Can Friend.tech and TimeStore really work in China?

Could Friend.tech and TimeStore Successfully Function in China?

Introduction:

Have you ever thought that you could become an NFT yourself? The recently popular Friend.tech and Time Store platforms are based on this concept. KOLs (Key Opinion Leaders) on these platforms release their own NFTs, and fans can interact and communicate with them by purchasing these NFTs. Can this concept really work in China? This article will provide an introduction and analysis.

(Image source: Time Store official website)

01 Friend.tech Platform Gameplay

Friend.tech is a decentralized social platform built on Coinbase’s Layer 2 network Base Chain. It obtains users’ Web2 identities through strong integration with Twitter and utilizes these identities to achieve profit potential[1].

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The more popular a user is, the higher the price of their NFTs. Friend.tech is clearly mastering the fan economy.

(Friend.tech Twitter account)

The specific gameplay involves linking the platform to the user’s Twitter account. For example, a KOL (Key Opinion Leader), as a new participating user, activates their account by filling in someone else’s invitation code and paying 0.01 ETH. After registration, the KOL’s account generates tradeable keys (tokens representing ownership and access rights on the platform). If other users subsequently purchase these keys, the price of the KOL’s keys will increase. If the keys are sold by other users in the future, the price of the KOL’s keys will decrease. The market prices the KOL based on their influence, and the value of the KOL is tokenized in the form of NFTs.

You can check the real-time prices of relevant accounts on the official website:

According to the Keys holding data, as of August 25th, Founder Racer ranks first temporarily with 2.91 ETH, making a profit of approximately 90 ETH[2].

02 Friend.tech Money-making Methods

Friend.tech, as a decentralized social platform, has financial attributes. Its core mechanism is to transform Twitter into tradeable keys. After purchasing a KOL’s keys, users gain access to their inner circle and can directly chat with the group owner. This is a great way for ordinary users to interact with industry leaders. For example, if you’re looking for a good job, you can directly send your resume in the group chat. If you want to stay updated on the latest industry trends, you can follow the opinions and ideas shared by KOLs in the group chat. Or if you simply believe in a certain KOL and expect many buyers to come after you, you can also buy the keys to join the group.

After payment, you can enter the group chat and chat with the KOL. Each person can only see their own conversation with the KOL and cannot see the conversations of others in the group:

As a KOL, you can earn transaction fees by buying and selling keys in your own chat room. As a regular user, you can profit from the price difference by finding potential stocks and buying low, selling high.

03KOL Time Trading Platform – Time Store

Similar to Friend.tech, there is also a recently launched platform called Time Store (formerly known as Second Ah in 2017 – claiming to be the first national time trading platform). Users can buy tokens issued by KOLs to purchase their time and interact with them.

(Image source: Time Store official website)

After purchasing KOL’s time, there will be online and offline interaction opportunities between the two parties:

(Image source: Time Store official website)

04 Is it legal to issue personal coins?

First, we need to clarify a few concepts. NFT (Non-Fungible Token) refers to non-fungible tokens built on blockchain technology. The opposite concept is fungible tokens, such as Bitcoin, Ethereum, and other cryptocurrencies. Fungible tokens have the same function and value, and can be exchanged with each other. On the other hand, only one NFT can be generated on each contract address, and they cannot be exchanged. NFTs can serve as a carrier for storing real-world assets such as artworks, as well as virtual currencies.

According to the 2017 announcement on preventing the risks of token issuance and fundraising, any organization or individual is not allowed to engage in illegal token issuance and fundraising activities. The 2022 April initiative on preventing financial risks related to NFTs also states that there should be a resolute prevention of the financial and securitization tendencies of NFTs, and strict prevention of illegal financial activities.

The gameplay of platforms like Friend.tech and Time Store is actually quite common in the Web2 world. For example, Liu Run’s Evolution Island and other paid Q&A communities, where you pay a membership fee to enter the community and observe the discussions of the experts. However, in the Web3 domain, these platforms tokenize social value by allowing users/KOLs to issue coins for fans to purchase. But our country’s relevant policies do not allow any organization or individual to issue tokens. As for NFTs, which are localized digital collectibles, their main emphasis is on their value as digital artworks, and precautions against their financial attributes.

In the process of platform operation, if false information appears in the market to manipulate public opinion and cause panic among users, the prices of certain KOLs may quickly drop, leading to a collapse. Users who bought in early may opportunistically sell at a high value, but latecomers may get trapped and suffer significant financial losses.

If some KOLs guide a large number of users to buy their NFTs through hype, deception, price manipulation, and other means, but actually cannot provide users with continuous and stable high-quality services, and after raising the price, they sell the NFTs for high profits, it will also result in a significant loss of user funds.

In this type of trading model, if it triggers a large number of user complaints, both KOLs and platforms may be involved in criminal risks such as illegal fundraising, pyramid schemes, and fraud.

05 Is the development team safe overseas?

It is understood that Time Store claims to have all its members overseas. So here’s the question: Although the project and personnel are located overseas, they primarily target Chinese users for registration and usage. Can they evade the jurisdiction of China’s criminal law? The answer is no.

According to China’s criminal law, it stipulates territorial jurisdiction and personal jurisdiction. Territorial jurisdiction means that as long as the criminal conduct or result occurs within the territory of China, China has jurisdiction; personal jurisdiction means that as long as it is a Chinese citizen who commits a crime outside the territory of China, China also has jurisdiction.

Therefore, as long as it is a Chinese citizen committing a crime or the criminal conduct or result occurs domestically, China has the right to exercise jurisdiction.

06 Lawyer Mankun’s reminder

In the world of Web3, there can be a lot of innovative content, which is why more and more people are starting to pay attention to blockchain, metaverse, and other related topics. From the joint issuance of the “Guiding Opinions on Accelerating the Application of Blockchain Technology and the Development of the Industry” by the Ministry of Industry and Information Technology and the Cyberspace Administration of China in 2021, it can be seen that China also holds an encouraging and supportive attitude towards this. However, since the issuance of the “Notice on the Prevention of Bitcoin Risks” in 2013, relevant regulatory departments have consistently released documents expressing a negative attitude towards the issuance, trading, mining, and other aspects of virtual currencies. Therefore, while Web3 entrepreneurs engage in various content innovations, they must remember not to cross the regulatory red line, otherwise they may end up in prison.

[1]Friend.tech: An Analysis of the Emerging SocialFi Track – LD Capital – Medium

https://ld-capital.medium.com/friend-tech-%E6%B5%85%E6%9E%90socialfi%E8%B5%9B%E9%81%93%E6%96%B0%E8%B4%B5-203d43b61acb

[2]friend.tech Research Report: Investment Logic, Value Evaluation, and Potential Risks – Foresight Newshttps://foresightnews.pro/article/detail/4158

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