Fri. May 7th, 2021

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Is BitClout a scam, or is it the next big thing?

3 min read

There are legitimate reasons to suspect BitClout. Nevertheless, this article exists because there’s also a case to be made in its favor. This thing is backed by some of the biggest names in the crypto-industry. And the amount of development around it is insane for a nascent project. Remember, BitClout debuted online less than two months ago. And everyone thought it was some kind of joke.

There’s something suspicious about BitClout. Scams are a dime a dozen, though. There’s also something special about BitClout. If this is a scam, it’s a very well-done one. This series started with an introductory post. In retrospect, the tone was too harsh. Especially considering that we just found out about the existence of this NYmag article. It makes the same insinuations as ours’, but in a classier way.

Related Reading | This Ongoing Bitcoin Wallet Hack Has Stolen $22 Million In BTC

The article seemingly uncovers the identity of Diamondhands, the mysterious creator of the novel social network. The author describes him as:

… a familiar entrepreneur named Nader Al-Naji, best known for starting an ambitious but unsuccessful cryptocurrency company several years earlier. Al-Naji, using his real name, began posting job listings for a new operation sometime last fall, but since launching BitClout, he has refused to confirm his identity even to reporters who have interviewed him. 

The article also denounces the hypocrisy in remaining anonymous, while using all of those influencers’ names, likeness, and profile pictures. Which is a fair point.

BTCUSD chart for BitClout

BTC price chart on Bitbay | Source: BTC/USD on TradingView.com

Anyway, the following breakdown uses terminology specific to the BitClout ecosystem. If there’s something you don’t understand, consult Bitcoinist’s introductory post.

The case for BitClout being a scam

  • The only way to participate is by exchanging Bitcoin for BTCLT, their own token.
  • With that BTCLT you can buy Creator Coins. Now, your money is buried two levels deep into BitClout’s ecosystem.
  • So far, no cryptocurrency exchange supports any of those coins.
  • In fact, there’s no way to change BTCLT back into Bitcoin. This is a big red flag.
  • The whitepaper says, “The price of BitClout doubles for every million BitClout sold.” Those sound like the rules to a game.
  • There are rumors that the creators premined both BTCLT and the Creator Coins they deemed more valuable. And, they’re selling it all for precious Bitcoin.
  • Last but not least: 

Related Reading | Thumbs Down: Instagram Influencer Scams Followers Out Of Millions In Bitcoin

The case for BitClout being the real deal

  • The names backing it up. Once again from the NYmag article:

BitClout’s backers have poured more than $100 million into it. They include a roster of blue-chip Silicon Valley venture capitalists — Andreessen Horowitz, Sequoia, Social Capital — along with high-profile crypto investors Digital Currency Group and the Winklevoss twins.

  • Apparently, they developed several off-ramps to change their cryptocurrencies back into Fiat money.
  • The project’s code will be released on GitHub, proving it’s open source.
  • They developed a public Exchange Listing API and are waiting for exchanges to list them
  • The company apparently dug a well for a village in Uganda as part of their charity programs
  • One of the Creator Coins paid for advertising in a football game
  • Most of all, the number of developments around the project.

In closing, we have no idea what’s going on here. This launched less than two months ago. There’s too much activity for BitClout to just be a scam. Nevertheless, something smells fishy. More investigation is required.

Photo by Inja Pavlić on Unsplash - Charts: TradingView

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