ZoneBitcoin Editorial
Friend.tech is an application that arouses a lot of enthusiasm among some cryptocurrency enthusiasts. In the space of a few days, the Friend.tech application has established itself in crypto circles creating a buzz with users claiming to have made significant gains. It doesn't take much to stoke the fire among aspiring traders, especially when you find yourself in a bear market that seems interminable.
However, behind this media hype, this new type of social media platform also raises significant concerns.
This article aims to introduce you to Friend.tech, its innovation, its functionalities and the potential risks linked to its use. We will also see to what extent earnings promises can be misleading.
What exactly does Friend.Tech offer?
To describe Friend.Tech In simple terms, the application can be described as a decentralized mobile social media platform with a simplified trading function. From a technical point of view, Friend.tech is built on “Base”, the layer 2 from Coinbase. Thus, users must have a crypto wallet to be able to register and participate. The application looks like a basic social media application with a chat facility similar to Telegram for example. Others will say that Friend.Tech is more like Only.Fan in that users can chat (and now send photos) with their favorite influencers.
However, to be able to chat with a person, you must own shares of the account in question. This opens access to a private chat with the person who owns the account and sells shares to all users.
At any time, users can buy and resell purchased shares. This is how they can hope to make profits if the shares they purchased have increased in value, for example.
Thus, the Friend.tech platform essentially relies on the arrival of influencers with a large audience, in order to make account shares profitable more quickly.
Why such success around the Friend.Tech application?
A few days after the launch of the platform, a hack made it possible to update the database of more than 100 users connected to their X accounts (formerly Twitter). Although the hack did not compromise the security of user accounts, it made it possible to link public Twitter accounts with users of the platform.
Launched in beta since August 10, hundreds of users rushed to download the application. According to CoinDesk newspaper, the platform generated more than $700 million in transaction fees, including $000 in revenue. How is this explained? To join the platform, users simply need to link their X account and send a minimum of 0,01 Ethereum (ETH) in order to validate the registration.
Thus, in the space of two weeks, Friend.Tech would have generated approximately 25 million dollars. This places the application among the most lucrative in the DeFi scene. A real success for the founders who declared that they were the first surprised by such enthusiasm from users.
However, it is important to note that this enrichment mainly benefits the founders and influencers of the platform.
Influencers looking for a new source of income
This craze for Friend.Tech seems fueled by the promise of the earnings that influencers and their followers can earn on this application. By attracting influencers with large communities, this quickly attracted many followers to the platform. They directly or indirectly promoted Friend.Tech pushing their disciplined followers to “invest” in their accounts.
Some of the account shares traded for over 3 ETH, or around $5000. Thus, personalities like @RookieXBT even offers partial distribution of its income and special subscriptions to holders of its shares. In his private chat, the DefiMaestro trader shares trading strategies with the owners of his account's shares.
This is then a new opportunity for influencers to generate a new source of income on the platform. This also pushes other personalities with non-crypto communities to join Friend Tech. Indeed, NBA player Grayson Allen saw his shares increase a few hours after he joined the platform.
What issues does Friend.Tech raise?
Now, it's time to address the potential problems of such an application.
First of all, you must be aware that the promised winnings are random. Although some people will make money, as with most crypto applications in their early stages, there will also be many (more) people who will lose money. Indeed, applications that experience rapid success are also those, statistically, that experience decline just as quickly.
Worse still, those who will probably make the most money are especially the influencers themselves who sell shares of their accounts. It is important here to remember that one of the biggest problems with Friend.Tech is that it allows you to invest in social network account shares, which by definition are, for the most part, destined to disappear on the market. long term. Thus, only influencers and developers are likely to make money on the platform, much to the dismay of small investors. However, they have a big role: they are there to enrich them….
Investing in shares of a social network account is a highly risky activity. Indeed, few influencers will last in the long term. Even if an influencer maintains his notoriety throughout his life, it is clear that upon his death, his accounts on social networks will no longer be worth anything.. This is different from a business or a society made to transcend generations...It seems that the platform's investors have not all understood this element...
In terms of security, the application raises criticism because Friend.Tech requires users to link their Ethereum wallet to their account on X (formerly Twitter). Thus, Friend.tech has certain permissions such as the ability to post and retweet on their behalf. We can also be concerned about the hack which allowed the disclosure of X accounts which were linked to Friend.Tech.
Is Friend.Tech a scam?
In reality, we cannot (for the moment in any case) say with certainty that Friend Tech is a scam. However, it is doubtful whether this is a crypto project with a business model lasting and serious.
Some Internet users believe that the application works on a Ponzi Pyramid. In other words, the business model is based on the sale of shares which can only be profitable if other people come in and buy shares to increase the price.
In addition, the application has not yet clearly displayed a privacy policy and its legal status is currently uncertain. This is also a point that should not be neglected to the extent that international regulations are tightening with crypto-assets, as evidenced by the recent allegations of Gary Gensler, For example. Therefore, Friend.tech users should be aware of the potential tax implications of using the application. Earnings made on Friend.tech may be subject to tax, and users are strongly encouraged to keep accurate accounts of their activities and profits on the platform.
Suspicion of fraud on the founders of Friend.Tech
We also don't know the founders of the project. The latter preferred to remain anonymous. Although in the crypto space, anonymity is not problematic, it must be said that very often it serves scams and meaningless projects. Indeed, under cover of anonymity, it is naturally easier for scammers to hide from justice and general opprobrium. It is important to know that the most popular and trusted DeFi protocols have founders whose identities are known.
The blog CryptoSlate revealed an investigation in which the identity of the founders of Friend Tech is revealed. They would have been involved in a project called “Kosetto” in 2022 which consisted of selling stickers linked to NFTs. The project ran for a few months before disappearing into the depths of the internet. Since then, the project has been completely abandoned, without having given any notice to users and without updating the company's accounts on social networks. A real flop which allowed the founders to leave the project with the investors' capital, without further ado.
However, it must be emphasized that we are not certain whether these are the same people involved in Kosetto and Friend.Tech.
Additionally, the Friend.Tech app appears to have a more sophisticated business than Kosetto. Indeed, the company obtained initial financing from “P“, a crypto investment fund. The fund must necessarily carry out thorough due diligence before investing. This can be positive for users of the platform. However, if we dig a little deeper, we see that this fund also invested in the FTX platform which was founded by Sam Bankman-Fried, a notorious crypto criminal who is accused of (among other things) insider trading, money laundering and market manipulation.
Of course, this does not mean that the Paradigm investment fund is failing and co-founder Matt Huang has already expressed his “deep regret” in having invested in FTX. He clarified that due diligence research has since become more precise.
Final word on Friend.Tech
Friend.tech is an application that can be seen as an innovation in the way we interact on social networks. However, as with any new crypto application, it is important to fully understand the risks involved. It is, as always, recommended to do your own research (DYOR) and take responsibility in the event of a loss. It seems that this platform is primarily designed to enrich influencers before small investors.
Indeed, the shilling and hype on social media from crooked influencers should be considered manipulation techniques. We must be wary of promises and always ask ourselves who the real beneficiaries of this platform will be.
Most of the time, it won't be you.
See also:
- What is the shilling in cryptocurrencies?
- How to do your own research on a crypto project (DYOR?)
- Who are the seven most wanted crypto criminals?
- BTC20: A false promise?
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