Latest Chinese SCAM = Fcoin Exchange ??!!

In this video, we're going to take a look at Fcoin, the latest exchange coming out of China that says fuck you and is regarded as the latest Chinese scam. So Fcoin is famous or rather infamous for two things. One of them you probably noticed and that is for fucking up the Ethereum network. They made Ethereum transactions extremely expensive last week going all the way up to 60 gui and for transaction times to take almost three hours if you're just a little bit under the curve. So this is a direct result of their listing policies. We're going to take a closer look at those policies, how they're implemented and the long term ramifications for the whole cryptocurrency ecosystem. On top of this, they're even more famous for having insane trade volumes. They are reported to have $7 billion of trade volume in the past 24 hours, which is more than all the exchanges in pretty much the whole cryptocurrency ecosystem combined. Boom. So obviously there's our suspicions of loss trading and they have problem policies that directly promote this. And we'll take a look because whilst this might be a passing fad, it might also have long term ramifications in the cryptocurrency exchange ecosystem. And lastly, we'll look at Chinese exchanges and how this is impacting this new breed of exchanges coming out of China. So all this and more coming out on today's box mining special episode. And of course, if you like this video, remember to click the like button and also share it with your friends. Lastly of course, as a disclaimer, everything covered here is my personal opinion, not financial advice. Let's start off with how they fucked up the Ethereum network. So last week, you probably heard me complaining about how expensive Ethereum gas prices were. And that's because there's a lot of transactions happening on the Ethereum network, which is clogging up the system. Ethereum can't handle so many transactions. Let's start with the policy that led to this whole congestion and it seems pretty reasonable at first. So Fcoin will have preferential treatment to list coins that bring the most users onto the exchange. This is something that Binance has done for a while. They had a voting system. They want to say, okay, look, what do you guys like? You guys get to vote. But here they're using deposits as votes. So if you can bring new users on that like your coin and they can deposit that, then it kind of makes sense that they have a huge following. It's kind of like a win-win scenario. The shitcoin gets listed on this exchange and Fcoin gains new users, thereby increasing their business. That makes sense. But the problem is instead of dealing this internally within the exchange, they are using the Ethereum network, projects wanting the list on Fcoin also got smart. You see, the policy is for cumulative deposit number ranking, which is the number of individual deposits going into Fcoin. So projects thought, hmm, why don't I just airdrop one of my shitcoin to tens of thousands of users? Then it seems like as if tens of thousands of users are making deposits into Fcoin. And that's exactly what they did. So if you look at the top gas burners for Ethereum, you can still see that today where these projects are sending out thousands of transactions per hour, and they're just sending one of their shitcoin, one of the ERC20 tokens. This one is Star Chain token. And you can see that every day. If you look at the top gas burners, this kind of trend is still going on. This becomes a nuisance for the Ethereum network because of the high number of transactions being sent out per hour, meaning that Ethereum can't deal with that load. And hence, the gas prices increase because it's a bid system as to which transactions go through. So this as a result had a very negative consequence for the whole Ethereum community. And Fcoin really took kind of advantage of that. You think with a policy that's unsuccessful as this, because obviously not new users, right? Fcoin probably could have seen this and said, you know what, this policy isn't getting us new users. This is just spamming the Ethereum network. Maybe we'll just stop this. But they chose to keep on this policy for quite a long time. They kind of use this as the CryptoKey's advertising model. The fact that if Ethereum gets clogged up, it goes on the news and then Fcoin gets more exposure. So they pretty much knowingly had policies that were very ineffective and clogged up Ethereum network in the process. Now moving on to the second more fuck you thing that they're doing, which is a policy that directly increases the amount of watch trading that's done on the platform. Watch trading being a illegal activity where traders or investors trade between themselves to artificially pump up the trade volume for a said token or said asset. Well, obviously this gives a fake signal that this is a very hotly traded coin. And in fact, what is shown here is the screenshot shows that Fcoin has $2.6 billion trade volume. So just for the Fcoin token itself has 2.6 billion trade volume. And for your reference, the total trade volume for Bitcoin is $4 billion. So if you think about it, there are almost more than half of the Bitcoin total Bitcoin trade volume for just one token. So exactly what is this policy? Well, this is the new transaction mining model. This model is marketed as mining. So every time you make a transaction on the exchange Fcoin, you would in fact be mining and generating Fcoin. So what in fact they're doing is they're giving you a rebate for the transaction fees in the form of Fcoin. Normally generating a shit token and giving that out as a rebate would be pretty meaningless. But because Binance made their Binance token very hot and Fcoin, the coin itself is a token of the Fcoin exchange platform, people started drawing that analogy and especially because there had this crazy exchange volume, which beat Binance, which beat the other exchanges. There were people who felt that, well, maybe this is the next biggest exchange. So starting from June, when Fcoin started getting popular, the value of the Fcoin token increased. This resulted in all the market makers in the world flying over, flocking over to Fcoin and trading between themselves essentially was trading and generating huge amounts of trade volume, which gave them huge rebates in Fcoin token. And because the Fcoin token price was going up, they made a lot of money. So this had a few ramifications. This is very shady in terms of trade volume for cryptocurrencies, because it sends out a kind of fake image that there's a lot of trade activities going on. It's very popular, lots of people are trading, but in fact, it's just a few big players trading between themselves. Next up is that this model is not sustainable. And the fact that this system can't sustain itself is caught by Zhao Sunpeng, the CEO of Binance as well. Zhao Sunpeng went on to say, if an exchange doesn't get revenue from transaction fees and solely profits from the price of its tokens, how would it survive without manipulating token price? Are you sure you want to play against the price manipulator, the same price manipulator who controls the trading platform, basically accusing Fcoin of manipulating the Fcoin token as their business model? All right, cool story. How does it affect me? Because this is some random exchange all the way off in China, doesn't really have any immediate ramifications, right? Well, not really, because this model has some benefits too. That is because there is one advantage that's gained by having this huge amount of trade volume, which is high liquidity and also very low spread. That is because if people are trading, like say they're buying USD and selling USD and buying USD, they want that spread between the price between Bitcoin and USD to be small. So that in fact, helps the average trader, the average Joe, because that means we don't have and we don't meet enormous spreads like a 5% or 10% spread between the bids and the asks. One of these consequences is that other exchanges are copying variants of this model. For example, KuCoin recently implemented a policy where they'll use 50% of all trading fees earned by KuCoin to buy back KCS for the market. So that's actually quite a good thing for anyone owning KCS. It's China after all, if there's a good idea, let's make a million versions of that good idea and try to sell it off. So this sparked a huge interest in exchange coins in China and new exchanges popping up. For example, CoinX. He Yi, the co-founder of Binance, had a sarcastic remark for this as well. Now that people love trans fee reimbursement, how about giving back 200%? One exchange is not enough. Let's do a thousands. Users have different needs, so we are now providing different choices. Obviously, this is a very sarcastic attack at this whole ecosystem overall. So what a journey guys. What does this all mean? Well, it means that in the future we have to be more weary of exchange volumes because there might be more and more exchanges that adopt a trans fee or fee buyback model. So it kind of promotes more wash trading. So in terms of just personally for me, I'll be more weary of exchange volumes and what that means and if that really is going to cause the next bull run because we don't know if the information that we're getting is absolutely true or not. That being said, exchange volumes that we have reported are the best that we got. We don't really have any other good real values to work with. So it's like you know that something is broken but you can't really, you don't have any better choice. So I guess we have to use it but we just use it with a grain of salt. And that's it for this episode. I hope you guys enjoyed it and if you did, please do hit up the like button and subscribe to this channel for more content like this. Thank you guys so much for watching. See you next time.