quote:
A Ponzi scheme is a fraudulent endeavor where people are told they are going to be paid more from business activity that doesn't really exist - it's fraudulent - and there's a middleman that pays you your rewards.

It's most similar to Bitcoin where miners create money out of thin air and pay themselves their own rewards through the fruits of their own labor. So since there's no middleman, it can not be a Ponzi scheme.

So because the coin grants itself its own rewards rather than a "middleman" doing it, it's certainly not a Ponzi scheme. Despite the coin not making any money and the value of it only being able to increase by more suckers buying in.

I'm not saying this is a scam. I'm sure it's a legitimate operation that functions as designed. But there's also an extremely slim chance this ever pans out and gains value again. I like this description from Reddit:

quote:
Scam is probably too strong of a word, but it's pretty much a scam. You're trading ETH for HEX and the creator is cashing out the ETH eventually and you keep the HEX. Is that a Scam? I guess not because that's exactly what they represent it to be. If you think you'll be able to sell the HEX in the future at a higher price it might be OK, but there's no reason to think HEX will be worth anything given there's no supply restrictions.

Hex does what it promises to, it gives you extra Hex coins if you stake them for a specified period of time, like interest. The problem is these hex coins aren't of any value, but you buy them with real ETH.

When you buy a CD at the bank, the bank takes your USD and lends them out at a higher interest rate than they are paying to you in the CD (making them excess dollars) and then they pay you back in USD. Dollars in, they lend dollars out at interest, then they pay you back your full amount in dollars and a small portion of the interest they made lending them.

With Hex, there's no lending going on. The software just gives you more hex at the end of the contract. They take your ETH, they give you HEX, then they give you more HEX after you stake them. You see the difference? That's basically a scam.

As long as you can sell the HEX at the end for more than you paid then you aren't losing money, but they take ETH, and they pay you HEX which they can create out of thin air. They say the ETH stays in one general account, but it looks like they could take it out at any time. If there is a penalty for doing so, that penalty goes back to them anyway.