What Is Hex?
Hex is an Ethereum-based token that bills itself as the first blockchain certificate of deposit (CD). Just like traditional CDs offer an improved interest rate to customers who agree to leave a lump-sum deposit untouched for a set amount of time, Hex holders can stake batches of HEX tokens for specified amounts of time. During this time, they may not access those tokens without severe penalties—but when the specified time period is complete, Hex holders can receive HEX rewards.
Hex was launched in 2019 by founder Richard Heart. It has received criticism for being a scam or a potential Ponzi scheme, and it has a market capitalization of $5.6 billion as of Oct. 11, 2022, down from more than $30 billion at the start of the year.
- Hex (HEX) is an Ethereum-based token that is marketed as the first blockchain certificate of deposit.
- Richard Heart launched Hex in 2019, utilizing an aggressive marketing campaign to build its userbase.
- Users stake HEX tokens, promising to leave them untouched for specified amounts of time.
Hex’s model pays rewards to token holders, rather than to miners or validators operating the network. Users stake their HEX by agreeing to not trade or sell their tokens for preset lengths of time. When the time period is complete, HEX holders then receive those funds plus an interest payment or HEX reward. Hex users can currently select from one to 5,555 days (more than 15 years) for the duration of their stake, with longer stakes corresponding to higher rewards.
The mechanism for staking is structured such that establishing a new stake burns HEX tokens and provides the user with so-called “T-Shares” in return. Longer stakes receive higher numbers of T-Shares, with each share accruing interest in HEX each day.
Hex operates using a “proof of wait” mechanism. In the Hex ecosystem, all HEX holders use the proof-of-wait mechanism and are rewarded with more HEX.
Hex’s value is designed to increase yearly by a maximum of 3.69%. This inflation, combined with penalty payments that Hex collects, pays HEX rewards to users who have already staked their tokens for the agreed-upon time periods. Penalties are charged to Hex users who trade or sell their HEX prematurely.
History of Hex
In the year following Hex’s launch in December 2019, holders of Bitcoin and Ethereum could claim HEX tokens for free. The last day of this launch phase was known as the “Big PayDay,” in which all unclaimed HEX tokens were distributed to existing HEX owners.
Hex has received criticism over various privacy and security concerns.
Concerns About Hex
Hex has received significant criticism and accusations of being a scam. The cryptocurrency has been criticized in particular for resembling a Ponzi scheme, with Heart acknowledging that the project uses “tactics a scam might use.” Heart attributed the skepticism to cryptocurrency investors’ loyalty to only particular coins.
How Is Hex Different from Bitcoin?
Hex claims that its inflation mechanism is favorable to that of Bitcoin. Hex’s annual inflation is capped, and inflation is paid directly to Hex holders. Hex’s proof-of-wait mechanism is less energy-intensive than Bitcoin’s proof-of-work protocol. Hex is built on the Ethereum network, whereas Bitcoin is supported by its own blockchain.
Goals of Hex
Hex was established with a goal of “price appreciation that overperforms as much and as fast as possible.” Hex’s developers also have asserted these goals for HEX:
- Replace gold as a store of value
- Eliminate the need for credit card and payment companies
- Replace centralized authorities with a trustless system that pays interest directly to stakeholders
Is Hex legitimate?
One criticism of Hex is that, unlike many other cryptocurrencies, it has no obvious use case. Hex’s developers claim that the token is designed as a store of value and that the monetization of the proof-of-wait concept is the cryptocurrency’s use case.
How much is Hex worth?
As of Oct. 11, 2022, each HEX token is worth $0.03. The Hex ecosystem has a market capitalization of roughly $5.6 billion.
How do you buy HEX?
To buy HEX, users need to hold Ether (ETH) tokens and use MetaMask, a cryptocurrency wallet that functions like a browser extension. Users can trade ETH for HEX.
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