Internet culture and cryptocurrency are inextricably linked. As a purely digital form of currency, Bitcoin received its start among the forums and message boards of niche social media sites. Understandably, there will be some crossover between cryptocurrency and trolling, memes and the general seediness of the Internet. While this helped bind the initial cryptocurrency community together, it may be preventing further growth.
Two of the highest grossing Ethereum (ETH) decentralized applications (dApps) are both Ponzi schemes – and freely admit as much. PoWH3D and FOMO3D both provide different flavors of the same pyramid scheme. They are steeped in cryptocurrency inside jokes and depend on new users subsidizing veterans. Their only defense lay in blatantly advertising the exact nature of their business – and hoping that is enough to prevent a law enforcement crackdown.
Top contender PoWH3D is the next generation of former ‘legitimate pyramid scheme’ PoWH. Their acronym stands for ‘Proof of Weak Hands’ and references a popular cryptocurrency meme. The weak hands referenced are those of investors that cash out at any sign of a market downturn. This is in contrast to a ‘hodler’ or someone that holds onto their cryptocurrency through any market fluctuation.
PoWH3D’s system is relatively simple. Each transaction carries with a 10% fee. That fee is distributed among all holders of the proprietary P3D coin. Users entering the system pay their fee, which then goes to all current investors. When someone decides to cash out of the system, they too pay a fee. So long as new users continue to enter the system, everyone involved is making money. In theory, those that remain the longest before cashing out will benefit the most.
Second place FOMO3D operates on a different principle. The name refers to ‘Fear of Missing Out’ – a cryptocurrency concept that suggests people will buy when a price is rising. Often, this results in buying in at the all-time high and subsequently losing money. The game involves a simple countdown timer – counting down to a complete payout of the amount currently invested. Users join a team, and purchase ‘keys’ that can add time to the countdown timer.
Whoever activated the last key will win the entire pot – if the countdown timer reaches zero. As this is now in the tens of thousands of ETH, the potential payout is significant. However, everyone involved has a strong incentive to prevent the timer reaching zero.
Internet Culture and Cryptocurrency
PoWH3D and FOMO3D are both making fun of the cryptocurrency community in general – but they show a potentially larger problem. Other dApps, ICOs and exchanges may be operating in a more clandestine manner towards the same purpose. Even unintentional gaffes like the original PoWH can damage the entire industry by association. For a market looking to seize greater legitimacy, projects like these can have disastrous consequences.
Article By: Adam Stone