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 simply, it can be described as a decentralized mobile social media platform with a simplified trading function. Technically, Friend.Tech is built on Coinbase's Layer 2 platform, Base . Therefore, users need a crypto wallet to sign up and participate. The app resembles a basic social networking application, with chat functionality similar to Telegram. Others might say Friend.Tech is more like OnlyFans, as 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 relies primarily on the arrival of influencers with a large audience, in order to more quickly monetize account shares.
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 on August 10th, hundreds of users rushed to download the application. According to CoinDesk , the platform generated over one million dollars in transaction fees, including $700,000 in revenue. How can this be explained? To join the platform, users simply need to link their X account and send a minimum of 0,01 Ethereum (ETH) to validate their 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 to be fueled by the promise of earnings that influencers and their followers can make 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 have traded at over 3 ETH, or approximately $5000. As a result, figures like @RookieXBT are even offering partial distribution of their earnings and special subscriptions to their shareholders. In his private chat, the trader DefiMaestro shares trading strategies with his account's shareholders.
This presents a new opportunity for influencers to generate a new revenue stream on the platform. It also encourages other personalities with non-crypto followings to join Friend Tech. Indeed, NBA player Grayson Allen saw his shares increase just hours after joining 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 media account is a highly risky activity. Indeed, few influencers will endure in the long term. Even if an influencer maintains their notoriety throughout their life, it's clear that upon their death, their social media accounts will be worthless . This differs from a company or corporation designed to transcend generations… It seems that not all investors on the platform have grasped this fact…
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 (at least not yet) definitively declare that Friend Tech is a scam. However, we can doubt that it is a crypto project with a sustainable and serious business model .
Some internet users believe the app operates as a Ponzi scheme . In other words, the business model relies on selling shares, which can only be profitable if other people join and buy shares to increase the price.
Furthermore, 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 overlooked, given the increasingly stringent international regulations surrounding crypto-assets, as evidenced by the recent allegations of Gary Gensler, for example. Indeed, Friend.tech users should be aware of the potential tax implications of using the application. Earnings made on Friend.tech may be subject to taxation, and users are therefore strongly encouraged to keep accurate records 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.
CryptoSlate has published an investigation revealing the identities of Friend Tech's founders. They were allegedly involved in a 2022 project called " Kosetto " that sold stickers linked to NFTs (Network Transaction Fees ) . The project operated for a few months before vanishing into thin air. Since then, the project has been completely abandoned without any warning to users or updates to the company's social media accounts. This complete failure allowed the founders to leave the project with the investors' capital, without any further legal repercussions.
However, it must be emphasized that we are not certain whether these are the same people involved in Kosetto and Friend.Tech.
Moreover, the Friend.Tech app appears to have a more sophisticated business model than Kosetto. Indeed, the company secured initial funding from Paradigm , a crypto investment fund. The fund undoubtedly conducted thorough due diligence before investing. This could be positive for the platform's users. However, a closer look reveals that this fund also invested in the FTX platform, founded by Sam Bankman-Fried, a notorious crypto criminal accused (among other things) of insider trading, money laundering, and market manipulation.
Of course, this does not mean that the investment fund Paradigm is failing, and co-founder Matt Huang has already expressed " deep regret " for having invested in FTX. He added that due diligence investigations have since become more thorough.
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, shilling and relentless advertising on social media by unscrupulous influencers should be considered manipulation tactics. One must be wary of promises and always ask 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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