Possible Exit Scam? Chinese Police Warns Investors of a “Blockchain-based” App
A “blockchain-based” app named “Qubu” is in payment crisis as Chinese police issued a statement to urge investors to retreat from the scam.
The blockchain project claims itself an app built upon blockchain technology to help users keep healthy. According to its website, it advocates national sports by means of technology. It aims to solve the problems of lacking inspiration and motivation in the current sports activity. It adopts blockchain technology to issue one billion candies, a kind of token rewarding participants according to the number of steps. (Actually, 1 billion candies were issued at cost of tens of dollars).
In fact, its official website is only a registration interface, without any market information published. For explanation of blockchain technology, ‘Qubu” just generate different but unique sports information (untamperable) from different users at different time and locations. This unique information will be generated into blocks, adopting POW consensus mechanism (walking) and rewarding users tokens by counting steps. Its ability is difficult to match with its own user volume, especially in security issues such as privacy information, funds and so on.
It seems that the core of “Qubu” app is sports, but in fact, it is its token “candy”. In this profit-seeking system, only candy can increase users’ income. This is disguised fund-raising, the profits is even much higher than that P2P scam promised.
If users want to increase revenue on a limited basis, they can also increase activity index. To increase the activity index, users should lure more new users. There are two ways: direct selling mode and multi-level pyramid selling mode. In addition, the cost of converting candy is very high. If users can not lure others to take part in, the converting fee can reach 50%. To some extent, for users, in order to maximize the benefits, pyramid selling promotion has to be done.
Ponzi scheme means that it lures investors and pays profits to earlier investors with funds from more recent investors. Ponzi scheme will not change its essence though built upon blockchain technology.