What the HEX: A Look at Richard Heart’s Controversial New Crypto
Heart says he wants crypto users to have a chance to "get in at the beginning again." But is he just cashing in?
HEX is a new financial tool and cryptocurrency launching on the Ethereum network via a Bitcoin UTXO snapshot on December 2. Critics are questioning HEX’s legitimacy, calling it a colossal cash grab and privacy compromise. Devout fans can’t wait to claim their tokens and start staking. So who’s right and who’s wrong?
Richard Heart, the outspoken man behind HEX, sat down with Cointelegraph to talk about the upcoming launch and counter a few of the criticisms surrounding the project.
Heart explained that HEX is the world’s first high-interest blockchain certificate of deposit (CD), letting users stake their tokens in return for interest. Users can enjoy interest payments ranging from 3.69% if 99% of the total supply is staked, up to an improbable and enormous payout of 369% if only one percent of the total supply is staked — paid out in HEX tokens. It’s worth noting that the monetary value of such a payout depends entirely on the market value of HEX at the time of maturity.
“It’s the world’s first blockchain CD that attacks the largest market in the banking ecosystem outside of savings accounts,” Heart said.
Move over, big banks?
HEX is essentially a crypto version of the traditional fixed deposit. The client-side looks like the popular banking instrument: a user locks up funds, then receives their invested principal plus interest when the term matures.
“Banks use your money as a sort of collateral that’s just an excuse for them to borrow money from the government at extremely low rates,” Heart said.
HEX fixes this…
Meanwhile, Bitcoin has some serious limitations, Heart explained. “What does Bitcoin do? It lets you enter a number on your screen which changes the number on someone else’s screen. It makes sure nobody does that twice by burning millions of dollars in electricity.”
Of course, the cost to secure a single such transaction is far from millions of dollars, but Heart has a soft spot for hyperbole.
Heart said Bitcoin prices can spiral downward due to miner competition, causing difficulty to spike to all-time highs while the market price dwindles. Miners have to keep selling more of their newly minted coins, and thus continue to push the price further down. Heart neglected to mention Bitcoin’s difficulty adjustment system, which finds an economic balance between mining costs and monetary rewards.
Rather than losing against inflation, HEX users earn it by locking up coins, Heart said. People are competing against each other for larger and longer stakes, starting as early as possible, in order to get a larger piece of the profits. “If you end your stake early or late,” he said, “you’re penalized.” Only users who don’t lock their coins suffer from inflation because they’re not letting the rest of the world know when they will sell them. ”It’s a truly unique system. It’s the first of its kind,” Heart beamed.
Heart complains that Bitcoin’s system still has critical bugs that aren’t solvable by wasting more electricity. “Bitcoin’s security model burns millions of dollars but starves developers of money, has no security audits, and no bug bounty.” Heart continued by pointing to the decline in wider Bitcoin adoption: “Fewer people accept it, it has fewer addresses, fewer Google searches, only minor upgrades besides SegWit... Lightning only has $6 million in total, and also has critical vulnerabilities from time to time.”
Heart explained that HEX solves these problems. “It does everything Bitcoin does, but better, except liquidity, but that’s because it’s brand new.” First, Heart pointed out that users can profit from referrals.
Secondly, lending BTC in the hopes of making interest requires trust, whereas HEX does not, Heart said: “To earn money on your Bitcoin, you have to lend it out to a counterparty and hope that you ever see it again. With HEX, you lock it in a smart contract. It’s trustless interest.”
This programming is secure, he explained, since the consensus code that controls the inflation and validity of coins is locked in a smart contract. Developers can’t accidentally generate a bug, he said. “But in Bitcoin, if you try to improve the network anywhere, your changes touch the consensus code. That’s how that last inflation bug got accidentally put in there.” Heart compared such a change to upgrading an airplane’s software while it’s in the ai