The main objective of this article is to let you into my thought process as to how I decided to invest in UTokens.
Update: April 6, 2016
Late last year, UFun disintegrated, and was “bought” by UNASCOS. Until now, no news were released as to the status of my investment.
I guess it’s appropriate (but disheartening) to conclude that It’s a SCAM.
Lessons Learned: If there’s no guarantee your investment can be retrieved, it’s a RED FLAG. Even legal insurance companies can run away with your money, all the more an entity without any legal identity.
Also, it should be noted that investing in a currency is NEVER a good idea. Why? Because it doesn’t have an intrinsic value. Paying with your mode of exchange to buy a mode of exchange doesn’t make sense (I read an article about this, but sadly didn’t follow its advise). Investment should be limited only to things that create value and increase market productivity.
We will follow a very simple guideline:
- What is UToken?
- How does the Company Make Money and How does it Give Returns?
- How much Risk is Involved and how much is the anticipated return?
1. What is UToken?
- UToken is a Digital Currency. It is similar to Bitcoin but differs in a few things.
- UToken is not controlled by the government. It is however controlled by the company, UFunGroup. This implies that the prerogative to increase or decrease its value is up to the company. This is also in contrast to Bitcoin, where the value is totally market driven, that’s why Bitcoin’s exchange rate is erratic, which discourages vendors to accept Bitcoin as a mode of payment.
- The government controls the value of its currency through the number of money it prints. This is also one of the few ways they influence market activities. Example, if the market is depressed, they try to print more money, so people would be more willing to spend. But by printing more money, the intrinsic value of the goods they buy do not change, so with more money to buy the same value of goods, the value of money decreases. What keeps the government from manipulating the currency value too much, though, is that it has a real territory to protect, with real people living within the territory. At the end of the day, it is still held accountable to its citizens, and to its creditors (other countries) through the real value of the goods being exchanged.
- UFunGroup, however, is a private company, with physical offices that span across the globe. Provided that UToken becomes the standard currency used by everyone, the management of UFunGroup has the final say as to how much UTokens will be put out into the market. They can even make UTokens for themselves, since they own the system, regardless of the 20% Reserve they claim they have.
- So to sum it up, UToken is a Centralized Digital Currency (With the UFunGroup ultimatately having the final say as to how much its value will be). It is not as erratic as Bitcoin, because again, its value is controlled. Also, just like any other currency, that includes USD, PHP, and Bitcoin, it has no intrinsic value.
2. How does the Company Make Money and How does it Give Returns?
- This Youtube Video presentation shows in detail how UToken works and how you can make money off of it.
- The first things I tried to find out before I invested in UTokens was “how would I get my money back?” and “how can the company pay me?”
HOW THE COMPANY PROFITS
- Let’s first discuss how the company makes profit. There are only two websites I visit frequently. https://www.utokenkms.com and https://www.ubonusman.com. These are the two website headers respectively:
- MULTIPLE CHARGES. After I surrendered my government controlled currency in exchange for UTokens, I didn’t immediately have them. Instead, I got UPoints. My UPoints were the currency to exchange for UTokens at the prevailing price (Then at 0.168USD or 0.168UPoint for 1 UToken). So to Recap, CASH -> UPoint -> UToken. However, here’s the catch. The minimum amount you can invest is Php25,000.00 or 558USD. But I didn’t get 558UPoint. Instead, only 400 UPoints per Php25,000.00 Investment! This means that the said 0.168USD = 1 UToken, is effectively 0.2344USD = 10.5Php = 1 UToken. So the company already makes money from there.
- UTOKENS ARE THE GOODS. Next, once you invested in the company, you can NEVER take your money out (At least for now, before the IPO?). There are ways to get your money out though: Buy items from their website Ubtmall.com or get third party people to exchange them with cash. But effectively, once the money is with them, there’s no turning back. Gulp!
- HIGH CHARGES AND RATES. You can gain Cash Equivalents thru Bonus Wallets and UToken Cash (I will explain how you can get these later). These are the only times you can get your money out. But there are two things to note. 1. The company’s exchange rate SELL-BUY gap is pretty wide. As of this writing, it’s 1 USD = SELL-BUY: 50PHP-42PHP, and the market exchange rate now is: 1USD = 44.78PHP. 2. As you make your withdrawal, the company charges another 5%, so you can only withdraw 95% of the value.
HOW YOU CAN PROFIT
- There are 3 main ways you can profit. (Apart from others I will not cover here, e.g. Investment Points)
- BONUS WALLET. The medium by which the company encourages everyone to invest in the UToken currency is through Binary Multi-level Networking. It works very similar to any Binary MLM. You have a left and right leg and you join people in either of the leg. A commission is given to you, with which 30% is retained as UPoints, and 70% will be put into your BONUS WALLET, which is withdrawable, subject to fees (See above).
- TRADEABLE UTOKEN and UTOKEN CASH. As the value of the UToken increases, you also gain by the amount increased multiplied to your UTokens. The equivalent amount will be put in a separate section as Tradeable Utokens. Take note, I mentioned above that once you bought your UTokens, you cannot sell them. This is the exception. Tradeable UTokens can be sold. Once sold based on the prevailing rate, 70% will be converted to UToken Cash (Withdrawable, subject to fees) while 30% will be retained as UPoint, the same scenario with your BONUS Wallet.
- UTOKEN VALUE APPRECIATION. The value of your UTokens will increase over time, in a very controlled manner. The company even DOES NOT ALLOW selling your Tradeable UTokens lower than the price dictated. So now, there’s no way the value of UTokens depreciates. With your UTokens, you can buy goods that are offered by vendors that accept UTokens.
3. How much Risk is Involved and how much is the anticipated return?
- According to Warren Buffet, it is not wise to invest in currencies, as they do not have intrinsic value. Their utility is on facilitating goods exchange. It is wiser to invest in the company that own these currencies. Or better yet, invest in the goods/business with real intrinsic value, or the company that owns these goods/businesses.
- This is not government controlled. You’re totally banking not even at a paper contract. You’re banking at a figure generated from the system of the same company that owns the UTokens. How riskier can that get? Anytime the company thinks the business is unprofitable, they can automatically disappear, and you have not anything to sue them with.
- Granted the UToken as a currency works, that in itself has a virtually unknown return because we don’t know how many vendors will accept UTokens as payments. But, there is a promising move with vendors from Thailand, as they apparently are already accepting it as a form of payment.
- We can simply compute for our “secured” ROI from the 70% of the Sold Tradeable UTokens we can get for every Price Increase. As of this writing, UToken had split thrice. It split twice last year, where the last split was ten folds, from $1.00 to $0.10, multiplying the tokens by 10.
- I laid out the possible returns based on the four scenarios. The first one is when we realize it’s a SCAM before we can get any money out. The second one is how much cash we can withdraw if it continues its current tick-rate. Third and Fourth scenarios are speculative, and will be similar to most of the presentations you’ll get from the web. Based on last year, around September 2014, it drastically increased its value for reasons I do not know. If we consider it from April to October, that’s just six months! The last two scenarios play around with those speculations.
Last Few Notes:
- My words of advice: Since I showed you how speculative the whole nature of this is, I suggest you only put in the money YOU CAN Afford to lose. As much as we want to concentrate on the “WHAT IF YOU GET MILLIONS OUT OF THE FEW HUNDRED THOUSANDS”, also consider the side which may destroy your life by losing your hard-earned money.
- I invested only the amount I am comfortable losing. In the event I will get the outrageously speculative ROI, I will not say I wish I invested more. That’s the rule of investment, you have to be emotionally detached as much as possible.
- If we’re friends in FB, I’ll be posting from time to time how much I would have gained as of update date. FB Album Here. Join me.
- If you have any questions or corrections, feel free to write them down on the comment section below, or drop me a Personal Message at my Facebook Account. https://www.facebook.com/christian.chiu/