the only cryptocurrency that I have ever heard of to use ads to market in magazines, buses, taxis, physical mail, hold shady airport seminars, and use TV trying to bring in a whole new barrage of people outside the regular cryptocurrency speculators. Examples will follow below.

This is a long article, so I TLDR some of the main points here:
1. Founder’s past businesses involved shady ventures such as spamming.
2. Poor reputation in crypto community as seen on Reddit or Twitter.
3. Uses semantics and deception to sidestep legal requirements for the selling of securities.
4. Purported interest returns from Hex are illusory – tokens are just created without actual revenue generation.
5. As a result, the entire value proposition is “on-boarding” new users to drive up token price (i.e. shilling) and to absorb supply of newly created tokens.
6. Able to sidestep SEC definition of a Ponzi scheme because outdated legal tests didn’t consider private currencies that just mint new units for payout when written.
7. If product doesn’t generate revenue but is paying out interest, realized returns can only come from other investors, which is still “Ponzinomics.”
8. Incredibly vast marketing efforts worth millions of dollars to advertise the investment scheme.
9. Founder controls ~88% of the entire token supply and would need millions of new entrants to be able to dump it.
10. Cultish community that attacks any criticism of project.
11. Token down 90%+ from its highs reached in Sept 2021 shortly after this article was published (not unique to Hex, but most alts peaked a few months later in November)

What Is Hex Crypto?

Richard Heart's Hex Token is a Brilliant Scam

Hex is a token on the Ethereum network executed by a smart contract and the website advertises itself as a place to earn 40% per year with “certificates of deposit.”

You think that the 40% per year “interest” is your first clue that this is a scam?

CIT Bank offers the highest US savings account rate at 1.90% APY, for comparison, but wait until we dig into the Hex details.

Hex has been very careful with the marketing language on the website and product design features to both appear legitimate and to avoid legal trouble.

There is even an entire page on the Hex token dedicated to why the product isn’t a scam and generously educates the reader on what technically constitutes an illegal Ponzi scheme and a Pyramid scheme and why this product doesn’t legally qualify.

Usually legitimate investment products don’t need an entire section educating you on scams and why their product doesn’t meet the technical requirements.

This page might actually be targeted towards the SEC or another financial authority law enforcement officer that happens to come across the product, to dissuade them from launching an investigation because it doesn’t fit neatly into their predefined 1920 rules of Ponzi or Pyramid schemes.

Crypto is largely unregulated at this point in time so a lot of sketchy stuff continues to exist out in the world and with contracts being decentralized, it’s hard to squash them out.

Hex Volatility

Hex is just like any other a volatile cryptocurrency, unlike a typical bank CD priced in dollars where your investment principal doesn’t change. Here’s a clue that “Certificate of Deposit” is a poor naming choice for Hex because in a bank CD it is impossible to lose money, which is not the case here where the later participants end up buying the top and losing most of their money:

Richard Heart's Hex Token is a Brilliant Scam
The anatomy of a pump and dump

PRO-TIP: If you want tax free or tax deferred gains on your crypto, check out the Alto Crypto IRA. It’s the best crypto IRA out there because they support 150+ cryptos and the fees are low. There are no monthly or annual fees, no LLC setup fees, no lawyer processing fees, and they charge only 1% on each trade. Any cash waiting in your account is insured by the FDIC.


Audited

Since it’s marketed to lots of everyday people, I want to make a distinction about what an audit on a cryptocurrency smart contract means, since Hex mentions frequently in its marketing materials that three different auditors have audited its contract.

To a layman, they might think that the statement means that a professional auditor like PricewaterhouseCoopers came in and reviewed it and found out it’s not a scam, or something to that effect. But that’s not what it means.

Auditing in the crypto world is where developers who specialize in cryptocurrency smart contracts evaluate the computer code for bugs. Having sound code doesn’t absolve it from being a scam if the code is written to be… a scam.

Get Rich With Hex Media Blitz

Hex has been successful in convincing enough new buyers to drive up the token price since inception through its highly aggressive marketing tactics.

Richard Heart's Hex Token is a Brilliant Scam
Richard Heart's Hex Token is a Brilliant Scam
Richard Heart's Hex Token is a Brilliant Scam
Advertising in the Economist Magazine. Source: Twitter
Richard Heart's Hex Token is a Brilliant Scam
Hex on Buses
Richard Heart's Hex Token is a Brilliant Scam
Advertising on Taxis
Richard Heart's Hex Token is a Brilliant Scam
Hex Ad in Subway
Richard Heart's Hex Token is a Brilliant Scam
Video Hex Ad on NYC Truck: Source
Richard Heart's Hex Token is a Brilliant Scam
Yes, “someone” did!
airport conference hex seminars
Does this seminar come with a ‘become a real estate millionaire with no money down!’ package?
Richard Heart's Hex Token is a Brilliant Scam
Nascar crypto sponsorships are becoming more common, but they can’t be cheap! (Photo Source)

Additionally, multiple people have reported receiving physical Hex spam mail to their homes with their names from the Ledger hack (here, here, here, here and here). Creepy, and unethical.

Then watch this comical TV commercial that aired on MSNBC with yachts and money flying around with the spokesman saying “people are getting rich, truly rich” before it even officially launched. Hex is designed to cater to your greed.

You have to ponder the incentives and return on investment for those willing to spend millions of dollars shilling to you a digital token.

Who Founded Hex?

The founder who goes by Richard Heart for marketing (his real name is Richard J Schueler). There’s nothing wrong with using a pen name except when the point is to hide a long history of shady businesses involved in spamming Viagra and anti-aging pills (which he was successfully sued for in the early 2000s) and legal trouble in Panama.  

He was even spamming courses on “how to spam” and avoid paying taxes on the spamming earnings. Fear of Missing Out (FOMO) is a great sales tactic that Richard Schueler uses continuously in everything he is involved with. Here in 2003 he offers up that he was a 23 year old multi-millionaire from spamming.

Richard Heart's Hex Token is a Brilliant Scam

Furthermore his own blog documented other shady businesses such as selling stereo equipment he didn’t own and then turning around and giving the buyer sub-par equipment.

Does a scammer ever reform, or are they always out looking for their next mark? Who do you think he’s looking to make rich here?

It is no surprise that since the crypto world is largely unregulated and is like the Wild West, that he would have gravitated to this space to enrich himself. And enrich he has…

One of the ways he promotes Hex is by flashing Rolexes and Louis Vuitton luxury items and comically attributing them to his own product, as if his wealth actually came from investing in Hex, and not from selling Hex to others.

Richard Heart's Hex Token is a Brilliant Scam

Well, yeah, Hex.com has been amazing for HIM. Bernie Madoff’s scam business was amazing for himself and early investors for dozens of years too. Bitconnect and OneCoin were also amazing Ponzi schemes for their creators.

That point bears repeating. How did Richard Heart make his money? By selling millions of tokens created out of thin air to poor saps who think that 40% a year returns can just be invented with a token. In later sections we detail how the scheme actually works.

Social Media Shill Army

He has had a pretty public persona for the last few years doing podcasts, and showing up to cryptocurrency conferences and harassing presenters about their cryptocurrency backgrounds. For instance, when Craig Wright falsely claimed to be Satoshi Nakamoto (anonymous Bitcoin founder), Schueler, who was sitting in front, very aggressively called him out on this in front of the whole crowd. This led to a big surge in social media followers.

Ironically, he has called basically anything other than Bitcoin a scam until he launched his own offering.

Since his large group of social media followers were the first ones to get into Hex and have the most to gain from its success, his product came with its own army of Hex shillers and defenders, who call themselves ‘Hexicans.’

Hexicans are a pretty toxic group and seem to take it personally if you say anything bad about Hex. Of course, this makes sense, since if you get in early enough on any scam, you too can make a lot of money at the expense of later investors and you want to protect your pile of gains. They roam around on social media advertising it to others and attacking anyone critical of it, usually in coordinated brigades.

They all seem to parrot each other from the same script: “100% uptime, no middle men, and you hold your own keys!” As if they don’t understand that every token on Ethereum’s platform has had the same 100% uptime, and most tokens don’t have “middle men” either, since that’s the actual point of a smart contract. Furthermore, getting a cold storage Ledger wallet allows anyone to securely hold keys to any Ethereum token (and most other coins too).

They follow the ABC‘s and are always looking for additional ways to market Hex to others, including creating thousands of Twitter accounts and YouTube videos. The odd thing is that they only ever talk about Hex, and all have either Hex logos incorporated into their profile pictures or have Hex as part of their screen names. Are they just bots or cult members? It’s strange. I have not seen any other crypto community shill as much as they do.

They even commissioned a documentary (whose creator recently reached out to me) on Hex and Richard Heart. The funding was only trickling in for the first 50 days until someone (guess who!) contributed about $450,000 in one go, which greenlighted the project. That generous contributor’s account balance shows more than $330,000,000 in value – 90% in Ethereum. I wonder who controls that wallet…

The Hex Disclaimers

Hex was carefully crafted to avoid the various outdated legal tests of typical pyramid or Ponzi scams. For instance, it can’t be considered a multi-level marketing program or pyramid scheme because it only had one level of referrals built in to the adoption phase during its first year.

It doesn’t technically constitute a Ponzi scheme because new investor money isn’t flowing directly to existing investors, but this is something we discuss in a later section.

Hex also doesn’t promise returns, it says that its returns are “designed by the code” as if simply decreeing investment returns could work in the real world.

At the very bottom of the page, you will see the disclaimers page where Richard Schueler has put in a copious amount of them.

Richard Heart's Hex Token is a Brilliant Scam

It’s not a security, I swear! They’re just numbers in a database!

I’m not selling you anything, it’s just code out on the blockchain!

You do your own work because you are the one pressing the button!

He can personally decree that it is not a security but that does not constitute what a legal authority would ultimately rule on what it actually is if they are even bothering to look.

During The First Year of Hex

The following four parts only applied during the first year of Hex’s existence, but it is important to point them out in order to explain some later points and also to understand the techniques and shenanigans that Richard Heart engages in to get around legal requirements, promote Hex and enrich himself.

The Richard Heart Initial Coin Offering (ICO)

During the first year’s claim period, you obtained Hex by sending Ethereum to the contract address, known as the “origin address.” If you wanted to change your Hex tokens back to Ethereum, you’d have to go somewhere else. Schueler’s origin address offered no refunds, which again refreshes why the term “Certificate of Deposit” is a poor naming choice. He kept everything you sent him, scot-free and if you wanted out, then you had to find an exchange offering liquidity.

Richard Heart's Hex Token is a Brilliant Scam

In interviews he always dodges the question of who controls the Hex origin address or he says he doesn’t know who owns it. Well obviously he controls it since its his own smart contract!

The reason why he will avoid that question is because the ICO was deemed a security by the SEC and he conducted an illegal one for an entire year without a filing and registration. He received an asset in exchange for his own creation, it’s an ICO without question. This is just another case where he tries to use obfuscation to get around legal rules.

About $7 million of Ethereum was withdrawn from the Hex origin address about a month after launch. It was conducted with 36 transactions of 1,337 ETH. 1337 is “leetspeak” for leet, which means “elite.” Hackers in the 1990s referred to others as elite if they had the best hacking skills being able to infiltrate corporate servers and websites. To me this looks like a cocky message basically bragging about how he bilked millions of dollars out of suckers.

Also, during the first year, there was nothing stopping Richard Schueler from creating a continuous loop by sending Ethereum to the origin address, receiving Hex, then sending the received Ethereum to a different address (maybe even through a laundering mixer to obfuscate this activity), and then sending it right back to the origin address for more Hex. He could mint himself as much Hex as he wanted and he did. We’ll talk about how much Hex he owns in a later section.

How could anyone ignore that fact alone and not see how much of a scam it is?


PRO-TIP: Have you ever considered investing in commercial real estate through a private REIT for passive income and to diversify your portfolio? Skip the ones with the biggest marketing budgets that pay for advertisements out of your income and instead check out Streitwise where you earn 8.4% yield AFTER fees. No “accreditation limits” on who can invest – open to everyone.


Instant User Base

To get it started with an instant user base, Richard Schueler offered free Hex tokens to anyone who had Bitcoin by a deadline and then submitted a claim to the website.

He advertises it like it was some great act of magnanimity, but in reality Hex would have no value if only he owned 100% of it. These Hex tokens were minted out of thin air and it didn’t cost him anything to give them out. It gave the appearance to outsiders that there was a thriving community with thousands of Hex participants, which is again a standard marketing tactic for “social proof” (as mentioned in my crypto scams article).

Furthermore, those early entrant’s gains are paid for not by Richard, but by later entrants who provide their exit liquidity.

Adoption Amplifier & Referral Program

Richard Heart's Hex Token is a Brilliant Scam

Schueler incentivized people to “act fast” to get a bonus and the longer you waited, the smaller the bonus would be. He used the same tactic with his latest project, PulseChain.

Users were also incentivized to bring in others through its referral program. Your referrals become your marketing shillers for free. A few websites started up affiliates just for the purpose of getting the 20% referral. They didn’t have to commit any of their own money to shill the product and earn.

Richard Got a Copy of Adoption Bonus and Referral Bonuses

During the early adoption phase he gave himself a copy of all Hex. When someone purchased Hex with Ethereum, Schueler got both a copy of the Hex value and also the full Ethereum value.

Isn’t the point of sending the Ethereum an exchange for the Hex? Why did he get additional Hex too? Double dipping.

Richard Heart's Hex Token is a Brilliant Scam
Richard Heart's Hex Token is a Brilliant Scam

And when someone was referred by another Hex user, he also got a copy of what both the referrer and referree got. Why did he also get a copy from other people’s marketing efforts?

Richard Heart's Hex Token is a Brilliant Scam
Etherscan Contract Code

In case it’s not obvious by now, each time someone used the adoption method or was referred, it was further dilutionary to the Hex token pool by 2x the claim amount.

It should be pretty obvious from the points I laid out above that the only significant whale in the Hex system is Schueler himself. We’ll come back to this point in a later section.

Marketing

It’s the never ending story here with this one.

Hex not only has lots of marketing through traditional print and online media as I showed at the beginning of this article, but Schueler also paid for professional press releases to show up on financial news sites with comical claims like “Hex has the potential to eradicate middlemen payment companies such as PayPal and Venmo, as well as impact credit card companies like Visa and MasterCard.”

So which is it, a payment app or a certificate of deposit? In fact, Hex doesn’t have the ability to do any of that because the infrastructure for sending tokens or payments comes not from his token, but the platform his token is built on, Ethereum. It’s simply more grandiose claims to lure in buyers hoping to jump aboard the next Bitcoin, Tesla or transformative technology.

As stated before, this is unusual for a cryptocurrency project to advertise because search engines usually outright ban any advertisements related to crypto and print media is expensive.

Furthermore, the original name of the project was going to be “BitcoinHEX.” In the previous article I mention that usually crypto scammers seek to exploit name recognition and legitimacy by using another crypto’s name. Hex has absolutely nothing to do with Bitcoin, since it is built on the Ethereum network. But basically everyone by now has heard of Bitcoin, and the massive success it has had, so he wanted to give the impression that Hex was somehow related to it to those who weren’t experienced in cryptocurrency.

FOMO: When Lambo?

No scam would be complete without advertising how rich people are getting along with some Lambo shilling. In addition to a bunch of exotic cars purportedly paid for with Hex winnings, there is a whole cache of items on the webpage.

Try to imagine a legitimate investment product posting pictures of exotic cars.

Richard Heart's Hex Token is a Brilliant Scam
Richard Heart's Hex Token is a Brilliant Scam

What he forgets to mention is that the McLaren on the left with the HEX1 License plate is his own car as you can see on his personal website.

The other items may or may not have been purchased with Hex gains, or they may be just random photos from the internet, who knows? Either way it is just a marketing ploy hoping to snag “get rich quick” hopefuls. Early investor experiences will not match yours even though that is the implication from this style of marketing.

Supply Reduction: Time Lock

This is really the crux of the brilliance of this scam. It’s like Hotel California: Your money checks in, but doesn’t check out. The main product feature is to lock up your Hex tokens for a chosen period of time with the purported interest rate increasing along with the lock-up period.

Technically, Hex converts to T-shares during the time-lock, which reduces circulating supply figures and is a computational efficiency to avoid account balance tracking for thousands of wallets. It is clear that most Hexicans do not understand its purpose and often try to move the conversation in that direction (“T-shares only go up!”). At the end of the time-lock, the T-shares are converted back to Hex. The efficiency is not unique to Hex as Anchor Protocol had the aUST, for instance, and the inclusion of T-Shares doesn’t change any of the criticisms I make in this article.

By incentivizing Hex buyers to lock up their tokens for a number of years, and heavily penalizing them if they unlock early, it removes selling pressure and reduces the float. This provides the opportunity for the marketing efforts to have a more powerful effect, since with more buyers than sellers, the price will be pressured upwards. This, in turn, lures in additional buyers catching the FOMO bug.

The goal of course is to remove as many retail sellers as possible from the process so that the only people who are left to sell are the earliest investors and promoters who have large bags to dump on new entrants. “Longer pays better” because they want to incentivize you to not think about getting your money back until years after you’ve contributed it.

A key point is that early investors in every Ponzi and pyramid scheme make money along with the pinnacle scammer and they will defend the product to protect their newfound wealth.

Heart’s Use of The Word ‘Staking’

We need to discuss Schueler’s use of the word ‘stake’ here when referring to time locked Hex tokens.

Older cryptocurrencies like Bitcoin and Ethereum require millions of computers (i.e. ASICs) running specialized number guessing hardware all competing against each other to secure the network. It uses up an enormous amount of electricity and only those who can afford the hardware get the rewards. This is referred to as Proof-of-Work.

In contrast, the staking concept where investors lock up their funds for a period of time is the norm with newer Proof-of-Stake styled cryptocurrencies. It’s democratized as anyone can participate in rewards with any amount of money and is more energy efficient because people bet on datacenters which don’t require random number guessing hardware.

The staker needs to research the datacenter to make sure that it has a legitimate group running it, won’t behave against the interests of the network, and doesn’t have long periods of inactivity, because if it does, the staker’s money will be slashed. Therefore, it is a decentralized way to secure a network where people put money where their mouth is, and as a reward, they earn a portion of the datacenter’s fees from processing transactions.

When you ‘stake’ with Hex, you aren’t securing a network, voting on governance or facilitating any underlying economic activity at all. It’s a complete misuse of the term and there is no Proof-of-Stake at all. You are just agreeing to lock up your funds so that there won’t be selling pressure.

What a convenient product feature.

How Does Hex Make Money?

In short, it doesn’t. This is where we really get to the crux of the Hex scam. Let’s compare two models:

The Banking Model

When banks give you interest, it stems from economic activity. A bank creates loans, earns fees from ATMs and services and then pays you part of the profit. A commercial bank’s basic business model is to capture a spread between short term and long term interest rates. They borrow short, and lend long. That’s the core of their business and why they offer savings and checking accounts in the first place: They leverage other people’s money.

Everyone is familiar with Certificates of Deposit: you put in dollars, and you get more dollars back later. Banks don’t offer CDs as an act of chivalry, they exist for the benefit of the bank, just like savings and checking accounts do. Banks offer them because they can plan better around their federally mandated capital requirements and lending portfolio by penalizing money that leaves too soon.

This is how revenue is generated in the real world; DeFi and CeFi platforms like Celsius, Nexo, and BlockFi do some similar activities, although I don’t generally recommend them.

For a more in depth discussion of banking mechanics involving money expansion and the impacts of quantitative easing, read this article. Richard Heart and Hexican trolls love to name drop the “Bank of England paper” as evidence that Hex “is just like the banking system,” and I point out why that reasoning is incorrect.

The Hex Model

With Hex, there is no underlying economic activity happening at all. It’s not even real interest.

All the Hex contract code does is mint new inflationary tokens every year and then distributes the inflation to those who have agreed to lock theirs up.

This whole scam could not work if the requirement was to lock up an asset and get paid interest in that asset for an asset that Richard Schueler didn’t control and create out of thin air.

Where’s the DeFi certificate of deposit that pays 40%, or even 10%, in Bitcoin or Ethereum? It can’t exist.

Those who lock up tokens also get half the penalties from those who unlock their funds early, or get this, forget to unlock their funds within two weeks of the agreed upon period. Richard Schueler generously gives himself the other half.

Richard Heart's Hex Token is a Brilliant Scam
Etherscan Source Code

The sole purpose of the Hex contract is to redistribute value from some token holders to other token holders.

Inflation is Dilutive

Inflation is never a good thing, but in the case of Proof-of-Work (PoW) cryptocurrencies like Bitcoin and Ethereum, it is a necessary evil to incentivize miners to secure the network. Someone has to pay for the infrastructure and electricity and without a centralized authority to provide funds, inflation acts like a tax to pay for it.

Because cryptocurrency adoption multiplied over the last decade, the growth in demand vastly outweighed the effects of inflation and the price rose.

However, the inflation in Hex does not stem from computer work in the form of electricity like in the case of Bitcoin or Ethereum. Inflation in the Hex system is completely arbitrary, unnecessary and solely exists to create funds out of thin air to pay people. Likewise, if Schueler and the Hexicans can rope enough new investors into the scheme to drive up the token price or keep it level, investors won’t notice the effects of inflation either. Now you can understand the vast marketing and shilling efforts.

Everything else being equal, the expected return to total Hex capital from generating inflation is 0%. You have more tokens, but each token is worth a little less if you hold demand constant.

When an publicly traded company conducts a 2-for-1 stock split, shares double, but the stock value doesn’t suddenly double along with it – the price halves because the underlying equity didn’t change.

It’s like cutting up a sandwich into smaller pieces – you don’t have a bigger sandwich.

Hex is like buying a foreign country’s currency that only printed extra bills to pay “interest.” At some point you have to convert it back to your own currency to spend it. When you make that conversion, supply and demand will reduce the value of what you thought you earned.

There’s nothing magical about the chosen inflation rate of 3.69%; it could have been 1%, 2%, 5%, 10% or anything in between to create a different perceived rate of interest with a differing level of token dilution. When you grasp that concept, you will realize how pointless Hex really is.

Richard Schueler could have written the smart contract to say that every year a zero will be added to every locked account balance. Would anyone actually believe that they were 10x richer? Of course not, so why does the more subtle way that Hex uses this principle fool so many people?

Fool’s gold does not turn into real gold.

What Makes Hex Effectively a Ponzi Scheme

From the SEC, the technical definition of a Ponzi scheme is an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors. 

When Ponzi schemes were defined 100 years ago, private currency ones like Hex didn’t exist, so it doesn’t quite meet the exact legal definition since the cashflow of new investors doesn’t directly cross the table to another investor’s pocket.

That’s where Richard Heart and his followers stop the discussion: “See, not technically a Ponzi, therefore not a scam!”

You aren’t investing with dollars, euros or even another crypto and being paid back the same currency as you would in a classic Ponzi scheme here. There’s an additional step in the process.

Since Hex controls its own seigniorage and just mints more tokens to pay out according to the smart contract, the Ponzi link is the cash transfer from new investor to old investor, the “purported returns.”

Hex can mint new tokens until the end of time, but herein lies the gist of the problem: by constantly increasing supply, there will always be negative price pressure on the value of what those tokens are worth. Yes, the laws of economics and debasing a currency still apply to the world of crypto.

Otherwise, imagine if immense wealth could just be created by printing more tokens and distributing them; everyone would be millionaires…. Venezuela style.

The amount of new capital that needs to be brought in to absorb these new tokens is quite sizeable as we will see in a later section.

A technical Ponzi scheme eventually collapses because the earnings aren’t really being generated and the scheme always needs new investors flowing in to pay off the older investors. The collapse can be delayed for years though because the mechanics behind the scenes are opaque and investors wait years to collect their purported earnings. Bernie Madoff’s scam lasted for decades, for instance, because most people just continued to hold their investment with him and never demanded capital back until 2008.

In contrast to Hex, the purported returns are paid with inflationary tokens and these additional tokens need to be absorbed by new investors to maintain the price. You can’t hide the price, and the price of it will eventually collapse without a constant stream of fresh money supporting it (Hex is now down 90%+, and should continue to drop now that crypto has entered a bear market).

This is what what makes Hex analogous to a Ponzi scheme, only that there is one additional step where both new and existing investors are transacting indirectly with each other through a fresh token that is subject to supply and demand.

The average lockup time is about two years, so there is a long delay before the impact of the freshly minted tokens takes effect on the Hex supply, but the earliest entrants are now using fresh investors for exit liquidity.

The Hex Token Distribution

Inflated Address Count

In an effort to pretend that there are more investors than there really are, someone, guess who, sent HEX to 173k addresses in large batches, mostly small amounts of 100 and 101 HEX and the addresses have no further activity.

These are throw-away amounts since the Ethereum gas would cost more than the value given to actually sell it. Schueler loves to brag about how many unique wallet addresses have Hex, so here’s your reason why. The owners of the addresses probably don’t even know Hex is in their address since you have to manually import tokens into your wallet to actually see them.

Centralization

Heart loves to talk about how Bitcoin and other blockchains are so centralized.

Richard Heart's Hex Token is a Brilliant Scam
Pot Calling the Kettle Black. Source

The irony is apparently lost on him, but in reality he is just preying on people’s ignorance to be unaware that he created a huge number of wallets to hold his own Hex stash to give the illusion of decentralization.

Remember all those first year features we discussed above? They were important to explain how he has so much Hex in this next section:

How Much Hex Does Richard Heart Own or Control?

Etherscan provides a tool to look at the top 500 token holders. Almost all of them were created in blocks on the same day, within the same hour. Try to find a single account in the top 150 that wasn’t funded by the origin account. Furthermore, there is a whole block of accounts that all have the same exact amount in them.

Richard Heart's Hex Token is a Brilliant Scam

Yup, you guessed it, all funded by the origin account.

In fact, I couldn’t find a single Ether account in the list of 500, from randomly clicking, that had any activity beyond just funding Hex. Geee, suspicious.

Then check out this Ethereum address, with funds originating from a money laundering mixer all paying the gas fee on 200 accounts each worth 350-400 million dollars in Hex tokens. See for yourself and do the math.

These simple observations show that Richard controls the majority of the entire supply of Hex. His laziness to use a single account to fund the gas fees on 200 other massive accounts is much appreciated because it made the analysis much easier to collate.

So how much Hex does he control in total? I originally speculated from the above points that an automated account analysis program would show his ownership of up to 80%. Well as it would turn out, someone has actually managed to collate the addresses funded from the origin address and Richard’s token database shows he controls 88% of all Hex! 88%, just wow!

If Richard himself didn’t want to pay a 20% founder’s tax on a coin, why does he deem it acceptable for you to pay an 88% founder’s tax? He didn’t even attempt to make the product remotely fair and he’s playing anyone who buys into it for fools.

I’ll note that he can’t get that value out of the system unless lots of future suckers buy in to prop up the price while he is unloading, which is why the marketing efforts are more broad than you typically see for cryptocurrency.

But why obfuscate his holdings? Would there be fewer Hex token buyers if everyone knew he controlled so much and the main point of the token was to enrich himself? I think you know the answer.

Why Is The Hex Interest Rate 38-40%?

The 38% number (June 2022) comes from the requirement that only people who lock up their funds get paid the inflation and currently only about 10% of Hex token buyers have locked up their funds.

As we showed before Schueler owns about 88% of the token pool and he has not locked them up in order to keep the advertised rate high. That’s the only purpose these tokens serve and since he didn’t pay for them, losing 3.69% of their value every year to inflation is of no consequence if it attracts more buyers clamoring for the 38% APY and therefore drives up the price far higher than his inflation losses.

This is a two way street of course. Since ~90% is freely available, your biggest risk is that large quantities of Hex will be dumped and the price of the token will drop to a level far lower than your cost basis and inflation earnings.

Thought Experiment, an Improved Hex Without a Rug-Pull Risk

Even the often advertised “only 3.69% inflation” is a deceptive shell game to give an appearance that the arbitrarily chosen contract inflation rate isn’t terribly high in the grand scheme of things.

Would as many people buy into the token if the advertised rate of inflation were 38%? I think not.

Let’s start with a thought experiment. Say that Schueler sent all his unlocked Hex holdings, the ones keeping the advertised rate high, to a burn address and then he no longer had access to them or the ability to sell them into the market. This would reduce the rug-pull red flag risk significantly (he still primarily controls the DEX liquidity, so not 100% in the clear, but less risk overall).

The ‘interest rate’ would still be 38%, and all newly generated tokens would still be still funneled to the retail lock-up class. For all intents and purposes, Hex would work exactly the same as it does today without Schueler’s ability to rug-pull. Basically it would be a slightly improved version of Hex.

But in that scenario you have to ask yourself, what is the purpose of all these superfluous tokens laying around in a burn address for? The contract could just be re-written to skip generating them in the first place for the same effect. But then of course for the contract to be able to pay the 38% rate, the inflation rate would also have to be 38% and the nature of the scam would be very obvious to all.

Do we understand the deception now?

The key point is that all these extra tokens that Schueler controls were minted and not locked just to give the appearance that total inflation in the Hex system is low, while at the same time maintaining a high rate of inflation to those who time lock. The 35% rate difference doesn’t come from magic. He could have doubled his tokens and we could pretend that there’d then be an 76% APY to the retail class while maintaining a 3.69% contract rate.

Therefore, the effective inflation rate to the circulating supply is 38% since all newly minted tokens are being funneled to the retail class. Of course, some people have chosen multi-year lockup periods and those tokens won’t flood the market for some time, but eventually they will come. Hex is only two years old and the maximum lockup period is comically 15 years, older than cryptocurrency itself.

But here’s the rub, this improved version of Hex doesn’t even exist! Schueler still controls the 88% share and there is only downside risk to his massive ownership. He can either dump these tokens onto the market, or lock them up and reduce the “interest rate” for everyone else. If he locked up his whole share, the interest rate would drop to the same 3.69% rate of contract inflation (ignoring 1-2% of retail Hex shares in transition or not being locked for other reasons).

You have to trust that Schueler won’t do either of these things, which violates a central principle of decentralized finance: trust.

Problems With The Size of Hex

Hexicans love to brag about how Hex is a ‘top 3 coin‘ in terms of market capitalization, worth $159 $32 billion (it’s dropped significantly since writing this article).

  1. Hexican’s preferred coin ranking list is basically anything other than the gold standard, CoinMarketCap, because it lists Hex at #201.
    • CoinMarketCap has an evaluation process that attempts to weed out low quality projects that try to jump to the top of the list with artificially large marketcap gaming, where a token is minted with a trillion supply and then the creator wash trades the price up to $1. To list in the top 200, a token must be listed on a centralized exchange with material volume, such as Coinbase or Binance.
    • It’s curious why these retail exchanges will list hundreds of other tokens, but specifically exclude Hex when it is so large. I’m pretty sure the reason is that listing any Ponzi token that advertises itself as a “certificate of deposit” earning interest is a securities regulatory risk for the exchange and when investors lose money it’s an easy lawsuit.
    • Hexicans comically attribute the #201 rank to a conspiracy theory that Binance (who owns CMC) is keeping Hex down because they are threatened by it. lol.
  2. It’s so large, but Schueler and Hexicans always invoke the low price fallacy: “It’s pre-viral because it is only $0.26.” Bank of America could split their shares 100-to-1 and have a stock market price of $0.47 but that wouldn’t make it any less of a $250 billion company. Price has no bearing on future opportunity or cheapness without considering how much supply exists along with it.
  3. The 88% that Schueler owns gives it more relevance than it deserves which is then used in marketing: “it’s bigger than Solana and Cardano combined!” Size often is perceived as a stamp of quality or social proof.
  4. At its peak, Hex was getting close to challenging the valuation of the platform it’s built on, Ethereum (which reminds me of the Palm Pilot craziness of the Tech Bubble).
  5. Having a large market capitalization combined with permanent inflation is an issue. Think about how $32 billion*3.69% (June 2022) is about $1.2 billion in new tokens a year that must be absorbed from new buyers. It’s a dynamic relationship with price; as the price increases it becomes much harder to maintain. Presumably many will ‘re-stake’ again and again keeping the supply off the market for a while, but that is only delaying and stacking up the eventual unwind.
  6. Trading volume for a token of this size is quite low. Price discovery comes from volume and basically any other coin in the top 100 has multiples more. You can compare apples-to-apples by taking the volume and dividing by the marketcap. A typically this number is between 0.02-0.06 or more. As of this writing, Hex’s volume ratio is less than 0.00035 which means it has 1/57th of the trading volume of its peers.
    • This low volume is NOT a reflection of Scheuler’s outsized ownership interest or the lock-in product feature keeping supply off the market because CoinMarketCap’s volume calculation only considers the circulating supply.
    • If you consider the entire supply, it’s 0.00009522, or about 1/210th its peers.
    • This volume disparity is somewhat of a result of not being listed on centralized retail exchanges.
    • The point being that low volume anythings are easier to manipulate.
Richard Heart's Hex Token is a Brilliant Scam
Price has dropped 80% since this graphic (June 2022)

Schueler tries to lead you away from these inconvenient points in his YouTube videos and he constantly claims that market cap and volume do not matter, because “you can’t make money from the market cap or volume.” But of course it matters.

Market cap is essentially the “account balance” of all token holders in the system and the average volume roughly shows twice the capacity of how much could be unloaded on any particular day without adversely affecting the price (technically, the LP liquidity and slippage). And as mentioned, the market cap combined with the inflation rate determines how much capital must be brought in just to keep the token price level over time.

Whataboutism

Watch a few Youtube videos of Richard Heart getting interviewed by someone critical of Hex and see his replies. When he takes a break from all the name calling and insults, you’ll find that he is very adept at manipulating semantics and introducing red herrings into his arguments.

If you watch enough of his material you’ll see that the same script is uttered ad nauseum and then regurgitated by the Hexican underlings.

False Analogy to Bitcoin

I am NOT a ‘Bitcoin maximalist’ as some have claimed in an attempt to undermine the points I make in this article, and I only bring up Bitcoin throughout this article because Schueler is constantly comparing it to Hex and inventing reasons why Hex is supposedly much superior. It’s his favorite rhetorical device likely due to Bitcoin’s name recognition and its established background.

He claims that Hex offers the best opportunity to buy now because it’s ‘just like Bitcoin in the beginning.’ In its beginning, Bitcoin had:

  1. Low liquidity.
  2. Large founder’s share.
  3. In hindsight, those who held the longest had the best return.

And Hex has low liquidity, a large founder’s share and had a quick initial gain! See, same same! Buy, buy, buy!

But cryptocurrency was in its infancy 11 years ago: few people had heard of Bitcoin, it was the only digital currency available, you could only trade it peer-to-peer, and you could mine it on your own home computer. It was a big gamble that cryptocurrency would even have any value at all many years into the future because digital currencies had been tried before and failed.

When you only had a handful of people experimenting with a new technology that had a limited practical value at the time, of course, there is going to be low liquidity and a large founder’s share. However, Bitcoin wasn’t engineered to have those features like Hex was.

There are now over 10,000 cryptos covering $2 trillion in value, dozens of retail crypto exchanges, ETF like trusts that buy and hold Bitcoin, and futures contracts on it: cryptocurrency has not been in its infancy for 5+ years now.

Additionally, Bitcoin exists by itself. Hex depends on another cryptocurrency, Ethereum, because it isn’t even an independent coin; it’s a token.

To make the jump that Hex is like Bitcoin because they both, well, use blockchain, is completely nonsensical, but it has the contrast about the size of the Grand Canyon.

What does Hex Crypto actually do? What is Hex’s Purpose?

Ask yourself, what innovation does Hex add to the table aside from being a self enrichment scam?

Bitcoin’s purpose wasn’t to furnish its users with investment returns, which is Hex’s only purpose.

Bitcoin was invented to facilitate digital payments and solved a double spending problem for digital money. Bitcoin was the genesis of cryptocurrency and it didn’t require sending the founder money to participate in it. Bitcoin is also disinflationary and has a fixed terminal supply.

Hex is none of that and anyone can clone it with a few mouse clicks. See Rex, for instance, on the Binance Smart Chain (lower gas fees).

What does Hex do? Spawns more Hex. Anyone can write a contract to do that.

Schueler saw that other scammers were getting rich creating scam-coins and just wanted in on the action. He only put a little more thought into the storyline of why you should buy.

Hex Coin/Token Review Summary: is hex a good investment?

If you have made it this far you will likely reach the answer that Hex is not a good investment.

The biggest problem with Hex is that ‘interest’ is being paid, but the token doesn’t generate revenue, so the only place that investment returns can come from is other investors. That’s a Ponzi scheme no matter how much spin you put on it, and boy is there a lot of spin laid on thick.

Over time, Hex will need to bring in over a billion dollars in capital each year to keep the token price level (June 2022 price). That’s a tall order. Surely plenty of existing investors will defer selling their interest tokens and will lock them up for additional time making the new capital requirements a fraction lower, but the additional supply will continue to stack up until eventually it gets sold onto the market.

Furthermore, Hex is the largest smart contract token because the founder baked in a lot of perks and loopholes for himself leading to an obscene 88% ownership of all Hex tokens today. Try to go into the mindset of someone who creates an ‘investment’ product, but didn’t actually contribute his own capital to obtain that level of ownership. Who’s he really trying to make rich, you or himself?

While Richard Heart likely won’t ‘rug pull’ because a smart parasite doesn’t kill its host, he will dump his massive holdings onto the masses over time in order to cash out if he is successful in gaining wider adoption through the extensive marketing efforts.

Additionally, Richard Heart’s large social media following led to a lot people who got in on the ground floor and also stand to make a lot of money from future buyers and therefore contribute to the shilling and advertising effort through social media.

When a token pumps 2,000x+ in two years (now down 90%+ from the peak) as a result of aggressive marketing, there are a lot of people who contributed minimal amounts of their own capital, but showed a life-changing account balance and were counting off the days until their lock up period ended so that they could sell to someone else and realize a massive gain. Think about it: when a $1,000 investment turns into a $2,000,000, the holder needs 2,000 new $1,000 investors to buy his or her coins to cash out. Now multiply that by the hundreds of early investors and realize that Hex’s only value proposition is to find buyers to dump on.

Simply put, Hex investors are not going to tell you to hold off on buying it. It’s best not to ask the ones who benefit from your ignorance whether you should buy or not.

As such, the only rebuttal from Hex shillers about why Hex isn’t a scam seems to be because their account balance has gone up since they bought in. People also thought that they were getting rich with Bitconnect (which peaked at #7 and still trades), Bernie Madoff, and the Celsius Network, but only those that cashed out before the bottom fell out actually made any real money. The same scenario will pan out with a majority of Hex investors who bought the top.

Yes, you too can make money in scams if you buy earlier than the majority and sell before they do, but the trouble with these kinds of schemes is that usually by the time you find out about them, you are one of the later investors buying close to the end of the line while the earlier investors are selling their bags to you.

It’s right in the name: You are being Punk’d.

Richard Heart's Hex Token is a Brilliant Scam

Please share WantFI.com with your friends!

Ryan Recommends

You can create your own stock based index funds called “portfolio pies” with M1 Finance to buy low and sell high through automatic rebalancing and reinvest the cashflow from dividends or direct deposits, all commission free.

For advanced traders who want direct access to exchanges without “payment for order flow” choose Interactive Brokers. I’ve been a customer for over ten years. Earn up to $1,000 in free stock through this link.

For bank accounts, the CIT Savings Connect account offers the highest APY at 1.90% and Axos Bank offers a no-fee business account with payroll features.

To track your spending and assist in your monthly budgeting, check out the free tools from Personal Capital.

When it comes to crypto trading, Phemex is king (read my full review here).


Ryan

After graduating with $75,000 in student loan debt, Ryan began a professional career in finance, aggressively saved and invested and became a self-made millennial millionaire in early 2019. He holds a Master's degree in Computational Finance, a Master's degree in Economics, and a Bachelor's degree in Mathematics. His two passions are investing and traveling.

252 thoughts on “Richard Heart’s Hex Token is a Brilliant Scam

  1. Excellent article. But this follows into grandma‘s rule. If something is too good to be true it usually is. But thank you because individuals like myself don’t have the understanding computer knowledge and can get scammed. I was put off by the by the necklaces he wore actually in the interview. That screamed manipulation and the last guy to be real was Steve Jobs but the turtleneck did not work well for Elizabeth Holmes. Michael Saylor- is Michael Saylor last I heard. Alarm.com is running my security system. It seems like Microstrategy is a palpable company -he may be totally wrong with bitcoin but he will sink his company with it. What company is here that this guy has done?

  2. You haven’t even touched on their new cultish sacrifice thing with pulse chain. A decision they have it seems they have made because new entrants can’t afford current Eth gas prices to lock up their tokens.

    1. And the “sacrifice” was for the anti-aging research group, SENS, which has been called a pseudoscience, has garnered a lot of criticism in the medical community, and also has a cultish vibe to it. All these crypto guys are worried they won’t have enough time to spend their millions and billions.

      I haven’t looked much into Pulsechain since it is still a testnet beta. I do wonder what angle Heart has dug out for himself inside it though. Who knows, maybe it’s a fair product this time, but I have my doubts.

      1. Anti-aging how uninformed you are. That field of medicine what they are trying to develop is more groundbreaking and lifechanging than any technology ever in the history of mankind. You should look into it. If we as world would pool our energy into perfecting it life as we know it would change. Body cells that don’t break down from being copied over and over again. No cancer (which I have) No neurological diseases. No Heart disease, No autoimmune disease, And yes you would basically stop ageing but ageing is just the rapid break down of cells.

        Search any group and tell me there isn’t some kind of cultish vibe. I like to tie flies for fly fishing. Crazy Cult! People are so serious about their fake bugs!!

        “Sacrifice” It’s a term used so people understand they are expecting NOTHING in return. may work out may not. If they called a sale you would expect something. If you give something with expectation of profit from the work of others then you are creating a SEC defined Security.
        When PulseChain launches it will have zero value at the instant of launch.

        1. The founder of that group literally wrote a book on “ending aging” [link]. Maybe it is you who is uninformed? The sell foundation of youth fantasies for the gullible.
          Usually fly fishers don’t have a vested interest in trolling the internet and trying to bring more people into the bait they use. That’s the difference with Hex, it requires bringing in more people to prop the price up.
          Didn’t the sacrifice get them some tokens on the Pulsechain? Doesn’t sound like that is nothing. Hard to say that Pulsechain will have zero value when there is a whole community of Hex shillers who will be trading in it on day 1.

          1. Ending ageing is exactly what it is. How would your summarize putting a stop to all diseases caused by cellular decay. Good marketing to use a term the old rich people will respond to. Take a deep dive into the Research side of the website you will click your way to some of the top universities.

            All cryptos/ stocks/ sports cards/ actually every asset, requires more people to come along to prop up the price. You just look down on Hexicans because they have to use tacky grass roots marketing. Bitcoin and Eth have more shills( people bringing in more people to prop up the price) than all the other coins combined. It just doesn’t look as seedy because its got more money polishing it. It’s the exact same thing.

            I have a close contact that Is up over $5,000,000 on Eth. If he would have shilled harder to me back in 2015. I might be right there with him. He would have had to pull out all the stops and had to look very seedy trying to convince me to spend a weeks wages on fake internet money.

            Sacrifice got you points. which get you PLSs. semantics I know but that really is a moot point.

            Can You link me to any other articles you have written about possible scam coins.

          2. Ryan,

            I’m sorry to offend but you don’t know what you’re talking about in this instance. I know you have a preconception around HEX and are therefore conflating the anti-aging stuff with it being a scam, but it’s not the case. You should read a little about the advancements in biotech around aging. I recommend Lifespan: Why We Age – and Why We Don’t Have To. You’ll probably think it’s not worth the time, but ironically you might have a bit more time if you invest in reading it.

            1. Ryan,

              I found this article at a time when I have been considering getting involved and RH’s newest offerings, so thank you, it’s good information to consider.

              However, I agree that you appear uniformed about aging and science. Progress is frankly mind-boggling, and essentially it is an engineering problem that is becoming increasingly and exponentially more rapidly approachable. Love it or hate it, technology is growing at a crazy rate, and we will soon be able to do things that seemed like science fiction pretty recently. One of the front men for this progress, Ray Kurzweil, is the furthest thing from a scam artist. I think with regard to aging it’s hard to approach the subject with an open mind since we are all keenly aware of our mortality…in fact it’s one of if not the greatest drivers of our behavior and psychology.

              Again, I appreciate the depth of this article, and I will consider it as I’m deciding what to do.

              1. Thanks for your comment. I’ve never heard of Ray Kurzweil. My comments were more about what I read about the SENS founder and his application of pseudo-science, wishful thinking. Of course, I do hope more advancements in health come soon, so I hope they put the donations to good research.

  3. This is totally lie, it just perform like btc. It is too early to say. I love RH what he has done for people. Now if you believe this stranger, as he explains he won’t debate RH. And still you think is ponzi as people used to say to btc I should say people still say btc is ponzi. If I am too doubtful still I will take risk with 5to 10 %, because this time won’t come back neither this stranger who wrote wrong information. Thanks friend good luck. I think hex 100% legit and think what if RH die, this smart contract change this world.

    1. As I stated in the article, Hex doesn’t meet the legal definition of a Ponzi, because ‘earnings’ are paid in Hex: it’s done differently. In a Ponzi, new investors must be brought in to pay the old investors with an actual currency. With Hex, all investors have their token devalued and then those extra tokens are paid out to those who have agreed to lock them up for some time (stakers). Again, they aren’t being paid from economic activity, but are being paid from inflation which depends on new entrants to absorb supply. Robbing Peter to pay Paul is not a legitimate business enterprise.

      1. Hi Ryan, I think this is an inaccuracy. Inflation is minted only to those staking the coin. No one is taking HEX from other owners.

        1. That’s what inflation is though. You are devaluing the value of each Hex owner through the inflation, but then turning around and paying the stakers. Unstakers are paying the stakers, but of course, since 99% of unstaked tokens are owned by RH and he didn’t contribute money to get these tokens, so ask yourself where the value comes from.

          1. Okay, I understand what you’re saying but you’re dismissing the act of staking in HEX as “non-economic activity”, however you are deferring the ability to spend your HEX today in order to get more further down the road. You are committing to not selling when the price fluctuates. HEX could go to zero and if you’re staked you can’t get out without paying an emergency end stake penalty. You are being rewarded in HEX for that delayed gratification (very parallel to the traditional bank CD). The people who have not staked took no such risk and could trade in and out of the currency as they pleased during that period of time.

            So you can say “they are effectively paying the stakers” but that relies on the assumption that you aren’t engaged in economic activity by staking and in fact you are, as I have described above.

            Another point to consider: Bitcoin also inflates and is paid to the miners who commit their hash rate, and then that dilutes non-miners of bitcoin. So by your analysis, is Bitcoin also “close to being a ponzi?” HEX just switched the consensus protocol and pays the inflation to the people willing to forego trading it, and accrue economic benefit for their effort.

            1. I disagree that ‘waiting’ or ‘deferring action’ (i.e not doing anything) constitutes economic activity. If that were the case, lazy people would all be rich. And a bank doesn’t offer CDs to encourage delayed gratification for investors, it offers them to have assurances for their own book of reserves.
              Both Bitcoin and Ethereum, which Hex is built upon, are proof of work. No cryptocurrency could not exist without the inflation for performing work. Hex could exist without inflation because no work is being performed. The inflation is arbitrary. That’s the difference.
              So, yes, technically any non-cash flow generating asset that requires bringing in other buyers to attain its value could be considered a Ponzi, if I am being loosey-goosey with the technical legal definition. But like I said above, Bitcoin invented a solution to a problem, is unique and has a vast network. The only thing that Hex seems to have invented is lots of FOMO marketing, a product feature that strongly discourages getting out, and a product feature that enriches its founder. Anyone can duplicate the Hex token with minimal effort and you can get an equivalent product. In fact, “Rex” has done just that. You can’t duplicate Bitcoin, even though lots of spawns have been attempted.

            2. Hello Jordan Ledvina … I appreciate your rebuttals here. It would be nice to balance this article with a full counter-argument piece.

          2. Then Lazy people would all be rich? What are we even talking about, guy? We’re talking about within the framework of buying and holding a cryptocurrency called HEX, not speaking in generality about people and life. By your logic, there is no economic activity you should dislike bitcoin even more, all people do with bitcoin is buy and hope number go up. There’s no real medium of exchange to speak of.

            Furthermore, the analogy to a bank CD is just that, an analogy. Your ROI is proportional to the duration you are willing to lock up your funds for. Yes, the bank has a different reason for why they want your funds then why “HEX” wants you to stake, but honestly the difference only drives home why HEX is better than a CD. A Bank CD involves your reliance on a third party and HEX is you and the contract, no middlemen, trustless.

            Re: “Both Bitcoin and Ethereum, which Hex is built upon, are proof of work. No cryptocurrency could not exist without the inflation for performing work.”
            HEX draws inspiration from bitcoin, and you could claim HEX for holding bitcoin during launch… I don’t know what you mean it is built on. Re: Ethereum, correct it’s an ERC20. But you’re assertion that no cryptocurrency could exist without the inflation for performing work is increasingly outdated. Binance is proof of stake, Cardano is proof of stake, Solana is proof of history. Eth 2.0 (whenever it eventually arrives) will be proof of stake. Pulsechain is going to be Proof of Stake. The idea that you somehow need Proof of Work is already outdated. HEX will be copied over onto Pulsechain and you will have a copy of pure proof of stake HEX.

            Re: But like I said above, Bitcoin invented a solution to a problem, is unique and has a vast network.

            Bitcoin is old, slow, been hacked multiple times, and has never actually solved the problem it set out to solve. It never became a medium of exchange and none of the layer 2 solutions have ever gotten adoption. It’s just a speculative asset that has the benefit of network effect. Why are you celebrating this? It’s like walking around and touting your nokia flip phone. Software is always getting better and coming out with better versions of previously innovative technology which Bitcoin once was.

            RE: The only thing that Hex seems to have invented is lots of FOMO marketing, a product feature that strongly discourages getting out,

            A project that discourages you from getting out- and what’s wrong with that? It’s trading and selling bitcoin that would have caused you to miss out on 65,000x gains from just holding bitcoin (show me a trader who managed to beat the buy and hold strategy on bitcoin). HEX discourages you from doing that by paying you interest to delay gratification and see the bigger picture of where crypto is going. Why are you knocking that? The ability to trade feeds the fire of the worst aspects of human psychology. Trading gets your rekt and only serves to enrich middlemen. Staking HEX means you’re not selling when the price dips, and you’re later rewarded for patience two-fold when the price appreciates again and you’re paid the interest for staking. That’s such an improvement over bitcoin.

            RE: and a product feature that enriches its founder.

            – oh and what’s so wrong with that? Do you also take issue with Bezos and Musk being enriched for their entrepreneurial efforts? The OA has not been staking at all, and is diluted by the staker class. It gets half of the EES funds and the rest are distributed to the staker class. It’s just bizarre to me that this criticism exists. Founders should be enriched for creating something of value. HEX has and will continue to do that because it’s got an incredible product-market fit.

            1. My point is that doing nothing is not doing something. Doing nothing is not adding to the GDP or any other measurable concept of economic activity which is what would drive profits to pay interest.

              Clearly the marketing was intentional to call it a “certificate of deposit” to associate it with the concept of a bank otherwise he would have called it something else. DeFI is not automatically better because with a bank you have recourse and your funds are federally insured. Having middlemen isn’t what is preventing banks from paying 40% interest. Why no certificate of deposit that pays Bitcoin or Ethereum? Well because those returns would actually have to be generated somehow, kind of like what Nexo and Celsius do by loaning money.

              I didn’t say that you need proof of work, I said it work needs to be performed. Proof of stake still performs work, just less of it and in a more centralized manner. Instead of randomly guessing numbers with a million ASICs, a la Bitcoin, there’s 100+ datacenters processing their blockchain, voted on by individual stakers to behave well. Even staking in PoS has a purpose because you have to put money on the line. It still costs electricity and space to house those facilities. Hex would not exist as it does today without being an ERC20 token. Sure, he could create a new smart contract on another platform, but those platforms are the foundation for Hex, and 10,000 other tokens.

              I agree that Bitcoin sucks as a medium of exchange. It was good in the beginning when there was a niche user base not performing many transactions, but I do think those layer 2 adoptions such as the lightning network are taking off [link]. My other Bitcoin article [link] should show that I am no Bitcoin Maxi and I think that platforms like ETH, DOT, ADA, etc. is where the future potential is at.

              Discouraging selling isn’t necessary a bad thing if its for a purpose other than artificially driving up a price. Why? Because the price isn’t real in that case. True price discovery happens from a lot of volume of buying AND selling. Every other cryptocurrency of Hex’s size has 50-100x as much volume. If a whale comes in and drops a few million on the bid for one of those cryptos, the impact to price will be minimal. That’s not the case with Hex. It’s gone up 10,000x since inception, or whatever the latest figure is, which means that there are a lot of people ticking down the clock to the end of their stake with their $10,000,000 account balances. When a few large accounts decide to cash out at once then everyone else will find out the quoted price was all smoke and mirrors.

              Few people in the beginning could have expected that Bitcoin would go up 65,000x, so yes, everyone would have benefitted to be locked in for years, but hindsight is always 20-20. That doesn’t mean that Hex will have the same trajectory. Hex is already huge and has a market-cap of $136 billion. How much more juice can really be squeezed out at this point? If it goes up another 9x, it’s neck and neck with Bitcoin. If it goes up another 8x after that, its value is worth all the gold in the world.

              Founders of successful companies generally don’t get rich from putting into contracts that they get half of everything like Hex does. They get rich from serving others and producing value for others. Amazon makes it easy for me to go into my living room and buy cheap Chinese junk without going to a store. Apple invented the smart phone. Tesla made EVs popular.

              Hex is DeFi alchemy.

              1. One of the reasons why I mention liquidity and volume quite a few times is because it is easier to manipulate the prices of tokens with less of it. As an exemplary example that takes this to the limits, see this Reddit post on creating a fake coin with a million dollar valuation out of nothing [link].

          3. Yes but stakers are virtually lending value to unstakers by reducing supply and sell pressure and holding up price

              1. There is no lending – He used “virtually lending” as an analogy to explain what is roughly happening as a consequence of inflation and market supply.

                The HEX supply inflates at roughly 3.69%/year. As the supply inflates, the value of 1 HEX deflates relative to the total HEX supply.

                Consider this scenario:

                Liquid HEX sold today: 100 HEX = 100 HEX
                Liquid HEX sold 1 year from now: 100 HEX = 96.44 HEX

                It’s fun to calculate this for other tokens like SOL/BTC/ETH too!

          4. How is that different from Bitcoin?

            Bitcoin pays miners inflation for securing the network. HEX pays stakers inflation to not dump the price.

            Are you suggesting Bitcoin should just pay inflation evenly to everyone?

            1. That only demonstrates your inexperience with crypto. There are over 18,000 cryptos now, so even 1% is generous.

      2. I’ve never staked HEX.
        But? I have made a ton of money trading it. Even with the 3% slippage (which goes to stakers).

        1. I never said it was impossible to make profits trading an asset. The slippage goes to the LP provider: Richard Heart.

      3. You still dont understand how HEX creates and pays out its inflation. The HEX contract inflates the total supply at a rate of 3.69% per year – calculated daily and is paid out daily to ONLY the STAKERS. It does NOT require new users or members to pay this out – it is coded in the immutable contract. The dollar value of HEX is (in fact) derived by market participants coming together through buys and sells – you dont need an economics degree to understand that any product (or project) requires more “buyers” than “sellers” in order for price to go up – this is ECO 101 day 1 – maybe you missed that day. This dynamic is NOT exclusive to HEX, it applies to every crypto, every stock, every investment, throughout the world throughout history. Once again, you use your misinformation to extrapolating it into a foolish untrue argument.

        1. So you repeat what I stated above and then say I don’t understand it. Umm… ‘kay.
          Furthermore, I never stated that the price isn’t determined by market participants. What I did say is that 38% extra retail supply being minted every year will overwhelm buyers and drive the price down over time. Yes, that 3.69% of 90% of the entire supply that RH deliberately doesn’t timelock is funneled to everyone else only to keep the advertised rate high. Did you miss that part?
          It’s utterly foolish to think that the continuous generation of units that cost nothing to make (and only replicate in perpetuity) could have long term value as an investment. Funny you make a jab about Econ 101, but you would know this if you had actually taken it.
          You should read more about investing outside of crypto because your lack of experience is clear. Hex’s process does NOT apply to every other investment type:
          1. Real estate doesn’t mint new parcels of land that you have to sell to new buyers to earn a return. Real estate can be rented to generate cashflow.
          2. Mature companies can and do buy back their stock which drives up the stock and doesn’t require action from other market participants. Many companies also pay dividends from business profits. In fact about half the market’s historical total return came from dividends.
          3. A corporate bond or a CD pays cashflow generated from corporate revenue and doesn’t require any other buyers at all to earn the YTM. Government bonds from tax revenue. (Although gov’t debt isn’t really a free market anymore with Fed intervention and a constant growth of the national debt, so not the best example)
          The only similar cases to Hex are really just other crypto shitcoins, which constantly inflate, or ultra speculative stocks, the type that Cathie Wood likes, that constantly issue stock to finance their operations.

    2. He is wash trading on a code he wrote from forking Tornado Cash. Called Hurricash. One for Hex, PulseChain and PulseX. I been watching him closely.

      1. if you were watching him that closely then you’d know he didn’t write any code at all, considering he isn’t a developer

  4. Robbing peter to pay Pauls par for course isnt it? Ask TCV pump fallout members in the telegram groups, there all pickpocketing each other because there the same investors. Dero piratechain monero etc

  5. I wholeheartedly disagree with the assertion that Hex is a scam. All I hodl is hex and I’m up more than any other crypto. Coins getting hacked, rug pulled and scammed all around me, yet hex is still here and going up. Don’t be salty because you didn’t buy. All of the haters have been crying and you sound like you’re on your way to the pity party.

    1. Bitcoin is still here. Ethereum is still here. Cardano is still here. Hell even Bitconnect is still here. Again, just because something still exists or hasn’t gone to zero doesn’t legitimize it. Crypto has a tendency to stick around for a long time and since Hex is a smart contract on Ethereum, I am not sure if there is even a mechanism for it to ever stop as long as Ethereum exists.

      The only argument that Hex shillers seem to have is “I’m up X% since I bought, therefore it’s not a scam.” Being an early investor and making money from it doesn’t make it legitimate any more than it does for early investors in Ponzi or pyramid schemes. Early Bernie Madoff investors made millions as well. Although eventually much of their earnings were clawed back.

      1. ETH, ADA and BTC are not scams. However, there is nothing about I think you see that’s not the only argument. But there’s nothing to claw back here because the smart contract is paying the users.

        – the OA cannot mint any new coins which helps HEX from being classified as a security under the howey test. I’ve had an independent law firm look into this. If you think that the only argument HEXicans have is number go up, then you’re not engaging in discourse with the right ones.

        1. I was just pointing out that existence is not criteria for proving something isn’t a scam. Bitconnect was exposed, people were arrested, but yet its coin is still trading.
          By design, “donating” Ethereum to the origin address is all it took to mint new Hex tokens. Therefore, creating a script and running ETH around and around in a loop for months could mint him as much Hex as he wanted.

          1. Are you aware of how Genesis ETH was distributed? People had to “donate” Bitcoin during a sacrifice period to get ETH. It’s a normal procedure in crypto.

            1. Yeah it was basically the original ICO, but they also had an disclosure offering detailing its risks [link]. I would say the word ‘purchase’ is more appropriate instead of the word ‘donate’ since the word donation has connotations to charity.

              1. HEX details its risks quite plainly on the website. It’s much more transparent than bitcoin.org or ethereum.org, that don’t inform potential investors of the volatility of speculating in either asset.

                Taken directly off the website:

                On its way to 6,500,000x returns in 12 years the Bitcoin price dipped 94%, 95%, 81% and 86%, on some exchanges it flash crashed as close to $0 as possible. Amazon dropped 95% once too. Now it handles 50% of all Internet sales in the USA.

                In its first year HEX’s price dipped 81%, 73%, 59%, 67%, 87% and then went on to make new all-time highs. Price dips are often opportunities for the impatient to give their money to the patient. HEX’s large price movements up and down are a feature, not a bug. People who buy tops and sell bottoms hand their money to those who buy bottoms and sell tops.

    2. Bernie Madoff was chairman of NASDAQ. Talk about legit, right? His ponzi scam lasted for 20 years and lots of people got rich. Lots more lost their livelihoods. Success rate doesn’t determine validity of a scam. Structure does. I’m not saying HEX is legit or a scam, but you can’t associate earnings with legitimacy. The main thing I find concerning about HEX is that RH is from Florida. Never trust anyone from Florida.

  6. It’s interesting that you’ve Interpreted the brilliant design as a negative. What is wrong with it being designed for price appreciation and being honest about that and the mad gains in hex’s promotion. You do realise many of the design parameters are modelled directly from what works already in the real world of cds and that yes founders do get rich? Why was it ok for Satoshi to premine 1 million btc

    1. Because the main feature of the token should have some utility or purpose other than just penalizing selling for its own sake. If Hex actually did something behind the scenes like Celsius (be careful with this one) and Nexo do like creating crypto loans then I would have a different view of it.
      Price discovery occurs through large volume in both buying and selling. The volume in Hex is abysmal compared to its market cap, so the price you see and the gains showing in your account are an illusion. All it takes is a few large holders to sell and overrun the volume and it will drive the price down much more. The last couple of days has been a good example of that with Hex being driven down 25% on light volume (relative to tokens of its size).

      I have no problem when founders get rich for innovating something useful, but core to the design of Hex is to enrich Heart. Heart’s certificate of deposit idea wasn’t even first, just better marketed [link]. BTC was untested, unestablished, and was worthless at the time but even today his million BTC just sits there. Maybe money and fame didn’t drive Satoshi, but it is obvious it drives Heart. Satoshi changed the world and spawned an entire new industry with DeFi.

      1. You keep ignoring that it’s paying interest to the staker class. And the interest rate is far higher than the APY you can get on Celsius or Nexo.

        The market cap is a fictitious notion, it’s just the latest price multiplied by the circulating supply. It is not a meaningful concept, and it doesn’t relate to volume. The volume isn’t abysmal, it’s just early stage. There are less than 70,000 stakers. Why would you hold low volume against it? The price has dropped 29% with whales taking out $11.1 MM in the last 7 days. Is that a shocker? There’s only $30M in the liquidity pair between HEX and USDC. When there are 10x more users, do you think you’ll be able to be making the same argument?

        Besides, taking the last few days out of context is just silly cherry picking. Look at its performance since inception. Do you know how many times people have dumped the price and created dips like this? HEX has dipped several times in excess of 70%. Thats the whole point of staking, to get people to realize the bigger picture, and not lose out to their human psychology because each time they would have wanted to sell, their stakes kept them from doing so. Because each time previously, it’s gone on to make new all time highs. The reason that happens is because of product market fit and people and the long term demand continues to outstrip short term sell pressure.

        Another reason its cherry picking, is to merely point out this is hardly unique to HEX: Lots of cryptos have had significant dips in recent history and have continued to recover. SOL dipped 37%, Cardano dipped 54%, that doesn’t mean they are projects without merit.

        It’s a highly innovative and speculative space. Price discovery is far more dramatic than traditional markets.

        Richard Heart has worked hard to build products that improve the space and keep users safe. You took a swipe at the fact that “audits” don’t mean what people think they mean, but those audits were done to ensure the product is safe from getting hacked. And he paid good money to have it security audited twice and audited once to prove you couldn’t game the tokenomics. Do you know how many defi projects have gotten hacked and lost their users their money, or have been exploited for poorly conceived game theory? And you’re giving him guff over that. Dude, PwC doesn’t have any employees who are remotely equipped to do what CoinFabrik and the other auditors did. And what’s more important exactly? Keeping users’s funds safe and making sure the product works as designed or having PwC write some fictitious audit of the project?

        Seriously, so much misdirected hate.

        1. I know I’m going hard on you and your analysis, but all ribbing aside, I do appreciate the fact that you aren’t censoring our dialogue which certainly is in your power to do so.

          It’s your website and none of my comments have to be published. So good for you man. Seriously.

          1. Thanks, I appreciate that. And I do think that a two-sided conversation is more useful to all readers as it adds depth and clarification to various discussion points. I think the comments section is now loner than the main article though. ha!

        2. I’ve made it clear that the stakers only get paid. But the APY is far higher because its cutting up the sandwich into smaller pieces and only giving those pieces to the stakers. Peter is still getting robbed to pay Paul. The inflation serves no purpose other than to pay stakers. I feel like we need a different word here because its not PoS staking where people are voting on datacenters.

          Market cap is important because its of the value locked in and the potential for selling. Again, price discovery comes through volume. Unusual Whales on Twitter tracks whale wallets and lately there have been some huge dormant accounts that transferred Bitcoin to exchanges, presumably for selling. The market didn’t even feel a blip.

          Being down 30% over the last week on light volume relative to its size was just convenient timing, only because Bitcoin and Ethereum are nearing record highs. Sure, plenty of other cryptos go down a lot too on high volume, but usually with high correlation among them all. I’m not saying that Hex being down while BTC and ETH are up is particularly relevant, as the opposite scenario has played out in May, but a light volume to market cap ratio is always going to be a bigger threat to the token with lighter relative volume (that’s also true on the upside as we have seen with Hex, but then it becomes the battle of FoMo versus Lambo).

          Auditing a smart contract doesn’t mean what auditing means to a layperson, and advertising that it has been audited 3x is part of his marketing campaign. As I mentioned, I pointed that out because of all the traditional marketing on buses, taxis and magazines that is targeting people who might not even know what a smart contract is or even know what cryptocurrency really is. And while being audited 3x will mitigate contract bugs, it still doesn’t remove the fact the contract protocols strongly benefit his interests and gives him a massive controlling supply.

          1. This is an excellent debate between Jordan Ledvina and Ryan. Very professional and respectful. Two guys who obviously know what they’re talking about in Finance and Crypto. Really getting into the nitty gritty of wether HEX is a scam or not. I can’t make up my mind, you both make great points…

          2. So a couple of important comments to bear in mind.

            Re: Audits, I have to strenuously disagree with your perspective here. The layperson doesn’t know anything about crypto- I totally agree with that premise. But what is exactly the problem with advertising the audits, even if these people have a misconception of what it is. Being under a misconception is only a problem when the reality is worse than the perception. In this case, thinking PwC audited this product would arguably be far worse and far less meaningful (unless they have already moved into this market segment and hired up all the best cyber sec talent). In our case two reputable security audit firms audited the code and one of them did an additional audit of the economics of the coin to mathematically prove the game theory/core value proposition that staking pays longer. This is exactly what the layman should want to see if he took the time to educate himself. So the truth is actually more optimal than what people are thinking and there’s limited space in a billboard to communicate information. So I’m not understanding what the problem is.

            The fact that the OA receives half of all Emergency End stakes is well known and readily available information. It was disclosed from the outset and no effort was made to obsfucate that. The only material question is what is in it for the user who acquires and stakes HEX as intended, and the answer thus far has been outstanding results. That OA never stakes and that has ensured outsized returns to the staker class.

            re: Market Cap; I again want to point out that Market Cap is not a relevant concept. This is a point Richard Heart has made repeatedly in his many videos, it is just price times supply. I could invent a coin tomorrow, create two trillion supply and sell my friend 1 coin for $1, and I have literally surpassed the market cap of bitcoin in a single transaction. The market cap can’t be sold or traded. The idea that volume to Market Cap matters is based on a premise that they should somehow be related. And they are not. As of time of writing, USDT has a market cap of 70B and a 24-hr volume of 68B. Does that make an ounce of sense? A low liquidity market is the sign of one thing only: opportunity. Bitcoin was best bought when it had the lowest liquidity, and the same is true with HEX. When HEX hits 1M users, there will likely be more liquidity but there will also be less opportunity. (Also Mt gox coins are coming loose in a few months… it will be an interesting test case of your hypothesis if bitcoin is truly as liquid as you suggest).

            re: PoS, I think you’re right. Proof of Stake here does not mean the same thing as it does in Cardano. You’re not voting on validators, it’s just a mechanism to determine payouts to the stakers. Transactions are of course executed on Eth which is still PoW. I think that probably is a disservices the discussion in the long run, but I feel like this is a point of nuance that doesn’t have a large baring on most people’s evaluation of HEX.

            re: Celsius and NEXO, I’ve seen you point to these products as examples of innovation in some of your responses to me and to others and I’m a little surprised because you also seem to hold the innovation of Bitcoin in high esteem. To my mind one of the biggest parts of Satoshi’s innovation in bitcoin was the trustless aspect. It removed counter-party risk. With Celsius and NEXO, we’re literally re-introducing counter-parties to make less APY. Lending platforms in crypto are certainly not novel, it’s just the last time when Cred did it they went bankrupt and users lost their money. With HEX you earn interest without a pool, and without counter-party risk, and you earn more APY doing it. To me the value proposition is superior, the game theory is superior. The only way they are the same is that Alex Machinsky and the OA could both do a rug pull, which I think is highly unlikely in both circumstances.

            It was unlikely for RH before because it would literally crash HEX and the vast majority of his net worth and it would also kill the prospects of Pulsechain and his upcoming fork of pancake swap, and his exchange etc. Squashing his users would be incredibly short-sighted and so I think HEX just offers a superior opportunity, and I don’t care if RH gets rich as well in the process as he is the founder.

            Anyway, this has been fun and edifying. As you pointed out, this is getting longer than the article itself at this point, so I’ll bow out and you can have the last word! cheers guy,

            1. 1. “The idea that volume to Market Cap matters is based on a premise that they should somehow be related.”
              2. “I could invent a coin tomorrow, create two trillion supply and sell my friend 1 coin for $1, and I have literally surpassed the market cap of bitcoin in a single transaction.”
              Thus, you have just demonstrated that low volume relative to the size of the market is a problem. Try to sell a few hundred of it and there will be nobody to buy.

              “USDT has a market cap of 70B and a 24-hr volume of 68B. Does that make an ounce of sense?”
              Yes, since USDT is offered as a pair for pretty much every crypto and it is used as an intermediary for a place to park crypto sales before buying another one if two cryptos don’t have a direct pair.

              While you are right that there was less volume to marketcap in the very beginning of Bitcoin, I think it was more of a reflection of the infancy of cryptocurrency in general. It was very niche to computer engineers or people using the dark web, few people had heard of it, and you could acquire it without trading through mining or P2P wallet transfers. At least since 2016 [link], the ratio has been 0.02 or greater which is about where it is today. The exact ratio is not itself important, it is just a reference range for comparison to other established cryptos. Some have more, some have less, but Hex has 1/50th for cryptos of its size.

              Don’t get me wrong on Celsius and NEXO, I agree they have their own problems with centralization, custody and rehypothetication. The interest rate of 8% reflects that higher risk, and frankly should probably be higher. The latest data show that Celsius is currently operating as a Ponzi. I’m just pointing out that their returns come from people taking out loans, so its return is interest in the traditional sense and isn’t just reallocating money around in a game of musical chairs. You don’t have to buy a Celsius or Nexo token to earn those returns or take out a loan. The Anchor Protocol has created a decentralized loan platform, which currently pays 20% to depositors.

              I appreciate the respectful discourse you brought and we’ll have to agree to disagree on many points, but I do hope other readers have also found utility in this back and forth.

              1. i am here for the discourse and non censoring. Im trying to learn and that is impossible without a two sided debate.

        3. >And he paid good money to have it security audited twice and audited once to prove you couldn’t game the tokenomics.

          I’ve been able to locate one “audit,” if you can call a 12 page document with very wide margins, and five pages of filler text an “audit.” I’m not a coder but I am surprised so little of what looks like code could be sufficient to be an audit of any kind.
          The SENS foundation lists online and in their Annual Report their donors. Some groups made substantial donations. There is a list. However, Richard Heart is not on it nor a reference to any group donating $27 million. And if he did donate $27 million, a reference to how that donation was made (cash, BTC?).

  7. This the most comprehensive criticism of HEX I’ve ever read. I don’t necessarily agree with all of it, but well done.

    1. I’d like to echo the above comments that the article and subsequent exchanges have been phenomenal! Thank you, I’m learning a ton and also realizing I have no “real” idea what I’m doing with my bag of crypto lol!! Thank you!

  8. Hey Ryan, first off just want to say a huge thanks, for all the effort you have put into this article I can clearly see that you are genuinely providing value to the crypto community.

    I was wondering if I could address the Peter getting robbed to pay Paul analogy.
    Please take what I say with a grain of salt, I am not trying to prove anything I just want to understand to the best of my ability.

    In my mind it is true that Peter (liquid HEX owners) is paying Paul (staked Hex owners)
    in the form of inflation.

    However I choose the word paying intentionally. If I were to borrow money from a friend and pay interest to them. Is there any new value created? the net worth between the two of us will still remain constant. Money changes hands in the form of interest, but no new value has suddenly appeared.

    However I can use the money lent to me for potentially productive purposes, that perhaps my friend would not have done. In this case new value has genuinely been created. e.g I use the money to open a bakery.

    Now let me try to bring this analogy into the HEX system (and please let me know if I’m employing any logical fallacies here).

    My friend would be the HEX stakers, I would be liquid HEX owners. The loan, would be price increase created by my friend “locking up his HEX”

    Just to clarify in this situation the lone is NOT the HEX owned by liquid holders, but it is the increase in the value of said HEX.

    In this situation liquid HEX holders will of course pay interest for said loan. They have the utility of the increased value of HEX. This value can then be used for economically productive purposes. (It would be like taking out a loan to open a bakery).

    Thanks for your help and time in this matter
    Kind regards
    Connor

    1. The loan analogy is a little hard to follow. In this analogy, what are liquid Hex holders getting in exchange for the interest they pay? It sounds like from your last two paragraphs that they get increased value of the Hex price. What if the price of Hex stays constant or goes down? Outside influences determine the price and there is no guarantee that the token price will climb. And aren’t locked account balances also getting that value even though they can’t immediate use it?
      But say it does increase, how is the increased price of Hex (‘loan’) paid back? There is no reversal of the transfer, both locked and unlocked balances would increase with a Hex price increase, just that locked balances would increase faster since value is permanently being shifted from the liquid holders.

    2. I see you asked the same question on Reddit in the HexCrypto forum. You really aren’t asking the right crowd since anyone who talks negatively about Hex there is banned. I suggest you ask your question on an economics, finance or investing subreddit. Hex shillers all bring up the same marketing points because they don’t have a grasp on basic economics.

      “You are the bank.” -No, you aren’t. You still aren’t loaning money or earning fees on financial products.
      “Banks don’t lend money anymore” Umm, actually they do. In another link I posted the data showing that the average bank lend is 70% of deposits.
      “There’s no 3rd party middle men.” -Middle men are not the reason why you aren’t earning 40% with a bank. The maximum loan interest rate tops out at 18% but the average rate is much less.

      With Hex you get more Hex, that’s it. Anyone can replicate Hex and change the contract to pay 50%, 60% or 70%+ by tinkering with the inflation rate. It’s completely arbitrary and that fact alone should make more people understand the fraud that it is. You could have 1,000 Hex clones all doing the same thing, all inflating their nifty tokens, but everything would all come down to their prices. And that is the key why there has been such an aggressive marketing campaign and a brigade of Hex shillers pumping it everywhere. With 40% more Hex tokens a year and a 2,000x price gain, that is a whole lot of extra money that needs to be attracted into the system to keep it from collapsing when early investors cash out.

      1. Top loan interest rate on a CC is upwards of 39%. Payday loans 500%+. Banks Loan inflation (money borrowed from the fed based on their liabilities side of the ledger).at super low rates. When Hexicans say they are the bank they mean by burning/staking their coins it reduces supply. That increases value of liquid Hex, in a way lending the value they have now to liquid holders for a set time. For that they get paid inflation in Hex. (3.69% Not arbitrary per se. Look up Nikolai Tesla 369)

        1. Ahh, interesting. I haven’t seen any of the Hex material that directly addresses why 3.69%, but maybe I missed it. It was, however, arbitrarily chosen by Heart to be the inflation rate though.
          “Banks Loan inflation” you misconstrue the definition of a loan and inflation. One is paid back, the other is not.

    3. There is currently $341,312,599 sacrificed for this Pulsex “ICO”. I’m curious how you think this is going to go.

      I see a potential problem in how people will off ramp any gains accrued here as it’s it’s own chain, I’m wondering if these sacrificed funds will be locked on a useless pulse chain.

  9. RH stated many times there is no marketing department, no marketing budget, no marketing effort.
    Not RH nor “the HEX team” have ever paid for marketing or ads. Correct me if I’m wrong.
    All the ads you showed or mentioned are paid for by proud & grateful Hexicans who become rich investing in HEX.
    That’s a true grass-roots movement.

    Not a single argument in the article that does not apply to BTC, ETH or the Dollar!
    Are these scams too in your mind?
    How do you solve the created intellectual paradox of calling HEX a scam and then literally saying in the article it’s neither a pyramid scheme or a Ponzi?

    To close, I think you already completely disqualified yourself by creating biased and manipulative framing in the title and picture (shady-hooded-computer-nerd).

    Enjoy staying poor.
    HEX & PULSE will be the best performing assets ever created.
    One thing you said about HEX is true though – It’s BRILLIANT! YES, it is!

    1. And you believe him? Have to ask who has the most to gain from mass adoption of Hex: the guy who owns 80%+. I can see why you bought into Hex if you are willing to take everything he says as blind faith. That marketing cost millions of dollars and all had the same ad, so who was this mystery marketing benefactor?

      “Not a single argument in the article that does not apply to BTC, ETH or the Dollar!”
      In fact, basically every argument in the article doesn’t apply to BTC, ETH or the Dollar and where it does I have pointed out the distinction.

      “How do you solve the created intellectual paradox of calling HEX a scam and then literally saying in the article it’s neither a pyramid scheme or a Ponzi?”
      Because there are more than just 2 types of scams in the world. Just because Hex doesn’t legally qualify for those two, it doesn’t means it’s suddenly legit.

      There’s a certain creative element to publishing and the stock photo was a great fit for a scam. There is no uncertainty of my position from the title.

      The phrase “enjoy staying poor” is a common retort in the crypto world, but trying to use it on someone who owns an Aston Martin [link] is just comical. Good luck with your get rich quick scheme.

      1. You have heard of Baron’s. There will be Baron’s in Crypto. 100 years form now the richest families in the world will be Crypto Baron’s. You can work on building the railroad if you like as for me, I would much rather own it.

  10. When banks lend money, only a tiny fraction of it is investor money. The banks simply write the loan amount in their “books”, thus creating the money whose interest they then earn. This is a real scam and is part of the basic knowledge of the business model of banks. That you describe this completely wrongly in your article exposes your propaganda before it even begins.

    1. 70% of it is not a tiny fraction [link]. It is lower than it has been in decades because of central bank (government) financial engineering flushing the world economy with cash. I don’t know what bank you place your money with but I wouldn’t want to invest in one creating their own money either. You might want to rethink that basic knowledge of the business model of banks.

      1. Whole point of crypto. No central controlling entity. Our fake money is better than their fake money. Predetermined supply, total supply. inflation. Open market determines the value.

          1. He does. That was my original hold up with Hex. Why would RH or OA need so much of the supply? He’s already wealthy but to much money there is no such thing right?. Maybe he wants to be the richest person ever IDK? Most super wealthy are just super rich on paper. Never can they realize those gains. Just to spend a Billion Dollars it would take you 25 years if you spent 100,000 every day. So once you get to 1 billion all the billions after that are kind of pointless. One thing I know for sure is that with such a overwhelming supply out of the reach of the financial cartels, they can’t with 100 certainty corner the market and manipulate the price. Richard Heart has made it so that almost every other crypto out there is a better prospect for manipulation than HEX. Yeah were taking a leap a fait there. # China Bans Bitcoin

  11. The tokens arnt locked they are burned and replaced with shares. 🙂

    And since the oa holds 80% there can never be 100% staked to make the apy to go to 3.69. There’s only 20% available to stake making the available hex that can get the inflation scarce and more valuable. These are just some points you left out.

    1. Yes, replacing Hex with Tshares, but it’s basically just semantics replacing one token for another and then reversing that replacement when stakes end. Introducing Tshares doesn’t really change anything so didn’t feel it necessary to mention.

      It depends on how much of his bag he stakes but yes it looks like it will be unlikely that ever Hex would be 100% staked since he runs a large portion of the liquidity pools on Uniswap. I’ll update that section to address this but all the tokens that Richard has were copied from other Hex buyers, so its kind of like he is just giving people back their own money, lol.

      1. T shares are one of the most important parts. When I burn my tokens I give my value to liquid Hex holders. My Tshares are what pay me inflation. The Tshare price changes always becoming more expensive in terms of number of Hex to obtain one. This stops people form being able to stake then turning around and end staking and buying more Tshares than they previously had.

  12. Thank you so much for this article!
    I Know it’s a whole different topic, but I’m wondering what your opining on defi automated market staking pools such as pancake giving up to 70% APY. Do you feel it’s legit and will sustain itself of a while at least?

    1. It really depends on the pair, but I think the golden rule of the higher the APY the higher the risk. The risk in any DEX of course is the “impermanent loss” (the oddly coined term really means unrealized loss). I’ve never used Pancake swap so I don’t know what their protocol offers, but I assume it is like Uniswap (maybe even just a clone of Uniswap V2 but for the BNB chain). Uniswap v3 allows you to target only select areas of the relationship between the crypto pairs which limits the impermanent losses since you aren’t providing liquidity all the way to zero if one token in the pair fails. People who were providing liquidity to IRON FINANCE back in June between their stable-coin and the collateral pretty much lost it all as both sides headed towards zero. If pancake swap is like V2, then have that point in the back of your mind.
      Moreover, as DEXs have become more popular, the yields on liquidity pools have dropped like a rock. Your mileage will vary but I think you won’t get 70% APY for any extended period of time. It’ll probably be a win-some, lose-some situation in the LPs you choose so that if you diversify your LPs you’ll get somewhat of a decent return. I wouldn’t really recommend buying a token just to liquidity farm but lots of people do it. If you target the highest yields though, you are probably just providing liquidity to tokens that are going to lead to a large impermanent loss. Hope that helps frame your decision.

      1. “IF you target highest yields, you are probably just providing…” that’s been me trying figure out farming. This is a great article.

  13. Thank you so much for this article. I was pouring over articles and YouTube videos before I found this one trying to figure out why I couldn’t get that “too good to be true” feeling out of my stomach. This research would have taken me days and you laid it out very efficiently and easy to read.

    The biggest issue I’ve seen over the “scam” argument is that both sides can be right at the same time. For example, it can be true that HEX provides no real solution or service and is built by a self-proclaimed “scammer” with the intention of enriching himself. It can also be true that people have made massive gains with HEX and that there is opportunity for gains in the future which of course is not an element of traditional scams. Given that you aren’t required to stake HEX, you can take the bet that the price of the token itself will increase over time and exit when you want to without the risk of the staking penalties.

    I will give them credit for marketing though. The amount of people this RH guy has convinced he is some sort of fighter for the every day citizen is mind boggling but I guess we have seen it before many times through history. To your point from the beginning of this article, I don’t know how you can look at this guy’s past and all of a sudden believe he’s trying to take on the entire US banking system with your best interests at heart. Also touting massive gains on such little volume and claiming market cap is not important? The whole thing smells.

    1. Absolutely the initial investors have made big gains, they got in early before the FOMO marketing blitz and YouTube shill videos advertising it everywhere. Right now, all those early investors are trampling over each other to cash out before their $100 to $200,000 investment goes back to $100.

      Most scams are sold on the future opportunity, like how a few months ago Richard Heart referred to its $0.26 price and how that somehow makes it ‘pre-viral’ without mentioning it already had a $160B market cap. In this crypto world everyone had heard about how $100 invested in Bitcoin in the beginning has turned into $6,500,000 and Heart is using that same FOMO and greed tactic to get people to buy, especially with all the subterfuge of it being an investment earning these big returns. It could still go back up, especially if he amps up the marketing campaign to rope in new buyers.

      Beanie Babies were worth a lot of money back in 1999 but people weren’t kidding themselves that they had some legitimate investment. Everyone knows that Dog-meme coins have no real utility. The subterfuge of the Hex product and community is what is most bothering. I wouldn’t have even written an article about it if it wasn’t pretending to be a “certificate of deposit” or investment.

      1. Its new money new instrument. It doesn’t have a definition. A COD is just the closest thing to explaining it. You don’t make interest on stakes you make inflation from a sub-staking mechanism called Proof of Wait. You have to user terms that people understand even though they are not correct, because the definitions haven’t been made yet. New inventions have to use like terms to convey understanding, even if they are a bit misleading. How do you define a wheel before the invention of the wheel?

        1. I have to give it to Heart, he is very crafty with language. Proof of stake, proof of work, proof of authority, proof of history all mean that the blockchain has been proved to be true through some kind of agreed upon work. What is actually being proved with “proof of wait?”

          1. I think what you actually mean to say is what I being secured. The Proof of “x ” is what does the securing of a project. Proof of wait is more of a sub-proof it secures the price.
            For proof of anything I think we need to broaden our ideas of what work is.

    2. Watch his older videos. That will give you an idea of what type of person he is. PRE CRYPTO.
      HIs first crypto idea was to use wasted hash power to solve fluid dynamics equations. Early on he came to the realization that great projects with great tec. weren’t going anywhere. The cryptoverse wasn’t mature enough for that yet. What was successful was speculation coins. He realized that price was the only thing that mattered so he created a coin that would hold its price as well as it possibly could and he did his best to not create a security. Price that’s all anyone cares about.

      1. In this low rate environment our country has been in for ten years, it has really skewed perceptions of investment. Traditional investors in bonds, dividend stocks and real estate also liked getting cashflow from their investments.

  14. Hi Ryan. Just wanted to say this is a very thorough article. Nice work.

    I’m an early “investor” in hex. I was there on day 1, converting my ETH into HEX, even using my own ETH address as a referral to get the extra tokens on top. About 50% of my stack has been cashed out thus far. Needless to say, I made a lot of money. I’m only saying this to make it clear that I’m not “salty” for not getting in early.

    I also blindly trusted everything Richard said. The crucial turning point for me was when I saw irrefutable proof with my own eyes (on the blockchain) that the origin address was indeed recycling ETH that it received from early adopters to dilute their share of newly minted hex. I don’t think Richard planned to do this initially, but at one point the price of hex was so low that people started joking the value of it needs to be denominated in “litetoshis” instead of “satoshis”. My theory is that Richard panicked and started buying the hex himself to prop up the price. If he used his own money to do so, that’s fine by me, but to recycle the ETH from early adopters over and over to dilute them and keep it a secret was a step too far for me.

    I watched many of his streams hoping this “recycling” would be addressed and somehow explained, but it never has. Bans were handed out swiftly.

    If you plan to put money into hex, please do so with your eyes wide open.

    1. How else could you add liquidity to a project with out using project funds. IE not creating a Security
      1.Your sir entered adoption amplifier with eth
      2.RH or someone was paid that eth. that is their money now they pay income tax on it.
      3.they enter the adoption amplifier just like everyone else does (with the eth they earned) which you gave them
      4.They use the Hex they bought with their own money and the rest of the eth they earned ( from you ) and provide liquidity.
      5 Voila! Private Liauidity.
      6 Never was rugged. Should have stayed in.

      1. Why the aversion to creating an actual security if its this great financial product? Because it wouldn’t actually be approved by the SEC?
        I don’t think Heart will ever rug pull Hex. He’s too smart for that, but he WILL dump Hex onto the masses over time if he is successful in getting wider adoption through the marketing and shilling efforts.

        1. What’s wrong with Government mandated religion. Its a new space created to nullify the greed of governments, (Bitcoin) If we let government back in they’ll just bend us over again. Im not anti-Gov I just think a lot less of it would be nice. I cant as a non registered investor participate in an ico ido or ipo because why? my safety? but I can go to the gas station and spend my life savings on lottery tickets with zero chance for gain. Meanwhile Credited Investors can get in early and when the open trading begins and the price 100x in 5 hours dump all those allocations on the NC-investors for mad gains. Rich keep getting richer and the laws stop the poor from catching up.

  15. A very well written article. Exactly confirms my suspicions. As a software engineer, I love how you reviewed the actual code. I hope many Hexicans will read this and finally get to understand their great ‘product’.

  16. Great article, there’s also a Reddit post about one address was sending 100, 101 Hex to 173,000 different addresses approx year ago. They can’t sell cuz the gas fee will cost more than what the hex is worth so most of them are sitting dormant. I think their goal is to manipulate people to make it look like there’s more wallet holder than there actually is so they can market and convince people that they’re growing rapidly and have a lot of holders.

  17. Welcome to the “World-of-Hex-craft” Game Review

    Game World : “Hexico” (although there is no graphics) except for the 1980’s website design.
    In-game characters: “Hexicans”
    In-game currency: “hex”
    Objective: To prop up t-shares.
    Bottom-Line-Strategy: Shill and get new players to join be taking pictures of the things you bought selling your in-game currency.
    Penalties: Leave the game early (before the event ends) and you pay the game a fee (to the AO and the rest of the players).
    Game tags: meme token with interesting tokenomics, Meta without the verse , Casino(since house OA will win).
    Similar games: “Mining pools” just like virtual staking but virtual mining.
    You’ll be stuck in an endless commitment to keep withdrawing carefully planned withdraws as to not hose the in-game currency so the new players don’t leave too early, we need them!

    This game is commonly confused with the following:
    -Ponzi
    – pyramid scheme
    – Wannabe financial product/vessel (if the SEC looks at it, then it’s not).
    -Cult
    – “Can’t put a finger on it, but something is a bit fishy.”
    -That meat loaf you ate the other day that didn’t quite sit well in your stomach.
    – A fruit cake; Looks legit, but secretly nobody likes it.

    Overall review: It’s a bit of a boring game, crappy graphics and new users are far in-between and the content is pretty dated.
    Not many users in the telegram group (~38k) to interact with.

  18. Hex is awesome. Pls let’s all go back within a year and review our thoughts and see if the criticism stands. Ppl Will continue tô make money and that’s all that matters in crypto.

  19. So… for starters, you come of very much a PoW maximalist and dismissive of proof of stake. That is always going to create a backlash… because its… incorrect. I agree when you do nothing you contribute in no way, but Proof of work vs Proof of Stake is not doing nothing vs doing something – both secure the networks from a “something” point of view. So IF you are a PoW maximalist, and I do get the impression you are despite having read all your comments and the post, I strongly disagree ( I could well be wrong and admit that ).

    Second to that… as you stated in the article and as was predictably done by the community… whenever you tell someone they are in a scam, they will defend it to its death. True in crypto, true of ponzis, true of pyramids, true of MLM (which is not a pyramid by definition). So it was no surprise that you had backlash from deniers.

    Third, I will say what you will not, this IS a ponzi scam. What they are attempting to do by making these definitions and claims is HIDE that fact. A scam that did it MUCH better and was not related to cryptocurrency was zeek rewards. They actually sent people physical products when they joined the scam. When the US SEC shut them down they were worth of $650 million. They used the argument “sales were taking place so it can’t be a ponzi”. The courts disagreed. They said… no there was limited sale of product and almost exclusively the sale of products was by members of the scam, but not enough to justify the payouts they were making. Meaning they were making more money from people investing in the scam than any sale products taking place and thus payouts were from the funds of new members coming in. I suspect similar here… the only people buying the tokens, are people that are joining the scam – and as such its a ponzi with 0 usage outside of it being an investment.

    You comparison to a stock split was pure generous. In fact most of your post was aside from what I stated above. Thank you for this. Much respect.

    1. I think it stems from the performing work comment above, but I don’t mean that in a pure PoW state since PoS is performing work as well. For the record I am NOT a PoW maximalist, quite the opposite.

      I think the PoW idea was a good idea in the beginning when the reality was a couple of thousand individuals running mining software on their home computers leading to strong decentralization. When mining farms emerged, PoW became very centralized, so I think that PoS is a valuable evolution of keeping that centralization in check. Plus it’s nice that stakers get to share in the profits without having to burn their own electricity.

      Good info on the zeek rewards. Here’s a [link] if anyone is interested in reading the case. Ponzi schemes and scams are always evolving.

  20. Judging by the comments on this page, humanity is in peril. The hex token is such an obvious scam and I cannot believe that there will be anyone defending it. I understand being greedy and wanting to make money before the bubble bursts, but to genuinely believe it isn’t a scam is astounding. These are the people who will inherit the earth when the boomers die out…

    Anyway, have you looked at OlympusDAO or Wonderland Time? They operate similarly to HEX token, but at least they provide up to 80000% compound interest annually. If you want to scam someone, it seems that it can be worth it to go big. I have a stake in them and I’m hoping to make money before it all falls apart…wish me luck lol.

  21. Truth of the matter is, this author nor anyone else have any idea as to the outcome of success of any project. I for the life of me cannot fathom why anyone would want a Dog coin or a governance token, but would I write and article or waste my time convincing people not to buy one? NO!!! It would be futile. The only thing I would have to gain by doing so is that perhaps their funds would flow into the liquidity of the projects that I hold interest in. I’ve seen many articles like this, most of which had the facts as they pertain to Hex completely wrong. I will give it to this author he has covered most if not all of the Hex haters talking points, and by ever so slightly skewing the actual facts or mildly imparting his own assumptions, his article almost seems like one of an objective critic calling out Hex for being a scam that is meant to hoodwink its investors into loosing all their monies. I would not be surprised if this was PAID FOR FUD, sponsored by those fearful that Bitcoin might loose market share to a product that is much superior. It’s actually the sheer number of SHILLED hate articles that strengthen my resolve in the Hex project. I have to ask myself.” why do people care so much about me getting scammed by Hex”. Why not just write an article about a project that is so good that it would make me want to invest in that project and forget all about Hex. Perhaps because one doesn’t exist? If I wanted to protect Bitcoin it would be easier for me to write articles defacing projects that challenged Bitcoins dominance, then to write articles as to why Bitcoin is still better then said project. Its easier to put out an ember then a flame. The naive and the smart people will prosper and the midwits will miss out. DYR.

    1. Let’s break this down here. So a Bitcoin holder, whose presumably already made multiples of his money from owning Bitcoin, is going to pick another cryptocurrency that isn’t even the slightest of threats to Bitcoin’s dominance, and pays a random blogger on the internet who has only a small platform to write a 5,000 word negative article about it? And then said author doesn’t even promote Bitcoin in the article, and has previously written about problems with it [link]? Why not pay that author to bash the #2 coin, Ethereum? Said author is not even a “crypto influencer,” and doesn’t have a Youtube or Twitter presence. Hmmm, I dunno but your argument seems pretttttttty flimsy, wouldn’t you agree? By your logic it is impossible for anyone to have negative opinions on Hex and it’s a cheap way to discount Hex’s flaws in your own mind.
      I know you Hexicans have a remarkable talent of looking at every single negative as a positive somehow, but you are free to comment where you feel the facts are “skewed.”
      It’s also easier to see where the motivation of Hex shillers is: their future gains depend on sucking in additional buyers. They need nearly $6 billion in new capital coming into the scheme every year just to keep the Hex price level. The ratio of Hex shilling to criticizing on major platforms like Youtube seems to be 100 to 1. I get more concerned about situations like that because the negatives are drowned out.
      This article was written for the investors who don’t want to be shilled to and seek out criticisms in things they put money in. Smart investors want to know where things can go wrong. Three months ago I had never heard of Hex or Richard Heart, and I started researching it as a prospective investment. It’s just that the more I dug, the more obvious of a scam it became and why I wrote this article.
      I agree it wouldn’t make sense to write an article on a dog coin. Everyone knows that meme coins are just that. That’s why I chose to write an article on a product purporting itself to be a “certificate of deposit” investment. If you look at other topics on this blog, I criticize a lot of alternative investments and point out their flaws. That’s the theme and why Hex was ripe for it, as a clever scheme.

      1. “Bitcoin might lose market share to a product that is much superior product”. Wow superior hex does 25 million in daily volume compare to billions for Bitcoin. Hexicans are crying now because Nomics.com drop their ranking from 3rd in market cap to 18th which they don’t belong on either ranking because their market cap are manipulated by low liquidity and supply by Richard. Even the top 100 coins does more volume than hex so you can see there is something wrong with hex.

  22. The entire crypto ecosystem, with of course a few exceptions, is essentially a closed universe of adult gamblers trading and “investing” in things that have no real globally scaled utility, currently. It only works bc it’s a closed system playing with participants in its own world of made up rules and assets. that’s where all the value is created-in the fact that it is in and of itself, a closed universe, much like real life with the Fed. That is the only reason it works.

    In real life everyone is subject to inflation by the FED through explicit raising of interest rates or other pseudo things such as treasury purchases, etc–all of which we have no control of but are subject to. The decision not to hold cash but rather to invest is an exercise in: 1. beating inflation, or at a minimum maintaining value w inflation and/or 2. generating alpha. The reason is largely both of these, bc even investors in low vol products such as gold (to temper negative effects of inflation) are also happy to generate a profit. Those who choose to engage in investment over holding cash are rewarded with asset appreciation for their risk, and capital preservation/protection for their inflationary deterrence at the expense of everyone else in the ecosystem who is holding cash and not taking said risk, but rather choosing to maintain full exposure to cash devaluation through economic inflation.

  23. The beautiful thing is that the crypto world is also a closed system like real life. And Hex is also it’s own closed system as well. It’s open in the sense that anyone can participate, but it’s closed in that it plays according to it’s own rules–it’s own “arbitrary” inflation rate, or it’s own number of total coins, etc, Go trade something else with it’s own made up rules and arbitrary inflation or deflation or whatever. It’s all made up, there is no Property, Plant, or Equipment. There is no real market cap, there is no real anything in crypto. There is no utility. Maybe it’s a bubble until the world catches up, maybe not. Who cares. It’s like poker, there is utility only to those engaged in that system, according to the stated rules, at that time. Which is why poker is not the economy. It, in and of itself, is nothing. In the instance of Hex, it is also a closed system in and of itself with participants choosing to hold unstaked Hex, like people choosing to hold cash in the real world. Unstaked Hex in the Hex world is a negative value proposition as is holding cash in the real world–both subjected to inflation which is paid to the invested, but of course not explicitly. In every closed system the returns aka rewards are always paired against the alternative–in this instance vs cash aka unstaked Hex. As long as people decide to engage in the Hex world, then those are the rules. Exactly similar in structure to normal inflation games played in “real” life on Earth. And it will continue to be such as long as people want to engage in that system, as it is with all things on Earth. There is no more of a scam than in traditional finance, in which things are the exact same–cash is the worst investment. Staked cash and it’s returns, ie investments, over any specified time period, in any closed system where inflation and a single alternative to inflation exist, is always the winner. Of course, not always, but that is the risk. Hold cash then lol

  24. Good post with lots of research I must say, but I have to disagree.

    1. Existing fiat is printed out of thin air and inflation right now is huge! Fiat in itself is a scam. Does that mean it’s ok for HEX to also be a scam? Maybe not, but whatever you want to call it, fiat is not an angel either. Richard Werner (check him out) has written papers on this for 20 years and it’s been admitted by the Bank of England. Loans are not lent out, but printed into thin air! Then when a loan is paid back the money is removed from circulation. HEX just does it all directly and out in the open, the fiat system hides it all and makes you all think its great! Existing dollars are being inflated hugely.

    2. Many assets don’t have utility, gold is the least useful metal yet the most valuable, paintings and antiques sitting in a house have no use yet cam be valuable. Bitcoin so far has had little use as peer to peer cash yet is the most valuable! Why? Supply and Demand, that’s all it is, HEX is similar. Why can’t HEX be a new peer to peer cash in the future? It’s possible. It’s just so early right now to tell, just like it was with Bitcoin.

    3. Market cap is a vanity metric. You can create a trillion coins, buy one for a dollar and you have trillion dollar market cap. HEX market cap isn’t really an issue, it has some meaning but market cap isn’t everything. It’s price action. People talk about volume and liquidity, but that’s only an issue if you want to cash out! If you believe in crypto rather than fiat you don’t need to cash out! That’s what everyone is missing. You don’t need to sell your BTC, ETH, HEX at all, because these are the new mediums of exchange! If all you think about is liquidity because you want to cash out then you shouldn’t be in crypto at all.

    1. For 1. Yes, the government money printing is out of control right now. Inflation was tame for 10 years but they really got excessive with the 33% of all dollars minted in the last year. It’s pure insanity.
      Yes I have seen the Richard Werner comments [link] and have read the Bank of England paper [link, see page 18, p4]. It is clear that RH or your average Hexican didn’t actually read the paper and just took out some quotes for their own interests about why Hex is ‘just like the banks.’ The BOE paper and Werner’s comments describes an accounting mechanism inside a fractional reserve banking system: Banks only hold a portion of the money in reserves, this isn’t news to anyone who has taken an introductory class on macroeconomics. Warner’s comments say the “banks don’t take deposits,” which they obviously do, and “banks don’t lend money,” which again they obviously do. If you really read through the transcript [link] you will see it’s just a semantical game of words like “promissory notes” and “IOUs” that doesn’t actually change the reality that banks make loans and take deposits.
      Banks wouldn’t bother to take deposits if they didn’t need to because depositors are their cheapest source of funding. They pay 0.01% to depositors, but have to pay 0.25% to the Fed. In a fractional reserve system banks only have to hold a minimal amount of money to meet customer demands and then loan out the rest, but its been like this for a couple hundred years. They act as a middleman between those who need loans and those who need a place to store their cash. When they need more funding they borrow from the Fed at slightly higher rates. Loans aren’t inflationary in the same way that printing currency is because the loans are eventually paid back, or collateral is seized. Fiat, Hex, and many other cryptos constantly inflate which reduces their long term value relative to one another.
      I don’t think the choice is only between Hex and fiat or Hex and Bitcoin though there is a lot to choose from that don’t have the same risks as Hex. In fact, I don’t think that cryptocurrency is much of an inflation hedge at all [link]

      1. Sure, but not all loans are secured loans, many are uncollatoralised/unsecured loans. The debt to GDP ratio is getting higher for many big nations and doesn’t look like stopping.
        And sure HEX is risky, but no risk no reward. Savings accounts pay zero interest and stocks are being pumped by inflation so crypto is the best place right now albeit as long as you mitigate risk.
        HEX is anti trading, what I like about it (and other cryptos, but especially this) is nothing is opaque. With the banks we really don’t know 100% what they’re doing, so much mixed info. I love the transparency that HEX gives, you know what you’re getting in to, most other things you really don’t know!

        1. Not all loans are secured loans, but someone has to pay it back, either the client does or the bank eats the charge. The government does not eat the charge for loans originated by banks, therefore, it doesn’t have the same long term inflationary effect that printing money does. (For the national debt, I’m assuming a hyperinflationary Venezuela situation where the government starts printing money to pay down its national debt, permanently, is not going to happen in the US, but basically every crypto will look good in that situation).

          Bank 10Ks and 10Qs tell you a lot of information about their business. BDC filings also tell you who they’ve loaned money to. The knowledge that Hex’s ‘business model ‘ is to only print tokens and distribute them doesn’t make me suddenly accept it as valid, just because of transparency.

          ICP is also anti-trading with their 8 year dissolve delay option. ICP is creating an alternative to amazon/google/microsoft cloud services, which is their most profitable business lines. It may work out, or it may not, but at least there is a business behind the scenes that generates a portion of the income.

    2. 2. That 88% founder’s tax will certainly hamper adoption and there are plenty of choices vying for the magic internet money designation. Stellar, Ripple, Nano are all very established and don’t require $100 Ethereum gas to transfer value. Sure the Pulsechain is coming which will lower the gas fees, but that’s always only a few months away until launch and still requires adoption.

      3. Market cap is important because it represents the ledger of how much value is in everyone’s accounts. It also relates to how much value in new tokens is being minted each year, so yes, its extremely important. Heart just doesn’t want to draw attention to the fact that he owns $139 billion of the supply so he always refers to it as a vanity metric. You can create a trillion coins, but you can’t invent a market for it and sustain that price level, which is why volume has a relationship and is important for market cap.
      “but that’s only an issue if you want to cash out! If you believe in crypto rather than fiat you don’t need to cash out” Most people eventually want to spend their earnings and not just have an imaginary account balance grow until they die. Even if you spend Bitcoin at a merchant, they use a service like BitPay that immediately sells it onto the market to collect their fiat. The world you are envisioning is a world without fiat. It could happen, but governments around the world will do what they can to hamper that scenario from materializing.

      1. 2. Perhaps yes but whether people like it or not from an ethical standpoint I think RH will do everything he can to keep HEX up, he is that smart, such is the power that he can have with that much money. The tax bit I’m not sure about, I would thought only an issue if he sells, maybe I’m missing something here! The HEX in the OA just sits there.

        3. Agree market cap is important but I think we get too hung up on these metrics and volume too. Of course there is also a balance, but what really matters is price action so long as the slippage isn’t too high. Actually HEX market cap on nomics is 35 billion as they removed the amount in the OA because it’s not circulating. Either way I’m not too hung up on it, HEX doesn’t care, people care but HEX doesn’t!

        And yes absolutely I envision a world step by step where fiat is phased out. We’re in a transition now. We went from Yap stones to agri beads to gold/silver to fiat and I think crypto will be next. You have to think long term, not short term. That’s where HEX and BTC (the only 2 for me as they have high demand and low supply..HEX scarcity is through T shares) come in. They are a long term hold, not for pump and dump trading….pump and dump trading is robbing Peter to pay Paul much like you said with HEX, but HEX is the lesser evil in my opinion. Just hold them and in the end I’m confident. I really think HEX will shock the whole crypto community just like BTC. People can question ethics….to me the whole system isn’t ethical and crumbled after 1971 gold standard ending. I now accept this and take the lesser Evil of all Evils :-). It’s the best of the worst in my opinion.

      2. “You can create a trillion coins, but you can’t invent a market for it and sustain that price level, which is why volume has a relationship and is important for market cap.” – Yes, you can. People funnel in their money continuously for the same reason they funnel money into CDs. Money is locked with penalization for dumping. People keep locking up for longer and longer, so it doesn’t end. They also continue to be invested in the product due to having to wait for years, so they keep promoting and adoption keeps growing. In the meantime more stakers have started their journey, have locked, and will do the same. It doesn’t end, no one gets screwed, it just keeps going and the most patient get the most rewards. It’s cool.

  25. 4. HEX doesn’t inflate at 3.69% a year as such, it’s delayed inflation because the HEX only gets paid when you end your stake so liquid holders are not getting diluted in the simple way that’s explained. The price of anything like shares needs more people to buy in to get the price up, that’s nothing new. But HEX technically doesn’t….the price can remain flat but you still get interest when staked and penalties paid for stakes ending early.

    5. The OA holds up the price and stops a 51% attack. Although possible it could dump the HEX in theory but there is tons of ETH at the OA, would make much more sense to dump that as low slippage and easier to cash out. No founder generally wants to nuke their own creation.

    6. I admit there is risk, but no risk no reward. Many criticisms were directed at Bitcoin early, but look what happened! Bitcoin inflates too at 6.25 every 10 minutes.

    7. The honest truth is the whole lot is a scam….Bitcoin, fiat, the whole economy. HEX just gets singled out because it’s doing it directly such as inflation at 3.69%,etc. So it’s easy to see what’s happening. The rest of the economy is all opaque so harder to scrutinise. HEX is just a better scam than everything else, but people don’t want to think the whole economy is scam so they shut their ears to it.

    1. for 4. Whether the inflation occurs continuously throughout the year or at the end of the ‘stake’ doesn’t really make a material difference to the long term result because the new tokens are still being minted and are stacking up to the eventual sale. Yes, it does hold off on new supply for a while, but that’s a function of how long people’s stakes are and its just delaying the inevitable.
      For 5. 51% attacks are hashing power attacks that allow the attacker to change the blockchain ledger. This is not a concern for Hex since it is a token on top of Ethereum (which is subject to a 51% attack, but super low risk given its massive size). There is absolutely no benefit to anyone else in the Hex system that one person owns 88% of the entire supply. It’s entirely risk that that person will dump chunks of it from time to time which will impede any price ascent and gives him ultimate control on how much appreciation other users get, which is diametrically against the principles of decentralization. I don’t think he will rug pull because that would be only a one time gain and the jig would be up, but he will certainly unload lots of it when the token is on upswings. He could send 90% of his holdings to a burn address and still have millions of dollars of “founder’s tax” and that would certainly alleviate one of the biggest red flags with this project. Instead he has squirrels tens of millions into various wallet addresses for obfuscation.
      For 6. No risk no reward, sure. But why not choose honest projects make economic sense? It’s not a choice between Bitcoin and Hex, but Bitcoin, Ethereum, Solana, Cardano, AVAX, and thousands of other projects.
      Bitcoin is disinflationary and after enough time the inflation won’t exist anymore. That’s not the case with Hex that has to mint currency to pay it to ‘stakers.’
      For 7. Yup, the Fed has really screwed up our economy with the endless quantitative easing.

      1. 6. To me HEX is very honest. Actually its almost too honest and the truth hurts. You can basically see everything that’s happening on the blockchain (except for a few tornado cash things going on with recycling ETH,etc but not 100% proven anyway). HEX knows that people only really care about making money, it’s brutal honesty that I like about it and it’s been specifically designed to do that. It doesn’t beat around the bush! I think ETH, SOL will all do well but because they don’t have the scarcity built into them with a capped supply eventually it won’t hold. Still a good return but not phenomenal like BTC and HEX….so far. When I talk about scarcity in HEX I mean from the T share side, not the HEX token side itself. HEX and BTC are the only 2 cryptos that monetize time and you can’t get time back, that’s so powerful. The scarcity increases with time. That’s why forks of BTC and HEX haven’t worked because BTC is becoming more secure and scarce with time and HEX is becoming more scarce due to T shares. REX and Axion are 1 to 2 years behind that and now can’t catch up because HEX has already built in scarcity in T shares in combination with high demand. Axion is struggling with its game theory (although I still quite like Axion myself). Axion and REX don’t have the demand that HEX has and therefore won’t do as well because its supply AND demand that you need together. So no, in my opinion you can’t just now copy HEX….it’s too late.

        BTW, I love this discussion and learning alot from your views…so thank you! It would be a boring world of everyone always agreed on everything ha!

  26. Yes I do agree it’s a brilliant scam, but that’s because the whole system (fiat included) is a scam. It’s just we don’t see it easily because with fiat it’s all opaque. HEX is confronting because it makes it all clear, it’s not really hiding anything.
    The HEX inflation is a max of 3.69%, typically much lower because stakers don’t get paid until they end their stake so the inflation is delayed. Therefore liquid holders are not get diluted at 3.69% per year, that’s just the maximum.
    Michael Saylor mentioned many times the reason he bought BTC is because inflation isn’t typically 3% as we are old told but more like 20% if you include cost of capital. That’s why he bought BTC to hedge that as a store of wealth. HEX is at most 3.69%, much better than 20% inflation in fiat! Again in fiat it’s too difficult to see it all, you have to do intense research as Saylor has done. With HEX its so obvious so we scrutinise it easily and think it’s special. It actually isn’t, it’s just a better scam than everything else. In that sense I think HEX is a better investment than stocks and all sorts.
    With stocks they can’t be used as a medium of exchange but HEX can be like BTC,etc. I think we confuse stocks because you need liquidity to cash out. With crypto you don’t need to cash out because it’s meant to be the new money essentially so no need to worry about liquidity and volume, just hold the crypto 🙂

  27. 4. Sure but my point here is the inflation is a MAX of 3.69% which isn’t that much. I’m relying a little on the smart Michael Saylor here, but his reason for getting BTC was because inflation in much nearer 20% than the 3% we are told. So HEX isn’t that inflationary and when you account for the deflation in T shares that’s where the real smart part is.

    5. Well in my understanding yes a 51% attack is from a PoW perspective but essentially you can do that with PoS if you have 51% of all the supply as they get to mine the next block, highest staker (although PoS isn’t that simple because after that they go to the back of the queue so they don’t get continuous power to keep mining new blocks). But yes in HEX terms I get your point. What I mean is control of the supply because you can dump it hard. Axion, which is a fork of HEX has this issue because it doesn’t have an OA and it has dumped hard many times. The OA prevents a larger whale from dumping, that’s what I meant.

  28. Thanks for aggregating all of the essential info on Hex into one well-written post. I think the next horizon to explore for us Hex Truthers is what happened/will happen to all the funds from the OA that were disbursed into the hundreds of shell accounts (the ones funded with ETH for gas fees from the Tornado.cash mixer you mentioned).

    Most of these shell accounts seem to have short-term staked their enormous amounts of Hex prior to the “Big Pay Day”, turning amounts of around 900 million to ~1.3 billion a piece. Then their Hex balances sat idle for a long time but were ultimately sacrificed into Pulsechain. A lot of these addresses already have large balances of PLS tokens sitting in them, though it’s not clear whether this is real PLS or just some kind of testnet prototype of the real thing that’s coming.

    In any case it seems pretty apparent that Scheuler’s strategy is to further obscure his holdings by creating a preloaded army of PLS whale sockpuppets that he can use to freely dump on the rubes post-launch, having it all go undetected. He’s built the entire scam on the idea of the OA never selling and being a necessary feature to prop up the economy. But if the OA instead becomes converted to hundreds of mini OA’s and they don’t “sell” the Hex but rather “sacrifice” it into a new asset class on a different blockchain, it will be easier to liquidate the spoils and have it appear that these sales are from legitimate PLS holders rather than Richard himself dumping the original OA funds.

    1. An interesting theory ha! When you say sacrifice the HEX rather than sell the HEX what do you mean exactly? You mean swapping the HEX to PLS? But if that happens that’s basically selling it still, there is now less HEX in the OA or mini OAs. So we would know wouldn’t we? I’m probably missing something here cheers!

      1. It was a transfer from individual holders to the Sens organization, a donation if you will. I think they got some promise of a PLS Hex bonus for doing it.

        1. Ah! He is talking about the actual Pulse Sacrifice phase. I’m well aware of that, I thought he was referring to another Sacrifice.
          Anything is possible but to pull off a scam where something is so public like blockchain is difficult. Different with the whole ICO phase, but at this point in the peice with HEX it will be hard given how much scrutiny it is under. It’s performed so well people are looking at every nook and cranny and still not able to come up with any substantial solid proof.
          But I’m open to the possibility that RH is so smart he could also have a bunch of other wallets he is using to buy more HEX with the ETH to keep up the price.
          Whichever way you look at it, I still think the combination of a smart, rich owner with fantastic game theory is the recipe to huge success here, albeit if the owner isn’t doing totally ethical things. I don’t love it, but since I have little confidence in the whole economic system as a whole and many ethical issues there, Im picking the lesser evil in my opinion with mitigated risk. I have diversified and have stocks too. In crypto you can take small risk for a huge reward.

  29. I’ve done some preliminary research into this but haven’t been able to build a solid enough argument to combat the hordes of mind-rotted Hexicans, nor do I think I’m as well-equipped for this endeavor as you are. So I’m merely sharing these findings as an area for your further investigation. The Pulsechain launch should bring a lot more clarity as to what Richard’s real plan and intentions are, but it will also require more intensive digging to find answers, since the raison d’etre of the Pulse fork seems to be obfuscation of Richard’s assets to provide him an easier exit hatch.

    Also worth looking into where all the ETH paid into the Flush wallet went, though this perhaps brings more new questions than answers. Similar to what he did with his Hex, it was all split into tons of shell accounts, and then routed through layer after layer of additional shell accounts (almost comical given how easy it is to trace on ethscan and how much cash he wasted in gas fees in the process). But ultimately it all ended up in a single shady vault contract. This contract was the #37 largest holder of ETH on the entire blockchain when I checked, the bulk of it being from the original sale of Hex, and it has links to a bizarre defunct Chinese rugpull called “Crocodile King”. The founder of Chainlink’s wallet also pops up at some point along the money trail, which was an odd twist. It’s possible there are some big players adjacent to this scam behind the scenes. I’ve also noticed many of the key addresses involved hold something called a “Security Token” – some NFT-like asset, the purpose of which I can only speculate. Perhaps this signifies some kind of ownership share in the enterprise and there are others involved in the shadows working with Richard.

    There are many avenues to explore, so I can only hope you’ll keep up this important work.

    All the best,

    Yung Scheuler

  30. Such scam tokens or coins bring bad names to all the crypto world. Now NFT has also emerged as a way to make or rather scam money by selling those pieces.

  31. A couple points …….

    * (1) After an investment vehicle has gone up even just 100x, the chances are your already to late … the higher it’s goes up; the higher your risk of being to late to the party.

    * (2) Scam artists often promote their charitable giving front-and-center to the public as a “smoke screen” ….. real philanthropists generally shy away from publicity about their charitable donations

    1. You are 100% right on both points.

      RH tries to keep the pump going by making comments on videos that Hex could go to $1 million a token. You don’t have to have a degree in economics to understand the absurdity of a claim like that but his followers just eat it right up.

  32. I have stakes in hex expiring 2028.

    I liked Richard heart before hex. Whatever he says except hex and pulse is true.
    But hex is a scam.
    80% origin f**king addresses.
    90% supply founder in pulse.
    Bashing Bitcoin to pump their sh*tcoin.
    All those rolex came after hex surge.
    I have been following Richard since 2018.

  33. I do find it a problem that the person who wrote this article doesn’t even know how the banking system actually works. The banks do not take deposits and loan that out, that has not happened for many decades. The money you get from loans and things like mortgages is made out of thin air. Money creation is done through the commercial banks through loans. If you don’t understand how banks actually work then you can’t understand why they pay the interest they do and thus most of your argument makes no sense.

    1. The keyword here is “loan” and banks have expanded the money supply since the beginning of time. It isn’t some conspiracy that only you have inside information on.

  34. Hold on here. Let’s repeat what you said and laser focus in on something.

    “Hex requires an increasing number of buyers to maintain the token price, which ‘interest’ is paid through, otherwise the token price collapses. This is what what makes Hex analogous to a Ponzi scheme.”

    Can I ask you a simple question?

    What happens if people stop buying Bitcoin?

    1. I always feel that one is forced to defend Bitcoin when they level criticism at Hex because of the Tu Quoque fallacy that is commonly used to validate Hex, but I’ll play along and point out some differences.
      Yes, Bitcoin does require a greater fool for you to make money on it. However, Hex requires a greater fool to not only buy your tokens, but 40%, 80%, or 120%+ more of them depending on how long you’ve held and ‘earned.’ Without a finite limit, like Bitcoin, there will always be downward pressure to overcome.

      1. This is why they can’t have too many staking. You only need a fraction of the coins going to inflation.

  35. I’m not asking about the HEX’s inflation and what that means for the project. Complete side issue.

    What I want to focus on is that you say Bitcoin requires a greater fool. Does that mean Bitcoin is also a ponzi scheme?

  36. That isn’t true.

    If BTC used the same nomenclature as HEX, the BTC being paid to miners would be called “interest” – but in reality the correct term for both projects is inflation – which is the expansion of the supply.

    BTC pays inflation to the miners.
    HEX pays inflation to stakers.

    All it’s doing is changing who gets the inflation and changing how inflation is created.

    The CORRECT definition of a Ponzi scheme is this: “an investment fraud that pays existing investors with funds collected from new investors.”

    For some reason you are throwing in interest into that definition, which it does not belong.

    1. Yes, both payouts are inflation, but BTC miners are actually performing a service by securing the network and are getting a piece of the pie for their work. And since they had to pay for equipment and electricity, they don’t even get to keep all of it, so it’s more akin to a tax on all BTC holders for network security. Bitcoin is disinflationary with the 4 year ‘halvings’ until the finite limit is reached and there isn’t any inflation at all.
      “an investment fraud that pays existing investors with funds collected from new investors,” and new investors are buying the tokens that the existing investors are unloading that they received as part of the fraud.

  37. “and new investors are buying the tokens that the existing investors are unloading that they received as part of the fraud.”

    People who buy BTC are buying it from people who are selling….

    This is really interesting because it’s becoming very clear that you are pointing things out in HEX that also exist in BTC, but you are labeling both of them a differently. We call this bias.

    1. I have mentioned that both systems have inflation, but think about the mechanics of both. Hex’s sole purpose for inflation is for an investment scheme. Bitcoin’s inflation is for network security. Bitcoin couldn’t exist without inflation, Hex could since it’s network security is handled by Ethereum. That is a tangible difference in design and purpose.

      People are encouraged to buy Hex for interest. Interest in the form of additional tokens, which require new investors to buy them from old investors. Just like a Ponzi, new investors are paying the old investors value. And that is before even factoring in the greater fool that both systems need for a gain on the principal.

  38. Ryan, this is all starting to fall apart even more.

    1. If Bitcoin’s inflation is for network security, then what happens when there is no more inflation?

    2. There are only two ways to get Bitcoin. Buying a mined coin, or mining yourself.
    There are only two ways to get HEX. Buying a staker’s minted coins, or staking yourself.

    In Bitcoin, you buy into inflation.
    In HEX, you buy into inflation.

    It’s the exact same thing. All it’s doing is changing WHO gets the inflation and changing HOW inflation is created. There is no other difference between the two at all.

    You can’t call one project a ponzi and not the other, especially after I very clearly laid out how identical BTC and HEX is.

    1. I feel like we are going around in circles here.

      The core principle in the design of a Ponzi scheme is the basis of earning a return from some investment activity. Bitcoin wasn’t even designed to be an investment furnishing returns, it’s supposed to be a form of money. All the talk about how both systems have inflation makes both a Ponzi, well not on that technical point alone.

      And the inflation is not the exact same because the infrastructure for Bitcoin is partially paid for from the inflation and miners have to compete with each other to develop better machines and find lower cost locations for electricity. Machines get built, electricity get used, economic activity occurs. There is a market with Bitcoin mining activity. Bitcoin is more akin to a gold mining operation, hence the terminology.

      What has Hex produced? If it’s the same, why didn’t Satoshi start with the Hex model and just have the code pay locked tokens to get people to use it? Well who would buy the mining hardware? Who would pay for the electricity? There wouldn’t even be a network. Hex’s infrastructure is outsourced to Ethereum, but it’s not free with those large gas fees to do anything, of course.

      To your first question, what happens when the last block is mined? Well the theory was that transaction fees would incentivize miners to continue after the block rewards were gone. Onion Futures has written an essay on this suggesting that the transaction fees will have to increase. Its still 30 years away, so we’ll have to see.

  39. You have no expectation of interest when you buy HEX – UNLESS YOU STAKE
    You have no expectation of interest when you buy BTC – UNLESS YOU MINE

    Why are you not able to see this?

    1. You don’t have to buy Bitcoin to mine Bitcoin and the capital that you allocate to earn with doesn’t flow to existing Bitcoin owners, it flows to hardware makers and electricity generators.

  40. When you Stake HEX, your (synthetically) purchasing a mining contract. Just like Bitcoin miners sell bitcoin to buy more mining equipment for the right to mint new coins from POW on the network. The bitcoin miners are inflating BTC and diluting BTC holders. HEX is no different. When you stake, your HEX is burned. The contract assigns you a mining contract and you have to mint your tokens back including the APY that is on Average 40%, depending on the length and the amount of HEX you chose to stake in comparison to how many stakers are in the pool. This is calculated at the time of mint and rebased every 24H depending on the system state. You determine the amount of HEX and the time length of the contract. Like a CD (but not as gross). This is ‘Proof Of Wait’ and it does it without polluting the environment. If you EES, emergency end stake sooner than your mining contract had time to finish minting the new coins, you only get the ones you minted at the time of end stake. Just like selling your mining equipment before mining the coins to pay for the mining equipment, this cuts into your earnings and possibly your initial investment for purchasing the mining hardware. So the only differences between BTC and HEX are the pollution and the inflation rate. But to me the EES is the best part of HEX. When price dumps, panic sellers will EES and hence dump their unrealized APY and or Principle in the pool of stakers. Not like a CD where the Bank takes your unrealized APY. Stakers effectivley earn more APY as the price dumps. The APY becomes more attractive so the coin is bought up and more tokens are staked to stabilize the price. Incredible game theory.

    1. Except that there is no ‘mining’ occurring with Hex at all. The inflation serves no purpose other than to fool people into thinking they have earnings after a period of time.
      “Proof of wait” is a BS term that RH invented to fool people into linking the association with other PoW, PoS, PoA, etc. systems. Nothing is being “proved,” “secured,” or “governed” at all.
      “So the only differences between BTC and HEX are the pollution and the inflation rate” Conveniently ignoring the Proof of Work pollution from Ethereum allowing Hex to exist. Then consider that the inflation rate to the retail class (non-RH holdings) is 40%, in that best case scenario that RH sends his 90% holdings to a burn address.
      It’s game theory all right, that’s all it is. To make money, you have to game other people out of their money.

      1. Oh my goodness man, that was surely a Bitcoin maximalist comment. Do you think a computer running an algorithm is also “mining”? With this logic BTC mining pools aren’t “mining” anything either since the definition of mining means to extract minerals from the earth. Sigh… The above poster left a perfectly good explanation of the HEX supply inflation mechanics in relation to Bitcoin’s. Would you feel better if HEX stakers were running computers that wind up costing massive energy bills (which some governments hate), hiking the price of video cards for gamers by 4 times, and dumping the supply to pay their electricity bills just like Bitcoin? Would that make things better in your head?
        Put your maximalism aside for Christ Sake. HEX is doing exactly what Bitcoin is doing but better. It’s not a scam and it’s not a ponzi. It’s already over 2 years old and you will not find a single victim of this scam in your mind. But what you will find is testimony after testimony of people’s who’s lives have been changed including mine. So unless you are against people gaining wealth please just stop it. We get it you loyal to Bitcoin, just like people were loyal to MySpace when Facebook was a better product.

        1. It doesn’t make one a Bitcoin maximalist to just point out distinct differences of the purpose of inflation. The guilt by association is misplaced because I don’t even own Bitcoin right now (occasionally I trade it), almost two years ago I published an article on Bitcoin with a lot of criticisms, and almost all of my holdings are in PoS systems.

          I didn’t invent the term mining, it’s the popular parlance for adding blocks to a blockchain. There is no blockchain for Hex, so Hex isn’t doing “the exactly what Bitcoin is doing but better.” Those $100 gas fees that Hexicans shell out each time they use Uniswap, lock, or claim is paying for part of the energy bills of the miners performing work on the Ethereum blockchain, so even though you may not be running graphics cards, you are paying for them indirectly.

          No, creating a PoW blockchain just for the sake of it is a pretty pointless exercise. I would feel better about Hex if it actually generated revenue and didn’t have the founder owning 88% of it.

          The interesting thing about Ponzis is that victims don’t know they are victims until many years later when they need to extract their investment and find out the emperor wears no clothes. The fact that it is only 2 years old is exactly the point because Ponzis by their very nature take time to fail. It took Bitconnect two years to fail after some governments started issuing notices and it took 3 years for OneCoin, but those were technical ponzis with centralized systems, so Hex has potential to go on for much longer since it’s a decentralized token battling out the effects of “onboarding” new users, aka shilling, versus inflation dilution.

          Early investors have a unique experience that will not translate to later investors and this applies to everything including Bitcoin, Ethereum, etc. that have collectively produced millions of millionaires. When an asset has already 1,000x+ and is worth hundreds of billions of dollars, it’s much less likely to 1,000x again in the future. Think of it this way, if your $1,000 investment grew to $1,000,000, that means 1000 later $1,000 investors need to pay for your bags.

      2. Sure it’s all game theory. It’s game theory designed as a tool to monetize patience. Even if as you say someone has to buy the newly minted tokens, it doesn’t end, no one who plays the game gets screwed as long as they are patient. It’s like a competition of who can delay the gratification most. If you are a pump and dump guy then yes you’re just paying the next guy. If you play the game and exercise patience you win.

        Everyone can play the game rubbish or play the game well. If they play it well they win. Such is the game of life.

  41. I’ve been in Crypto for 4 years (not very long) and I have never seen anything like this. I spotted this token when it was trading around a penny and passed on it because my ‘gramma’ said “If its too good to be true, it probably is”. Well not so in crypto. Warren Buffett and Charly Munger still don’t get it. I had to buy back higher after doing my research and averaging in. Also HEX is uncorrelated with the rest of the market so even if you don’t like it, its a hedge on your portfolio. And all this hate on the OA (origin address) is misdirected. The OA stakes just the right amount to allow for a good amount of the APY to be enjoyed by the staker class.

    This isn’t a Biconnect or Safemoon pozi scheme that reward you for money you didn’t earn and purley from new commers. That pyramid eventually collapses. The inflation in HEX goes directly to the stakers and you being paid to be patient not necessarily for “doing nothing”. As a trader, sometimes the best trade is no trade. Fear and greed will draw you in to make mistakes and sell your bags early. HEX provides an incentive for people to just stake and chill. Not only because the penalty for end stake is severe but for the opportunity to earn more APY on ever dip. This helps people NOT become degenerate traders and go do something else enjoying life for the length of their stake.

    1. A lot of the crypto that exists today will implode with enough time, so just because it has worked in the past doesn’t mean that it will work in the future. Your penny story exemplifies a lot of this, the FoMo that you could have gotten in early sucks people in and keeps it going for a while. You never really know if you are the last guy buying or not though.
      I agree that the Buffett crew doesn’t get crypto (I mean how could a 90 year old understand virtual currency?) and there are some potential real world solutions for it, but everyone getting rich is just not a possibility as most crypto projects just shift money around from later investors to early investors.
      The apparent negative correlation of Hex is quite interesting.
      “The OA stakes just the right amount to allow for a good amount of the APY to be enjoyed by the staker class.” He could send all the OA to a burn address, but the fact that he doesn’t is telling about his future intentions. The 90% supply that he controls also allows for the advertisement of 3.69% inflation, when in reality it’s 40% inflation to the ‘staker’ class.
      “The inflation in HEX goes directly to the stakers and you being paid to be patient ” Inflation isn’t real money though, it’s an illusion. It’s an expansion of the money supply, just like how the USD has lost 30% of its value in 10 years. There are other projects that have a long lock in period, like Internet Computer. They are down like 90% since their ICO this year though. I do think that more projects should incorporate the long lock up period option for higher rewards. I’ll give RH credit for that idea.

  42. So just asking, you would be smart to invest in these types of scams if you are a first adopter/early to the game?
    You said in your article if you make it early enough, you can make money and just screw over the later investors but if you make money, who really cares about them?

    So if you could go back in time right when it opened, would you invest?

    1. No, because by participating you are just perpetuating it and harming others later (and you never really know if you are the last bag holder buying anyway). Plus if we really want crypto to succeed and be useful, the scams have to stop otherwise enough people will stop participating and the nanny state comes in and starts regulating everything.

      1. I mean it is their fault in the first place if they get scammed but ok.

        How about his new coin coming up, PULSEX? Have you read into that anymore?

        1. That’s kind of a mean way to look at life.

          So I looked into the PulseX (PulseSwap) and of course he has baked into the pie a cutout for himself. He advertises that it will have a 0.29% fee to swap, which makes it cheaper than everything out there since everything else charges 0.30%, but then he takes 0.01% for himself, so it’s not actually cheaper. Uniswap trades $150 billion a year so even if PulseX gets 10% of that volume he is going to earn $1.5 million a year. At least in this case he’ll be providing an actual service. But just funny that, of course, he gets a slice of everything.

          Unlike Uniswap, LP providers in PulseX are only getting 79% of the fees, which is about 21% lower than is typical. He also states that those 21% of the fees “could” be used for buying LP tokens. That wording tells me that 21% will go to many other things other than buying LP tokens, and probably straight to another personal piggy bank “origin address.” It’s not launched yet, so we’ll have to see, but that’s my bet.

          The “sacrifice” wording to get PLSX tokens seems to be an attempt to again get around ICO SEC rules by pretending it isn’t an ICO and declaring that the new tokens will have zero value. He states “You are making a political statement” by “sacrificing” your crypto. “Whoever owns your crypto after you sacrificed it does no work for you”. Gee, wonder who that “whoever” guy who takes ownership of the crypto is.

          Also, he is employing the “act fast” marketing tactic to get you to sacrifice before Jan 10th because the points value per dollar contributed goes down 5% each day after that.

          1. The 0.01% that goes to an unknown place, I thought it was out of that 0.29%.

            All in all, you seem to not have much bad to say about PulseChain, based on this comment. I haven’t checked if you have talked about it elsewhere.

            1. Maybe, but the way I read it was 0.29% + 0.01% = 0.30%, which would bring it up to typical DEX prices. I haven’t written about PulseChain anywhere else, just in these comments.

              No real complaints with Pulsechain yet since it is still a testnet, other than it being Proof of Staked Authority with RH the authority controlling 90% of all tokens. A lot of people don’t seem to understand why centralization is a problem, but it means that RH will have the ability to change transactions or roll-back transactions, steal funds, etc.. Even if he has good intentions, what if a criminal organization captures him and starts chopping off fingers until he is forced to do what they ask? Single points of failure in crypto are a huge risk.

  43. That was incredibly thorough and an eye opener! Appreciate the work you put into this. It’s substantial. Specifically on RH just recycling funds through multiple accounts to pump the perceived user base. That was the biggest point for me that I was worried was happening, that and the origin wallet in general and the vague explanation of who controls it.
    This situation is very similar to what was happening in Amazon with buying your own product to spike the algorithm into increasing your rank and thus increase traffic /sales.
    However amazon came down hard on that just a month ago.
    If at any point regulation comes in to audit that origin wallet and follow the trail it’s gonna be a big problem.

    I’m curious if you’re following what RH is up to now with PulseX? Which will be going into sacrifice soon.

    1. I also wouldn’t be surprised if a lot of the volume is wash trading just to pump the numbers up, but it would require a chain analysis program to find that out. See my comment above in regards to the PulseX

  44. Great Analysis Ryan, i try to tell other Hexicans that this whole thing is a ticking time bomb, and there only argument is the price is going up, ive been kicked out of groups and silenced several times. Whats funny is alot of the followers that have made alot of money are just staking longer 5555 to show their appreciation, they think RH is god and a genius and HAVE NO EXPECTATION OF PROFIT.
    RH even said Hex might reach a million dollars one day?? Hes just raised nearly a billion for pulsechain but now thinks it necesary to do another sacrifice for pulseswap. Perhaps RH is selling off wallets into these new buyers?
    It seems the end is near, the only reason hex is pumping now is because people are buying hex to sacrifce, or buying hex so they can get a copy on pulse, ive looked at the top 2000 wallets, and all have more value than could ever be sold without crushing the price to zero, and when Pls launches there will be 2x as much hex.

    1. Hexicans seem to regurgitate everything RH says without any fact checking. I saw the video with his claim of the $1 million per Hex and couldn’t believe that he didn’t instantly lose a lot of credibility with his cult following, but the group does seem to be either exceptionally gullible or ultra greedy to the point that reason escapes them. The total supply of Hex today is 633,542,658,973 tokens, so even at $15 a token it would be rivaling the entire amount of gold in the world.
      It’s a good point that when they fork Ethereum there will be twice as many tokens. Furthermore, it’s going to a be a Proof of Staked Authority system and ‘I wonder who’ is going to be the authority in that one. That’s why I don’t see Pulsechain taking off. Why would anyone choose Pulsechain over Binance Smart Chain for basically the same functionality? He’ll probably bake in some tax that funnels into another personal piggy bank ‘origin wallet.’

        1. I’m more of a written word kind of guy because I like to fact check claims and link to data sources where available, neither of which is really conducive with a live debate format.

          1. Hi Ryan, Would you be willing to have a Live Streamed Debate/Interview/Chat with RH if it can be set up?

            Your article is very thorough and you know what you are talking about. If you are trying to help people not fall for a scam, video/youtube would be a great medium.

            If you do agree I will do my best to get RH to have a chat with you.

            1. Again, I have a preference for writing so that time can be taken to research any unknowns, facts, figures, etc.

  45. He has. He gets i think 2% of all sacrificed funds. I still dont get why people are arguing his side in this group. Everything you say is spot on. There wont be any legitimate daps being built on pulse, just absolute crap. And i dont see any new customers being there on launch. All the customers have sacrificed all their bags. Any potential new customers will now be sacrificing for pulsex. 60,000 sacrificers, only 55,000 telegram members. Whos going to buy the bags? And with a slither of liquidity. There will be alot of unhapoy customers.perhaps rh will use tormadocash to use the sacrificed funds to pump it for everyone

      1. Richard heart and his anonymous small private group of investors partner will be using their own funds or Hex fund, which is only on paper worth millions, to prop up the amount of dollars sacrificed, like they did with pulse chain. Then those money goes right back into their pocket cuz Richard heart own the sacrifice wallet. Then the hexicans will get all excited and bragg how much money is sacrificed and how the whales are sacrificing millions cuz they believe in the project but those whale are actually Richard himself and his small circle of his friends.

  46. This is a decently researched article with some flaws. Here are two flaws in one of your sentences: “Market cap is essentially the “account balance” of all token holders in the system and the volume is the capacity to unload those balances.”

    You are saying volume is what is needed to unload or sell your hex balance. In traditional markets volume could be an indicator that there are enough participants to have buyers in order for you to sell but the actual important thing is the liquidity. Liquidity is what gives you the ability to sell. Hex has low volume but it has plenty of liquidity. Any user who wants to sell will be able to sell because there is liquidity. There are buy orders waiting. You can see this on the decentralized exchanges that Hex is traded on.

    The second flaw is that market cap maters in crypto. This matters in a traditional market. But in crypto, market cap does not matter. Here is an example. I create a crypto coin with a supply of 1 Trillion coins. I make one sale to my friend who buys one of my coins for $7.00. My coin now has a market cap of supply x price = 7 Trillion dollars. Just because the market cap is 7 Trillion there is no way I could extract 7 Trillion dollars out of my coin. Supply times price is not a reliable metric in crypto. It’s more of a guideline.

    1. Fair point that the liquidity is handled a little differently with DEXes, as the size of the liquidity pool is a relevant factor to how much capacity. It looks like there is about $21 million in UDSC and $1.4 million in ETH available to trade for Hex right now (varies by day), however, Uniswap V3 complicates the picture a little bit because of the new feature that lets users target a particular range of liquidity. While you can see the liquidity graph, unfortunately you can’t drag a range to see exactly how much capacity for selling is available in a particular range. By my estimate it only takes about $2 million in selling to knock the price of Hex down 10%. The thing that is most interesting to me is that most of the liquidity is on the higher price range meaning that Hex LP users are willing to unload at higher prices, but not as willing to buy at lower prices (except with the huge blocks of buying capacity at 0.065, presumably RH’s backstop). It’s much easier for it to fall back to 0.25 than it is to claim 0.37.
      Hex Dex Liquidity
      Do you know of a better resource for this kind of analysis?

      Per the market capitalization, people make that argument all the time, and at least one other person in the comments has said something similar. I completely disagree for three reasons: This is why volume relative to marketcap is important because if a coin has $1 trillion dollars but only 1 unit traded, it will be obvious to all that the price is purely manipulated. Some people used to mess with the coin ranking sites by doing exactly that and so ‘material volume’ became a factor in the rankings to prevent these joke coins from jumping to #1. The first time another person who obtains some of these joke coins tries to sell, there will be nobody to sell to and the price will plummet to zero. Basically its the definition of a rug pull.
      And as mentioned, market cap is the aggregate of account balances, so the ownership proportion of the pie is what each Hex owner thinks their bags are worth and market cap multiplied by the inflation rate determines the value of new tokens entering the system. Market cap is very informational.
      RH loves to say that market cap doesn’t matter only because he controls 180 billion of the 200 billion pie and doesn’t want you to think about that fact.

  47. Mad thing about Crypto though. Is that pulse will probably still perform very well. Seems dog coins, cumrockets and blatant ponzis are what has took over crypto this cycle

    1. Very true and with a community of adherents which all of these tokens have, who knows what will happen at least in the short term.

  48. 200billion coin worth 20million, that is the entire debate ended really. If they cant see that, they are blind. Its like a room with a pile of 20million cash in the middle, and 100,000 people holding the same winning lottery ticket. Only reason no one has cashed in because the lottery has told everyone there also entered in the euromillions and they might be able to win 2billion

    1. Also Hexicans are very delusional they believe the price of hex will be $100, $10,000, and even a 1 million per hex in future, if that’s the case The top 200 address will be trillionaires. On paper they will be richest on earth.

  49. It’s funny how an expert try to destroy hex but at the same time missed the opportunity to make huge profits. If you dislike a million dollars from 100 I understand you are looking for a better investment.

    Let me know when you find a hex holder who has had hex for at least a year and is honestly critical as this article on his gains.

    1. I didn’t even know about Hex a year ago, so it wasn’t a missed opportunity for me. Check the comments above and there is a Hex holder who was early, sold and made money but is critical of the token.

      My article was written for those who have recently discovered it and want to know how the token works and what is does. You can’t fire up the time machine and go buy it a year ago. What matters is how the token will perform in the future and anyone who buys in at this late of a juncture will likely be disappointed.

      The truth of the matter is that most of these Hex holders who think they have a million dollar balance today won’t ever be able to convert it to real money because the liquidity just isn’t there to support it. Plenty of those early investors who put in $100 and now have that life changing $1 million will dump their bags onto the market as soon as their lockup ends and all that extra supply is coming to the market. If a small percentage of all of them follow suit, the price won’t ever be able to recover. 2.45 billion Hex tokens lock-ups ending this month alone ($490,000,000), but I am sure a lot of people will defer and hope it bounces back now that the price is down 50%+ from the high.

  50. Ryan, thank you for your work. I am Just wondering what will be the impact of pulse x sacrafice / launch. Price dump on HEX and moon for pulse x? In Short term of course. Do you have any idea how much money he would need to raise to effextively launch „uniswap”? If he does it effectively it could be good potential for his future wallet. And for early participats as well. P.s more and more i fluencers are shilling for hex & pulseX (jo parys for example). Maybe from initial scam it will go to a Real thing?

    1. He’s probably just forking the code, so it wouldn’t take much money at all. The sacrifice is just another way for him to fill his own bags and make tens of millions of dollars with an illegal ICO.

      As for how PulseX will perform, on one hand, the tokens for Sushiswap, Pancakeswap and Uniswap have had a pretty “meh” performance since inception comparatively. On the other hand, RH has a cult like following of 90,000 that will buy 10 of anything he sells. Also, since it will be a real product performing a DEX service, it will legitimately generate revenue and if the stated ‘29% of revenue “could” buy back PLSX tokens,’ then it will further drive up the token price. So, I would lean on the side of seeing good performance out of the PLSX token, but I’ll bet those buy-backs don’t end up in a burn address. It could be an interesting project to inspect for RH perks once it launches.

  51. Interesting article, you’ve clearly spent a lot of time on it.

    I have questions if you don’t mind.

    If this is a scam, why hasn’t richard just taken the money and gone by now? He has access to a billion dollars, if what you say is true. All scammers don’t stay more than a year. Two years seems a bit long for a scam, when he can have so much money.

    If Richard is taking money out over time, does it matter? All Crypto founders are doing this same thing. Everything you’ve talked about, could be attributed to any crypto surely? If people held, any crypto would go up (have you seen the communities of Shiba and safemoon? crazy!).

    I respect your column and definitely not shilling anything, but I not seeing how Hex differs from any other crypto where you can stake? Staking is definitely used by many other cryptos.

    1. I can’t get inside his head but there are a few possible reasons. 1) He can’t dump his $150 billion in Hex tokens without tanking Hex to zero on the first batch of $20M. He needs a huge expansion of Hex buyers which will require the long game of slowly selling a little bit of his holdings here and there. I can’t say for sure how much he has rat-holed in different addresses (that one Ether link shows $330M), but there’s one thing about greed: you can never have too much money.
      2) In his YouTube videos and the coming documentary he procured for himself he states that “he is in it for the glory.” He is a vain person seeking lots of status and so if he just disappeared and rug pulled he would lose his large cult following. He’d possibly also be sought out for legal prosecution because when account balances drop to zero people suddenly have a great loss that they want back.
      3) He wants to roll onto other projects like Pulsechain. It’s a chance for him to become legit with a product that actually has a purpose.
      4) Maybe he buys his own BS, although I doubt it. Any intelligent person can’t believe that wealth is created by just printing more units.

      I don’t have a problem with a crypto founders making money, but two things: 1) there should be a cap on their ownership for decentralization purposes, rug-pull risk, and just general fairness. 2) the product actually has to have a use case to produce real revenue (at least in the future).

      How is Hex different? Well the definition of staking is misrepresented, which fools people into thinking they are buying the latest crypto tech. The many other projects that only pay inflation as earnings are also fooling their holders, but just because “other people are doing it,” doesn’t mean that Hex gets a pass. These other projects don’t market the rewards as “interest” or sell themselves as an investment product which is a major distinction.

      1. Thankyou for the reply. Plenty of stuff to think about, not just with hex, but the whole crypto market.

      2. for me #3 is key here. PulseChain / PLSx and incentive token (which will be different from PLSX) seem to have a lot of purpose Actually it seems that If the pulse – system starts, It should be quite competitive on the market, huh? What are your thoughts on this eco-system. Seems quite competitive to me…

  52. Really good writing. I agree with some points and disagree with some.
    At what point would you say it was not a scam? When in 2025 you look at the chart and it still goes up? Or 2030? 2035? When?

    1. It’s not the price level a token can reach that determines whether it is legit or scam. That just reflects the marketing influence and product features that reduce supply. It’s the features of the product that matter. So, never.

      1. So let’s suppose we are in 2035. The price is $1000, all the Hexicans are millionaires and billionaires, there are millions of people staking (currently there are only 74000 stakers) and you will still shout scam instead of joining the winning team?

        1. lol, again, just because a Ponzi gets bigger doesn’t mean it becomes legitimate. I know that RH shared his wisdom on a YT video that Hex might one day reach $1 million per token, but do you actually believe that even $1,000 is possible? I ask, does a Hexican do arithmetic? Don’t trust, verify.
          633.542B total Hex supply * 1000 = $633 Trillion, which is 50% more than the wealth in the entire world. The new tokens minted on average each year would have a valuation of $23.3 Trillion, which is almost the USA national debt. Even $10 a token is really pushing the limits of reality.

          1. Yes but you’re not counting the circulating supply, you are calculating the TOTAL supply. For market cap its circulating supply that matters. The circulating supply is about 136 B HEX, check on nomics.com, hence why market cap is much lower, the OA HEX is not part of the circulating supply. You still get a big figure but not as astronomical as yours 🙂

  53. Just been looking over the sacrifice amounts for pulse+pulse x. Nearly a billion on each not including OA. Whats concerning is 90% of it is hex. Which only has a value of around 20mill. How exactly will pulse not be a complete failure. Richard seems a pretty clever guy, he must know the shows about to end

    1. I’m sure the last thing that RH wants to receive in the sacrifice address is more Hex since he already has $150 billion of it that he can’t get rid of. I am surprised that he didn’t specifically request anything other than Hex and come up with a story about why he needed more Ethereum, but maybe that would have been too obvious.
      I don’t think it takes that much money or hardware to run Pulsechain though. It’s not going to be decentralized at launch so he probably only needs 1 or 2 AWS machines processing transactions which will be few in the beginning anyway.

  54. I watched the big short last night. Hex reminds me of the housing stock market, and its about to crash. And all the hexicans have no clue, and ignore the maths. Is there a way we can short hex. Im huessing no one is selling now untill the snapshot

    1. I expect it to drop after the snapshot date as well since the preferred Hex will then be the pHex and with twice the Hex supply the old, high fee eHex will have to give. Buying pressure will diminish, but it will be interesting to see if a lot of people emergency unstake their eHex to unload it.

      1. But actually I think what will happen is as eHEX gets really cheap, people will snap it up….I will! And then possibly bridge across to Pulsechain and swap to pHEX. So I think eHEX will initially drop yes, but then go back up as its snapped up. However, I think pHEX will do the better of the 2 yes due to low gas fees, etc

  55. Phenomenal piece of work. You may want to look into a project called DRIP that’s been shilled quite a bit the later part of 2021.

  56. Awesome analysis and very thorough. I wish I had found this article earlier. I was looking for info regarding Anchor Protocol and found your article.
    I couldn’t find out where the inflation was coming from and asked many questions on one of the telegram group, and a guy quickly got angry. I am just willing to dig in the topic I said. If there is something I don’t get, it bothers me and I hate repeating what someone else says if I don’t get it…
    Anyway, I have one question about your article. Why do you say that all the unlock coins keep the ‘interest rate’ high. From my understanding the contract generates 3.69% of inflated supply every year. Where does that 40% come from? By distributing the unlocked tokens?
    Thanks

    1. Yes, Hex inflates the pool by 3.69%, but only those who lock their balance get a share of that 3.69%. Therefore, if everyone were to lock up their tokens, the maximum return would be 3.69%.

      RH: “well gee whiz, if anyone buys my token, since they only get the interest if they lock their balance, naturally 99% of the people are going to be locked at any given time and the maximum 3.69% ‘interest rate’ just won’t seem that impressive. How do I get that interest rate up to 40%? Change the contract rate inflation to be 40%? Nah, that would be too obvious. Ahh, I know! I will create millions of extra tokens to just sit around, so a great number of extra tokens will be created from their inflation value and then just funnel them to the locked balances. Then I can still set the contract inflation rate to 3.69% and the 40% returns will look like magic!”
      Or as a formula:
      Inflation tokens = 3.69% * ( retail class + RH stash ), the bigger the RH stash is, the greater value of the inflation returns while keeping the total Hex capital pool inflation rate fixed at 3.69%.

      To put some numbers on it, say the total Hex marketcap is $150 billion today then $132 billion of those are RH stash tokens that exist just to generate additional tokens for the benefit of the $18 billion in retail locked tokens. The market and price for Hex is determined by the actual investors buying, selling and locking their Hex tokens, the retail class that owns the $18 billion. The $132 billion aren’t in circulating supply because if Heart tried to sell them to the retail class and place them in the hands of market participants, the price of Hex would instantly drop to 0.000001. There would be just way too much supply.

      The return formula incentivizes longer term lockups, but the concept is roughly the inflation rate divided by the locked percentage to get the purported rate of return. With the 88% superfluous token share a 3.69% rate of inflation translates to a 30.75% ‘interest rate’ (3.69% rate / 12% locked = 30.75%).

      So, 3.69% of $150 billion is $5.5 billion in inflation that all funnels towards the remaining $18 billion in retail holdings. $5.535 billion / 18 Billion = 30.75%, magic! Retail Hex market participants are experiencing an effective 30.75% rate of inflation. See this is why its a slick scam – it looks like you are out earning the rate of inflation by a wide margin, but in reality the entire retail circulating supply is just inflating at the purported interest rate. Again this shouldn’t really be a surprise to anyone who knows that products without revenues can’t actually generate a real return.

      How could have Richard Heart increased returns even more by keeping the inflation rate the same? Just add more unlocked tokens. For instance, if Richard Heart had arbitrarily doubled his token share to $264 billion, then that would translate to a 93.6% ownership stake and the same $18 billion in retail locked value: 3.69%/6.38% = 57.8% ‘interest rate.’ Nothing changed except the superfluous token count creating more tokens headed towards the retail class.

      1. I REALLY wish your article was here before I made my stakes with Hex, everything of what you point out explains this coin and most of the crypto market out in plain language.

  57. First, a thanks for your excellent article. My Uber driver was listening to an interview with Richard, so I ended up listening to him on my way to the airport. Since I missed the beginning and the end I didn’t catch the name of the crypto that he was hawking or even his last name (though in retrospect I remember him talking about why he chose the name Heart rather than Hart, but I thought he was talking about his company not his last name!) , but your write-up was thorough enough to for Google to match up what I did heard with your article.

    I’m a crypto skeptic, but it was clear that Richard was charlatan of a different order. Aggressively self promoting, while making sweeping-sounding statements almost entirely devoid of content. The interviewer was fawning and I wonder now if it was a paid placement.

    One thing that I would add, that probably would irritate many of the commenters here, is that Heart’s crypto is more than just clever scam, it’s an ethical dilemma: if cryptos aren’t scams then Hex isn’t one either. Why? Because Hex is in fact a real crypto, (maybe not a very good one but certainly one that meets the minimum requirements) and if we assume cryptos aren’t scams, then they must be real assets and it’s entirely reasonable to create time-deposit financial products from them. In some ways Heart is doing us a favor by illustrating what a dangerous, viral threat cryptos and meme-finance generally pose to our financial system.

    1. Correct, a complete deterioration of our system. People hear the sh*t about inflation and everything and instead of just holding on to their real money, they “invest” in “assets” like crypto not fully understanding that the sh*t is actually all meme-finance that should not be taken seriously.

  58. Great article and discussion thread. Thank you for laying out so much evidence in a non biased way.

    I’m invested in HEX for some laddere stakes but in amounts I can afford to lose.

    It will be interesting to see if and when pulsechain launches where all the RH projects end up.

    Any project in crypto I lime to take with a good pinch of salt. Spread risk and know that any of these assets could easily crash to near zero.

  59. Thanks for this in-depth article. It has saved this Average Joe from losing a decent chunk of change.

  60. As with any investment, only invest what you are willing to risk. I bought a bunch of HEX, and sacrificed to get Pulse X coins (because I missed opportunities to buy ETH in its early stages and didn’t believe in crypto). Also staked HEX as well. Very interested to see how all this pans out (taking a leap of faith, and am one of the most skeptic people about crypto, but am opening up to it).

    My two cents after watching nearly every Youtube video, and reading articles like this is:

    Hex, Pulse X, and Pulse Chain is creating an ecosystem that theoretically should change crypto users’ economic behaviors by having lower fees and faster transaction times, but also the biggest air drop into Pulse Chain. I’m not going to say that HEX, Pulse X, and Pulse Chain is equivalent to Steve Jobs debuting the iPhone in 2007 at this point in time before the Pulse Chain launch.

    However, if this ecosystem works and in 5 years or less the valuations are there for HEX, Pulse X, Pulse Chain and Pulse, then it will be considered a great investment.

    Another analogy, for you football fans out there, you can’t grade a draft class until at least 3 years later.

    Anyways, as with any investment, do your own due diligence. I hope that HEX, Pulse X and Pulse Chain works. If it doesn’t, oh well. Again, I invested an amount that I am willing to lose.

  61. Can you look at Bankx at the same depth you looked at HEX? Sounds to me like they’re copying the HEX code with some changes, and will have something they call integrated protocol owned liquidity. And I think something like 25% reserved the dev team unless I’m mistaken.

    1. The integrated protocol owned liquidity angle is a great new twist on the Ponzinomics, but the Ohm forks like Wonderland (TIME) have already fizzled out. It does look like Bankx is targeting the Hex crowd based on the same terminology like “sacrificed” and they even mention RH. It seems short-sighted that they are launching on ETH instead of going to a cheaper chain already. Just remember that real returns are generated by revenue which BankX also doesn’t have.

  62. Hasnt wonderland time just crashed and owners getting done for fraud? Anyone know where rh is registered for tax? Surely if he has received 2billion in sacrifices then theres at least a 20% taxbill for that although,The hex doesnt hold that value.

    1. Yup, that was quite the revelation that the guy in charge of the treasury (Sifu) had actually been to prison for financial crimes and the founder of Wonderland knew about it. Reportedly his own personal wallet was worth $450 million. Crypto is a hotbed of scams and criminals. Check out the Bloomberg article on it.

      RH is a US citizen, so he would be required to pay taxes to the US government on his ICO and ‘sacrifice’ winnings. Given his previous writings about avoiding taxes, we can only assume how much the IRS has gotten.

      1. Of course, RH does have part of the $27 million write-off that the SENS donation would provide–if any one can find a record of it.

  63. Pulsechain and pulseX will be a ghost chain. There will be a lot scam project build on it. No reputable developers or company will touch it. The only people will flock to it are hexicans and newbies. Richard hearts is the most hated person in crypto especially in the Ethereum and bitcoin community on reddits. There’s no way hex or pulsechain will ever go viral because of it. Richard project will always need or rely on centralized exhange to cash out into real money into your bank account. Richard acting like new money “a person that just got rich the first time in his life” and flexing his rich after his hex project attracting alot immature young money hungry newbies. The ghetto version of rich how rappers and celebrities be flexing.

    1. But Pulsechain has all the game theory to get the price up, people will move where the money is. PLS and PulseX tokens are completely deflationary unlike in other blockchains and it has a strong community to get the price up. If not interested in price….well its Ethereum but 4 times faster and cheaper!

      1. What game theory? The same game theory that he pull on hex? Recycling his own coins that funnel back into his pocket? To make an illusions that billions are sacrificed? Manipulate the prices and wallets addresses to make it look like there’s more holders with only 100 hex in it so he can advertise there’s over 280k holders? Don’t worry Richard won’t rugg pull he will make more money by suckering and have his cult recruiting more newbies while he cash out slowly and line his pockets with bunch of his shell address that we don’t know about.

        1. Well yes its all a risk, but high risk comes with high reward. I have no issue RH getting rich if I do well too. I’m sure many other cryptos are manipulated too, it’s just that RH is an easy target because he puts himself out there.
          The game theory being all the free PRC 20s you get that are from ERC 20 tokens. The fact that setting up liquidity pools with be 50% cheaper because no blockchain has given you half the pair for free before. The fact that PLS is completely deflationary and PulseX too because it has a buy and burn with each transaction. ETH and UNI don’t work like this.
          No system is perfect, I admit there is likely manipulation but no real hard evidence, again many cryptos are likely doing the same if you look hard enough.

          1. How do you mean that the blockchain is giving you half the pair for free? And how can it have any value if it is just given out for free?

          2. All the ERC20s are being copied to be PRC 20s. Now lets say you want to set up a liquidity pool for PLS/pLINK where pLINK is the copy of Chainlink. You got the pLINK for free so you only paid for the PLS to set up the pool. Now of course, Chainlink arent likely to move to Pulsechain any time soon, likely never, but if a project does then as a liquidity provider benefits from the free copy. There is also nothing to stop people speculating and setting up pools anyway! I’ll be honest I wont be doing it myself……yet anyway. But its an interesting idea and of course an experiment!

            In addition its just been announced you will now be able to stake your PulseX token and get a different token as a reward! This is excellent because it doesnt put sell pressure on PulseX unlike HEX where the reward is in the same token (not that it affected the performance of HEX much buy anyway!). This new incentive token is likely going to be similar to UNI, it will be used for liquidity providers as the reward token but also for when you stake PulseX.

            1. You still would have had to have bought the other pair on Ethereum before the fork date, so not really free, but I get what you are saying for setting up a LP on the new chain.

              1. Yes but you are playing with semantics ha! Lets say “virtually free” then. Basically you don’t have to pay for the extra coins is what I’m saying 🙂

                FYI – not sure why buy I cant see to reply to your comments directly in your/my thread, although i can reply on others so I have to put the reply here outside our thread.

  64. You mean you can’t just mint new units and have a solid currency? Somebody better tell the US government! This is not a scam. Richard is on YouTube weekly explaining how it works. No one gets in without understanding how it works. Scam implies that someone is tricking you. If you don’t believe that it will be successful, then don’t invest. Just realize that the government does the same thing, and they’re fine.

    1. Hex is not a legal tender and the US government dollar is not an investment scheme, so the equation of the two fails on two fronts right out of the gate. He does trick his viewers because he repeatedly makes false statements that banking and loan interest comes from printed government money, which is exactly what you are implying with “the government does the same thing.” The government penalizes holding cash through inflation for their own interests, not for the interests of US dollar holders. I wrote a section in an article on why the government creates inflation in the first place and their incentives, if you are interested.
      Final point is that I’m sure plenty of people get into all sorts of cryptocurrencies without understanding how it works.

      1. Hi Ryan, Full credit to you for your clear due diligence and also understanding of finance markets, you are clearly an intelligent man in your field. Also I want to applaud you for not attacking people who have rebutted against your opinion, it’s very refreshing to see this and also that there seems to be no censoring here, we’ll done mate.

        For disclosure, I have recently invested in HEX and staked, also I have sacrificed for PulseX. I do so knowing I could loose it all, money I can afford to loose as I have done considerably well off the stock and real estate markets. If I may, I really think it needs to be pointed out that whilst you are highly educated and practised in your field of expertise, you are also indoctrinated and looking through the lens of the very system that ruins millions of low income earners and aspiring investors. Thus I believe this explains your disdain and distrust in anything that doesn’t conform to the ‘traditional systems’. Please just consider this before defending the doctrine that has shaped you and your views. I too have fallen victim to defending my views on geopolitical events, from my indoctrination of being a soldier. It’s taken a lot of hard work but since changing the lens, I now see the world in a different way. Interesting don’t you think? More to follow……

        1. I’m not very happy with traditional systems either, the Fed has robbed savers of risk free interest for 10+ years. I’m not anti-crypto either, just anti-Hex because any interest that isn’t generated from revenue is illusory and fooling people through the optics of inflation.

      2. Well yes the PRC 20s are not totally free because you paid for the ERC 20, but you are getting into semantics and I’m not a huge fan of semantics. “Virtually free” maybe a better description in that you don’t have to pay for the extra tokens 🙂

  65. Of course RH is off-putting; his ego, slandering, side stepping questions like a greasy politician, all whilst he overtly shuts anyone down who isn’t subservient to him is cringe worthy, I think as a bloke he is an absolute tosser who I would probably knock out if I ran into him in the pub. That said, he really hits the mark on some uncomfortable home truths, the biggest is calling out the western finically system for what it is, a fraud and an absolute scam, it’s just done by polite men in nice suits. Just research a little what occurred during the GFC and the lack of accountability and justice for those who rug pulled and scammed those who couldn’t afford to loose anything in the first place. It didn’t hurt those with large wealth, but it destroyed many who were trying to make it, even if it was to just own their own home one day.

    The system that educated you, is a fraud. It’s setup to grossly benefit the wealthy, maybe offer a bit for the middle class, but it’s the poor that get screwed. The poor en masse don’t have the luxury of a good education, financial advisor or money to lose on the stock market. That’s why crypto excites so many, it’s a chance to make a lot out of all they have, and that’s usually not a lot. And I agree, lots of people will get burnt in crypto, but you are being hypocritical not calling out the traditional markets and financial systems for how they screw so many people over.

    1. The western financial system is what it is. My critique for this article isn’t on the financial system in general or crypto in general, it’s on Hex. The Whataboutism doesn’t make Hex a stronger product just because there are problems in other areas of financial markets.
      If crypto excites so many, they have plenty of options other than Hex to choose from. In particular I like the 20% savings account option that the Anchor Protocol provides. Of course in crypto the risk of failure is much greater than in traditional financial markets. Risk and return are related. Don’t take anyone’s advice on any investment and do your own due diligence.

      1. The problem with Anchor is alot if it is stablecoins so yes you get the 20%, but there is no price appreciation of the coin itself. Even if not stablecoins the price appreciation is much much lower than HEX so the payout is much less and they dont pay penalties. 20% doesnt excite me at all. Thats why many dont go for other options. We have been too accustomed to “20% is a great return….be grateful” while all the corporations pocket the rest and take huge fees.

        Crypto gives a chance to change that, particulary HEX. Will it last forever? May not and eventually you may be right….IN THE END. but “IN THE END” could be 5-10 years before it all collapses, thats where the risk comes in.

        My point is for the sake of 100-1000 dollars why not give it a go?! 100 bucks in HEX would have been 1 million from day 1 to all time high. Some put 1000 bucks in and pocketed 10 million. Yes it robbing Peter to pay Paul, but so is trading and so many other investments. And yes i get it that HEX doesnt have direct utility so theres an ethical question but for me so long as its legal, I’m ok with that. I think its the Ethical Barrier you have and thats ok, but if you can get across the ethical side its fine so long as its legal 🙂

  66. It’s only the sophisticated investors that get the early word on emerging stocks, IPO’s and “word of mouth” amongst the boys for good share tips before the masses get wind of it. I can call this out because I led a revolt and blocked a hostile takeover of one of Australia’s largest iron ore assets, I did this because I found I could energise the Mum and Dad investors in taking a stand as they knew they were clearly getting screwed, if you want more detailed info on this I’m happy to share. The point here is that I had people calling me a scam, accusing me of lining my own pockets and all types of smear against me, even though I did it for free and because of the principle of the matter. Those that trolled me, were in-fact the men in nice suits looking to screw the most vulnerable. And without mentioning corporation names to protect myself, this private company in question, is one of the biggest in the Southern Hemisphere.

    Google “Macquarie Bank fraud” if you want to see a real scam and shady behaviour. Oh yeah, Macquarie bank is the largest fund holder in Australia and accounts for unforeseen amounts of superannuation (retirement wealth), they also fund shady logging companies illegally deforesting Australian bush and rainforest, they are to big to stop so they get away with their illegal behaviour.

    More to follow….

  67. Ryan there is nothing left for the man to buy hahah. He can’t spend it all quick enough, I don’t see him ever needing to cash out HEX. Everyone needs goals. When you are that big a tycoon the things you have to reach for are things like being the technical richest man in the world, first trillionaire, most charitable in crypto, etc. He is very open about being in it for the glory; I don’t blame him, he would be bored as buggary otherwise. Another thing to note is the marketing is actually quite clever as HEX is motivating people to get off thier behinds where they otherwise wouldn’t, and start learning how to promote something to obtain success. They get motivated, they put in extra work, they learn new skills. Even if HEX goes to 0, they are in that habbit and can take all that away. It’s rather poetic IMO as that aligns with RHs values in the pre-crypto videos. People are helping themselves. I would argue the utility of HEX is being the stadium for the biggest patience gonads competition. One that actually gives people a fighting chance. In a colloseum if a skinny guy is fighting a lion he can roundhouse that kitty all day he’s going to get eaten. In HEX the skinny guy can use his superior patience to grab the lion by the balls. It’s a fair system for the little guy.

    1. There was a comment I read online recently which got a laugh out of me: “crypto is like Mary Kay for young men”

  68. I also struggle to see where this eventual end comes as you have alluded to a few times. Important to remember that peoples money gets locked, and for an increasing amount of time on average (they’re competing for that yield with increasing patience). So tell me, if that is the mechanic, when does is it crash? People are continually getting great yield for more patience, securing HEX for longer and longer. That would break the criteria for it being a scam, as scams evetually screw people over. What I surmise you would say to that is it’s reliant on you getting a new person onboard, but so what? I have to convince the next guy to buy my house. And the HEX they buy from me will in all likelyhood make them great returns if they stake it. Essentially all you need to do is hop on board and have more patience than the next guy and get loaded up with marshmallows. It’s a win win for anyone who’s patient, no matter when they get in.

    To me it looks like a man invented the ecomonic equivalent of a perpetual motion machine. God knows how far it will go, could start swallowing everything else. I really don’t think it’s a stretch to say it monetizes the time value of money.

    1. When you convince someone to buy your house, you don’t convince them to buy your house and then another house that was built across the street. It’s the effective inflation masquerading as interest that is the problem. Hex won’t be a rug pull or a sharp drop to zero, it will be a gradual decline that balances the competing forces of supply and demand, with some ups and downs along the way. It’s still relatively young, with aggressive marketing so lots of new people are buying in and locking for a year or two. I haven’t seen the data, just guessing, but most of the new supply that has been minted since existence probably has been re-locked since it performed well up until last Sept. If it were a perpetual motion machine there would be no reason to market it and bring in new buyers.

      1. I dont think RH will let HEX decline like that, at least for the next 5 years. He will prop it up by buying up HEX from some of his wallets, as he’s controlling it all and yes the control is risk but in this case I think it benefits everyone. Maybe it will plunge in 5-10 years time but thats the risk you take, get in and out before basically. Here we have a smart and rich founder who can support HEX with his wealth for quite some time, especially if he does well with Pulse and PulseX, he can use some of that to support HEX too. The ethics of it are a problem yes, but Im ok with it so long as its legal 🙂

  69. It’s really quite beautiful all the big companies Facebook Binance CMC whatever all capitalize on peoples psychology to exploit them for their money and time. You got it backwards HEX uses peoples pschology in a way that’s beneficial for them and gives them the time straight back! That’s the beauty of it. It’s the biggest possible middle finger to the way people run things. All the frustration you see from the guy isn’t fun to watch you note where it comes from and who he fires it at. If you’re stood behind the man he’s paving a way for everyone through all the bull.

  70. Also it doesn”t matter that HEX is basic. A clock just tells the time and yet everyone has one on their wrist. HEX is like a perpetually running clock where you can hang onto the hand, and the longer you hang on the more rewarding. A simple, elegant utility that could be useful for everyone, useful for anyone who cares about time.

  71. Hex is a censorship-resistant debt-security instrument. When you buy Hex you exchange your “realvalue” for a “time value token”. With this token you can participate by burning the token in exchange for a contract with your own time-preference. The system is fair. Hex marketing is mostly honest about this if you read past the front page. In HEX the incentives of Powell, Lagarde, China, etc are absent or at least not in direct conflict with your own. In HEX your funny-money tokens only have to contend with the influence of the OA/Richard Schueler, (which is mostly egocentric but aligned with cellular regeneration research, him gettting laid, and getting recognition).

    HEX was designed primarly to be a long-term storage of value. The get-rich-quick tokenomics are just adoption strategies, which attract the cult-following. Hexican cultists are being used as pawns for the much bigger vision of a competing financial product to global centralized debt-securities. The vision is for it to become an asset which stands the test of time. If all goes to plan, the OA would be gradually dilluted of its total share in the pie, but presumably own part of a much bigger pie. The OA acts as a stabilizer for now.

    There is no certainty such an economic experiment will be successful. There are few people in the world that have the right mix of business acumen/marketing expertise/cultish-appeal and vision to pull this off. Richard Schueler is doing brilliantly so far. Food for thought.

      1. The OA collects half of all fees, and owns now around 90% of the total supply of current HEX. So the OA owns the majority of the supply. But because the token is inflationary to stakers, the OA (which is not staking) will get diluted over a long period of time as stakers mint more HEX. If the project is successful in the long term, then you would presumably have the premier global digital debt-security with millions of stakers, that in 20-40 years time, the OA would be diluted to 50% or 40% of total supply. And further in the future, eventually reduced to 5-10%… Thus, the OA serves as a stabilizer to any single entity or player to get control of the supply and significantly manipulate the markets.

        HEX is a new financial product. It’s an abstraction of fiat financial products. It’s all a ponzi scheme, but sustainable. It’s fractional-reserve.. There’s not enough money to liquidate it ever, as with global debt-securities market or real estate for example. That’s why market cap is meaningless in this context. Everyone’s in it for the yield and a place to park their wealth.

        1. But RH himself is the single player that has control of the supply and can manipulate at will, which wouldn’t be the case if his balance was in a burn address. His share only exists to artificially increase the inflation interest paid to locked balances. It’s purpose is for creating an illusion that 40% interest can be minted from 3.69% interest. There is no need for a stabilizer in a crypto project as the supply and demand would clear the price.

          1. I think Ethereum’s failure to scale has changed the roadmap for HEX drastically. RH did not use to control that much of the HEX supply. He still controlled a majority before, but now he controls almost all of it. This happened when he announced the planned fork of Ethereum, and most of the value sacrificed for that project was HEX, giving him the vast majority of the supply. For all the cultist Hexicans, let’s not kid ourselves, Richard Schueler (RH) controls the OA one way or another. And the “billions of dollar-value” sacrificed for PulseChain was mostly pumped-up inflated paper value of HEX. So the Hex road plan changed, and pivoted to a centralized Fork of Ethereum, and all faith is now laid square on the shoulders of RH. And, honestly he’s a good dude. Straight shooter, and for those who know him personally a good person to put your faith in. He will do his best to make sure the projects succeed, and he is not a scammer and not a rugpuller… But, we have to be honest. In summary, I’d say Hex is a ponzi scheme, but not a scam. Richard Heart is the new Jerome Powell in this scenario and the financial product is even more centralized than before. Nevertheless RH has good intentions to make this succeed, and it’s not entirely not his fault that Ethereum failed everyone, and the new infrastructure needs, have caused a bit of turbulence. But, he still has my vote of confidence.

  72. After reading your article (the most elaborate circulating – thank you!) and comments I believe opportunities to earn good money on RH projects are quite good if participating 1 – 2 years. The reason for this is mainly based on the community and RH personality.

    Proponents tend to completely take in what RH is saying. A cultish movement, yeah why not. This is a very strong indicator for price gains. The mantra above all is “Delayed Gratification” and RH is a genius in convincing people to participate.

    I dont believe there will be a sell pressure any time soon. First of all people lock their coins long-term, second, people whose locking period ends within 2 years, will probably want to invest again, if price trend keeps pace, yeah, or even slows down (not too much in comparison to market obviously).

    This is where RH 90% tokenhold combined with his egocentric personality is important. To a great extend he controls the sell pressure and he does not sell when it harms his project/image

    Besides earning millions, strengthening his ego is the most important driver for his continued engagement: He wants to be the front figure of crypto per se. Eclipse Bitcoin. It’s obvious from his public persona, youtube videos, his vendetta against Bitcoin maxis. He is not going away any time soon. RH will try his best to make sure Pulsex and Pulsechain takes off successfully and HEX simultaneously keeps pace. Silence his numerous opponents. It’s personal to him.

    1. May I add to my investor point of view above, my previous post. When I write sale pressure I mean a pressure in the magnitude of collapsing the project completely. Suffice to say, bear marked is looming as of now and we might be in for a long ride. The 1.000x to 10.000x gains could in such case be wanted to be offset more relative to other cryptos smaller gains, despite Hex being branded a long-term hold. Very interesting time ahead of us. Once again, thank you Ryan for putting the time in. We all learn from this.

  73. You effectively describe every market. What do you think drives up the price of anything. I have to assume that anybody making this argument either owns zero crypto or is just full of crap.

    1. No, not every market is a Ponzi scheme. For instance, companies in the stock market can pay dividends with earnings or buy back their own stock with free cash flow. Sure it’s better if a lot of other investors flood in to buy after you did, but it’s not a requirement to make a return. That IS a requirement to make a return with Hex.

  74. Why can no one win in a debate with Richard. He seems to always talk his way out and avoid difficult questions.

    1. He’s been practicing the same script for years and has already developed scripted answers to basically everything. All these interviews he does are pretty superfluous because the same questions and answers occur every single time.

  75. Ryan, this is great journalism and I admire the patience with which you engage with the ‘hexicans’ giving you grief in the comments. It’s unfortunate that the human mind sometimes protects itself from disappointment by wrapping itself in delusion. The way that hex bag holders idolize Richard, who has materially financially harmed them, is reminiscent of how many victims of abuse protect their abusers. This happened with the OneCoin scam, where promoters and victims were hard to distinguish and kept the scam going long after the founder had fled.

    I look forward to your future writing.

  76. Great article.

    Would be good if you covered the concept of market depth in there. It takes only a tiny fraction of the market cap to move the price compared to other high market cap cryptos. People might think they are rich on paper but as soon as some big players are able to offload onto the market, the price could fall through the floor pretty quickly.

    Also, I hope you are able to look into Pulse chain next, as Richard has already established himself as a majority holder by surprising his community and sacrificing a massive amount of Hex. Will be interesting to watch how that develops.

  77. I only came across this recently, and it’s a bit of a laugh. For example, one of your “big reveals” is the following:
    “Furthermore his own blog documented other shady businesses such as selling stereo equipment he didn’t own and then turning around and giving the buyer sub-par equipment.”
    You outline this as though he’s stealing or otherwise misappropriating the equipment and selling it. In fact, what he’s doing is not only common in stores (where they simply hold equipment and pay for it when sold), but a common middle-man sales technique.

    Your whole articles screams “I have a bone to pick, I don’t know why but I’m going to conflate everything I can find to make it sound like this guy is an ass”. Go learn how to investigate a coin pal.

    1. It’s not a “big reveal” at all. It’s simply a single sentence with information about his character. Someone being an ass doesn’t necessarily make a crypto a bad project, but combined with all the 50 other points I make in this article, the whole picture becomes clear what he is trying to do.
      “In fact, what he’s doing is not only common in stores (where they simply hold equipment and pay for it when sold)”
      Actually not common at all except for consignment shops, and even then you are buying the product in front of your face, not some bait and switch.
      I would suggest reading beyond section 5 to see the actual coin criticisms, but I think we already know where you stand on the project.

  78. Hex is slowly but surely heading back into 0.00x price territory. May not stay there long but it appears the whales are aiming for the price to go back into the accumulation phase.

    Anyone right now would be a complete fool to buy HEX and stake it. Staking is exactly what the whales want newcomers to do so they can keep dumping the interest from their stakes and using stakes as exit liquidity. That said, if the pulse chain doesn’t turn out to be a downer, (which it probably will over the long run but initially the hype might carry it for a bit), there might be some money to be made buying hex under a penny, keeping it 100% liquid, and dumping it after the hype pump if and when Heart announces the release/snapshot.

    But yes, this article is 100% real talk on HEX. An empty project that just happens to have one of the best marketing campaigns and social media armies known to man to shill and protect it.

  79. Well i would agree with you but by your definition every single crypto is a ponzi…. BTC mints their coins out of thin air, we can bullshit about different ideas some defend from attacks, some defend from selling pressure bullshit, but in reality no one generates any true value, neither btc, nor hex, both inflate. If you could get around this flawed logic and argument of yours – i would believe you. But now, saying that one thing which mints money out of thin air is a ponzi, but another one isnt is just hypocritical. I remember when such articles were being spawned non stop about bitcoin and how its a ponzi, cause it creates tokens out of nothing and there is no revenue and no value in them, cause you can buy HD 7950 cards and mint more insane APY than 40% in a year with them, including all the costs. Or does it make it more fair if you pay 1000$ entry price in gear, instead of tokens…? well you must buy some tokens of hex as well, or did bitcoin was ponzi all the time, but once it became so big and mining became so expensive – it suddenly became more ponzi ressistant The only big difference i could see is – mining/tech industries should be incentevized to keep btc alive and diff high, cause of all the profits it generates for them. But then proof of stake chains come to mind, so all of them are ponzies as well…? This argument makes no sense.

    1. I’m okay with the idea of labeling Bitcoin a Ponzi too (I mean not the technical definition, but you know what I mean). Look, any asset whose only value proposition is bringing in more buyers is speculative and not ideal for a serious investor who wants inherent value being generated through a business behind the scenes. Don’t forget though, Bitcoin’s original purpose wasn’t an investment scheme; it was designed to be P2P money. It just so happens that demand outweighed the inflation so much that it morphed into a “hold” investment by people who bought it. Satoshi had no control over that eventual rebranding by Bitcoin adherents.

      But I can appreciate what Bitcoin did by creating an inflation tax to pay for the decentralization infrastructure. How could cryptocurrency even get started without the mining tax? Would crypto have been born straight from Proof of Stake? I doubt it, since it wouldn’t have been peer-to-peer starting with 5-10 guys and it would have been essentially AWS. I can also appreciate what L1’s are trying to do with inflation by incentivizing staking and penalizing liquid holders by forcing them to vote with their money on independent data centers. There’s an actual purpose behind staking.

      Hex is like neither system. It’s just an investment scheme with artificial returns and doesn’t involve infrastructure or voting on data centers for security. The inflation serves no purpose really except to advertise “38% returns!” to get suckers to buy and to prevent selling with the lockup.

  80. USA dollar is a ponzi as well? They infalte fiat out of thin air, i dont think that inflation = ponzi, cause then we are living on a huge ponzi and bubble, all of us. Ponzi means – you need a new influx of money, to pay others, in hex terms, if there will be no newcomers, the old guys will have less and less “value” to sell. Like what was happening with bitcoin early adopters. Who were dumping thousands of bitcoins on people heads. I do have some concerns about hex and its success is not a guarantee, but in crypto nothing is. I do believe its a lot riskier asset, than the top dogs, but who isnt riskier than top dogs? Like every single coin, ever. Even stables fail. Sure argument can be made that its more risky, than bitcoin or other established cryptos, I agree that hex going to a 0 is more likely than BTC or ETH, but given same terms they would go to 0 as well. If there were no interested buyers for any reason, the price would go to 0. But keeping human flaws in mind, i doubt it will ever happen, cause humans are greedy.. There will always be some guy who will think i will make a huge profit and will buy a 99,999% btc crash. Sooner or later those few will start to trade between themselves again and then the bubble continues, cause new guys who ran away – will slowly come back to speculate again. Depends how much risk you tolerate, Just dont be hypocritical with inflation = ponzi, cause then everything is a ponzi including fiat.

    1. Another false equivalence. The dollar is not an investment scheme. You don’t hold dollars to get rich or make more money, you hold dollars to pay for things. Also inflation benefits the government, not holders of dollars.

      1. Whilst our global monetary systems not only transfer wealth from the poor to the rich but also make what we have left less valuable. HEX and all other non-Scam Cryptos are the normal persons opportunity to make life changing wealth….alternatively people can do nothing differently and keep suffering at the hands of the inflationary monetary policies and poor governance.

        My understanding is HEX will only not benefit those that break the staking rules and those that are “last”. If it keeps growing as i hope/suspect it will then it will continue to benefit those that use it. It will still be affected by market cycles as all cryptos are.

        1. There are plenty of legitimate investments based on actual businesses that build wealth. Various cryptos may make some early entrants life changing wealth, but that is only at the expense of later entrants, who are poor looking for that life changing wealth. It does the exact same thing you dislike about your claim of global monetary systems.

  81. When i discovered Hex i thought this is the biggest scam or the best designed crypto ive seen in awhile. Well, I no longer have a mortgage or any other debt! My life is completely changed because of Richard Heart! And i never expected that to happen because I only put up $700!!

Leave a Reply

Your email address will not be published. Required fields are marked *