Hex Protocol – The Good, The Bad, and The Ugly

You have probably opened this article because you have heard of something called a Hex Crypto.

The next thing on you mind is whether this is some sort of scam or Ponzi Scheme. In this post, we shall explore what the Hex Crpto is? The goods and the not so goods about this cryptocurrency after doing our research.

Essential Advise:

Always do your own research about investment, cryptocurrency or crypto project prior to making an investment.

What is the Hex?

Hex is a trustless interest built on Ethereum, which working like a traditional certificate of deposit, but with a lot of extras. So, essentially it opens users to stake tokens in return for interest.

Since, they’re eliminating the middleman the returns are higher than traditional CDs. However, the issues is that they’re still running on the volatile world of cryptocurrencies, making the outcome hard to predict.

Who is the founder?

Richard Heart is a person coming from humble beginnings having been brought up in an inner-city school system & being amongst the few white boys in a premodinantly black school for gifted students.

Heart was an early-entrepreneur, who after being inspired by a friend went onto start an at-home car stereo business. From thereone he networked with with friends / colleagues exchanging business ideas starting mortgage companies, conducting pay per click management (PPC), working on search engine optimization (SEO). 

Bringing in $60 million a year he was able to retire and travel the world. Heart started Hex upon realizing flaws within Bitcoin.

HEX Crypto – The Good & What We Like

Hex has a real use case, which makes it genuine. Moreover, it’s built on Ethereum, audited 3 times & has been working non-stop with no problem for months. 

Compiled below is what we like:

  • Secure: As mentioned, it’s built on Ethereum. Audited 3 times. Already live and working non-stop with no problems for months and months.
  • No miners: Hex does not pay miners polluting the environment while securing the network. There’s already a secure network in Ethereum.
  • Scalable: You don’t need many transactions to earn an interest on locked money. Just one transaction to enter.
  • Self Contained: Does not depend on data from outside the blockchain. Incorrect data input is one of the primary ways blockchain projects can fail and Hex cannot fail in this way.
  • Fast: With Ethereum 2.0, Hex will be faster.
  • It’s Live: Lots of cryptocurrencies derive value derive value based on what the developer promises to deliver in the future. Hex is done now & is doing what it’s delivered to do.
  • Passive Income: This is our best, viz that this telling you to set money aside in a disciplined manner into quality, long-term, interest bearing account & earn that passive income. At the end of the day, you have to admit it, you’re no market expert & even if you are, majority of them have failed to deliver any alphas.

The Not So Good Or “The Bad”!

Having given all the goods, you are probably thinking, maybe this is something worthwhile. However, before you fully decide, let’s look at the flip side of this coin or the “The Bads”.

  • Scam Ads: There are scam ads out there claiming 11,500% return in 4 months. According to one of the Twitter users the ads urges investors to visit the Hex website & become part of the success story.
  • Interest Rates: Hex claims to give investors the opportunity to earn interest on the holding with this ranging from 3.69% to 369% depending on the percentage of the total supply that’s staked. 

Our question is how? For which the answer probably is that it is relying on the price volatility of cryptocurrencies.

  • Controversies around the Owner: Heart has formally been a member of a Panamian criminal outfit. His crime ring is alleged to have been involved in robberies, blackmail, bribery and more. He previously went by Richard Schueler & faced lawsuits in Washington where he was nicknamed “The Spam King”. 
  • How did we hear about Hex?:Ever Wonder how we’ve come about hearing about Hex? It’s purely Social Media – Youtube, Twitter, etc with promises of how perfect the system & how it fixes the issues underlying bitcoing and cuts the middleman involved in banking.

Our Comparisons To The Banking System 

Why a Higher Return? 

Well, first off we want to clarify why the interest rate on Bank’s Certificate of Deposits are Low and the reason is now because there are so many middlemen and Mr. CEO taking huge salary as Mr. Heart so claims!

The return on a CD is linked to the existing Interest Rates in the Market – LIBOR. Based on the maturity of the deposit, the return is higher or lower. Higher for deposits with longer tenor. So, Hex has got this part right.

However, if you take an Excel Table and put all the 1-year deposits of various banks. You will notice they are all not the same. A simple explanation is, it’s dependent on the Risk Rating of the Bank (there are other factors like capital adequacy, etc but we shall not dwelve into these matters).

So, a Bank with Risk Rating of “Junk Category” will provide you a lot higher return in comparison to a bank with a Risk Rating of “AAA”.

Does this now make you wonder about Hex? Which is still yet to prove itself.

Why Do Banks Give Interest in Exchange For The Deposits?

A banks balance sheet is simple. 

The deposit that you provide is your Asset, however, that is the liability of the bank where they have to pay you an interest. So, they have to make enough money to pay the same? So, what do they go and do?

They go and lend! They give you money. The money you borrow (your liability) becomes their asset. They charge you the interest at a higher rate.

So, this is how banks are able to pay the interest on the deposit & still make money & pay all the middle men & Mr. CEO.

However, Hex has explained the part where they are giving an interest. What are they doing with all that money. Leaving that aside if they are giving a high interest then how are they earning so much that they can pay it in the end???

FDIC Insurance

Most deosit taking banks (not investment banks) carry FDIC insurance for their depositors, which means your depository accounts such as checking, savings, money market accounts, CDs are covered.

Is it the same with the high Interest bearing CDs from Hex. The answer is a big fat NO! 

Our Final Verdict

In our opinion, Hex seems to be too new with the promise sounding “Too Good To Be True!”.  The technology has been built on a great platform & there is tremendous potential with it, however, that is dependent on how the owners of the project it forward.

More importantly, we haven’t seen any paybacks yet. So, if you still decide that this is the thing for you, we’d suggest either a quick trade (in-and-out) or whatever the money is it be “Gamble Money”!

About Author:

Sana Khan is a graduate from Carnegie Mellon University specializing in Nuclear & Particle Physics. She’s worked with various multinational across US, Europe & Asia in various positions related to technology. After taking a sabbatical she started her own blog called EverydayElectronics.in where she provides opinions & reviews on your everyday gadgets.