What was the event about?
Looking at the three hour long video of the event, there is a lot to cover. All of it strikes an uncanny resemblance to a Multilevel Marketing event:
We have a lot of pomp, a lot of hype, bragging, talking about how everyone is forming a giant "family" and asking them to start buying and peddling the newest product - merchant applications. There is a lot of small pieces of information here and there on how they envision their system working, and a lot of it raises red flags.
The event certainly packed a lot of showmanship - live musical performances, important sounding speakers and so on. I've been to a few cryptocurrency conferences already, and they are completely different - you hear a lot about the technology, new developments, etc., and there is a lot less cult of personality.
Merchant program
One of the more important but overlooked parts of the event was the news about OneCoin's new merchant program. There are two new packages being sold - one for $1000 that comes with one whitelabel application, and a $5500 one that comes with seven applications. OneCoin expects its members to purchase those applications and sign up merchants, giving them those applications. Their goal is to reach one million merchants in the coming years. With the merchant adoption, the coin is supposed to gain liquidity and value.
Why should the merchants join? To gain access to OneCoin's "family" and the network, and they incur no cost for the first year. The coin should be "very stable" and merchants "should prefer it to PayPal, Visa, Mastercard".
So yes, the merchant program is as they say "free", and by free, they mean it costs $1000 to the person that signs up the merchant. So the marketing and on-boarding the merchants falls on the coin users that also get to pay for the privilege. But at least you will finally have some place to spend your OneCoins, right?
Well, not quite. The merchants will be able to specify how many OneCoins they will be accepting. They can choose to accept, say, 20% of the payment in OneCoin and 80% from the user's Credit Card (conveniently connected to the account already). This implies that OneCoin doesn't even do the most basic thing that every Bitcoin payment processor does - sell the coins for the merchant and pay them in fiat.
So let's compare that to say, BitPay, one of Bitcoin's oldest payment processors. It allows you to sign up for free, it's free to use for some small volume transactions, or it costs the merchant 1% otherwise. You can accept Bitcoin for 100% of the purchase and you get all of your money in whatever form you want - BTC, wire, etc. For OneCoin, you need to have someone else pay $1000 for the application, sign you up, then you specify how much OneCoins you will be accepting for every transaction, then you have to figure out how to cash those out (without a real exchange yet), and you might be charged something after a year of using it.
So yeah, it doesn't look good - more like a barely serviceable product that you want your current members to buy and convince people to use to make their coin accepted somewhere and thus gain value. It's a good MLM strategy, but terrible usability strategy.
Other things
We've already covered the coin doubling event, so there isn't much more to cover in that regard. It's silly, watching people get excited for a 100% increase in coin supply without an increase in coin's value. So instead, here is a list of various pieces of information that were stated thorough the event:
- There have been 14 million accounts created, with 2.5M active distributors
- The price of the coin was 50 eurocents, now it is 9 euros, and they aim to get to 25 euros
- OneCoin is launching some social media website called OneSaito, which will feature Groupon-like discounts. So it's like 2010
- "To make sure we continue to produce coins, we need tokens, and tokens come from product packages"
- They want to achieve critical mass in a year's time
- "We will eventually move to the next stage when what we're doing will become self-evident" - do they mean people will catch on to the MLM structure?
- "We don't want to create idiots"
- "Any one of you could've launched Pokemon Go"
- Whoever maxes out their 35k Euro contribution on the day of the event will have the opportunity to max out another 35k Euro contribution the following day
- "So guys in Sofia, if you don't switch it on, we'll come for you and kill you, yeah? Always good to motivate the office too..."
- OneCoin will be going into the remittance business (so they're joining the Bitcoin hype from a few years ago that has already been explored by 19+ companies?)
- OneCoin will be going public in Q2 2018
- OneLife has created 350 millionaires in its history. There were 450 diamonds in the event
- OneCoin is a special network, because it acts "like a family"
Conclusions
OneCoin is quite obviously a MLM pyramid scheme. Quite brilliant actually - instead of peddling products people have to start storing in their garages and try to sell to other people, they are selling a "crypto" currency and telling everyone to buy as much as they can to raise it's value. They have virtually no production costs, therefore every dollar spend is essentially profit. Instead of investing that money into development of some actual products, like exchanges, payment processors, etc., they just get people to buy into the scheme more and more, to promote the coin further to drive the sales.
The most symbolic part of the event came in around 2:35. The speakers talk about celebrating OneCoin's second birthday with a cake, "the largest cake ever" - OneCoinCake. 2x2 meters in diameter. Unfortunately, since there were 11500 people in the audience during the event, "not everyone will get to taste the cake". This is perhaps a good analogy to how OneCoin works - everyone pays for the cake, you make a large cake, and the elites will stuff themselves while everyone else will only get to admire the cake from afar...
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