CRYPTOCURRENCYMay 25, 2019Rob Loggia
If you’re one of the more than 900,000 people following John McAfee’s Twitter feed, you already know that from time to time, he’ll mention a project that he’s working with, usually as an advisor. And that every time he does so, one of the first 10 public comments will be to announce to the world that said project is a scam. Wash-rinse-repeat. It is as predictable as the morning sun, regardless of the actual merits of the project.
And so it was with KaratGold, minters of KBC Coin and a project with an interesting take on tying cryptocurrency to gold, one of the few standards of value the world has ever been able to agree upon, and considered by many to be one of the best stores for long-term value that you can count on. McAfee tweeted about the project at 10:08 AM on May 21:
Within 6 minutes, someone had offered feedback about the project being a scam.
Since this happens every time, the utterance is itself meaningless. It is just more noise in the increasingly toxic whirlpool of discourse known as Crypto Twitter. All we know from this is that KaratGold may or may not be a scam. And if we're being honest, unless we’ve looked into a project personally, this is all we can ever know.
In this case, the tweeter posted screenshots from the Google Play store comment section, about users that had lost their funds using the KaratGold app. Taking this evidence, McAfee went to the founders and industry contacts for an explanation. He then posted his findings:
Looking further, it appears that the software side of their wallet was not perfect when they rolled it out under pressure. This caused a bug that caused some people to be unable to log into their “account” with KaratCoin. It seems that for some of these people there was no solution, and they did indeed lose their funds. In the world of [people lost money = scam], a damning indictment.
But what about the people that didn’t lose their money? Was there anything different about them, or was it just dumb luck? As it turns out, the reason they didn’t lose money was because they listened to the advice of the company when they set up their wallet. At the same time, they followed cryptocurrency best practices as detailed in any 101 tutorial on the subject.
Though the wallet/exchange platform of KaratCoin is a software service, the wallets themselves were designed in the usual fashion, and the private seed can be used to access the funds directly. Most wallets display this seed during setup, as did KaratCoin, along with an admonition that funds can be lost if the seed is not retained securely. Users were told to “back up the seed” and store it “in a safe place” in case there was a problem. Those that did so lost nothing, and could use any wallet supporting their funds to restore access.
Nor were the founders suddenly able to “magically” access the missing funds to keep for themselves. Without the seed there was no way to restore the funds, short of building and successfully operating a quantum computer for some amount of time.
In short, the company did everything right, but in the process they made an error. Because they followed best practices, no one needed to be harmed by this error. Only those that refused to take responsibility for their money by complying with a reasonable procedure lost anything, a situation that is hardly unique to KBC Coin. To call that a scam is to remove all meaning from the word. We may as well start describing licking an ice cream cone as “rape”.
Amusingly, there does seem to be another reason people think KBC Coin is a scam, and it is probably a situation we’re going to see more and more often. It seems they are not the first entity to use the name, and that in this case their progenitor was a bona-fide, in-your-face, money-grab scam. Operating out of India, the principals have no evident connection with the KaratCoin group whatsoever, and the scam is no longer operating.
These days, KBC Coin is the name used by KaratCoin for a cryptocurrency token tied to gold. But unlike most efforts to marry cryptocurrency with gold, the price of the coin is not pegged to the price of gold, but rather to a portioned quantity of deposited gold. The founders have stated that the coin will be redeemable for gold, either directly or indirectly, in the near future. The project received a rating of 4.7 out of 5 on icobench.com, and the founders passed their KYC audit.
One important question to ask when considering the potential for the future growth of a company or coin is whether or not the value of the offering is tied to real world problems and solutions. Any successful endeavor, whether tied to a token or not, needs to provide useful solutions in order to be successful. This is a vital question, if not the pivotal question, driving real world success.
The real world problem here is the millions of people that don’t trust fiat, but also don’t trust crypto, to retain value over the long term. A medium of exchange that people can count on, even if the lights go out, is the holy grail, and no single value storage scheme mitigates against all possibilities. While this may be impossible, there is a genuine market for coming close.
KaratGold and KBC Coin will either succeed or fail in this marketplace, but the idea that they are a scam, at least for the reasons given so far, is absurd. If you are one of those millions that is looking for a hybrid cryptocurrency that relies upon a tangible asset, one proven to hold value, KBC Coin may be worth a look. You can visit their website here and read at the whitepaper here.