Paycoin Succeeding May Be More Dangerous Than it Failing

Paycoin has gotten a lot of press lately, as has the company behind it, GAW Miners / GAW Labs.  Paycoin has not maintained it’s “expected” $20 price floor, which is what Josh Garza and GAW Miners had stated that investors would be willing to pay for it, and that GAW would try to maintain.  The backlash from the community has been relentless.  The issues with Paycoin are complicated, but before I get into that, I must preface this article with a bit of Coin Brief’s history with GAW.  If you would like to skip to the next page, where I will begin the part of the article that is focused on Paycoin, click here.  Otherwise, read on.

GAW Miners and Coin Brief

I must preface this article by mentioning something that has been pointed out by members of the community:  Coin Brief serves advertisements for GAW.  If you do not use adblocker, you can probably see this.  We have been getting a lot of negative feedback for this, and I understand the hostility.  GAW has had a stigma attached to it for the past few months, and that has intensified since the launch of Paycoin.  We have been asked to remove the ads, but that is easier said than done.  The ads that are being served are impressions that were paid for upfront, and must remain until those impressions have been served, or until we are presented with actual proof of criminal activity by GAW.  I am an honest person, and by proxy, Coin Brief is an honest site.  We can not, in good conscience, go back on our agreement with GAW.  That being said, the extent of this agreement is to serve the impressions they purchased, and nothing more.  We do not receive any additional payments for clicks on their advertisements, and all GAW affilliate/referral program links on Coin Brief have been removed.

Coin Brief began following GAW Miners when they first started selling Scrypt ASICs.  They had the best deals, fast delivery, and friendly staff.  I contacted their PR department, and managed to secure an email-based interview with Josh Garza.  At that time, GAW was crushing their competition, had moved into selling Bitcoin mining machines as well, and was doing great work it seemed.  However, since that time, starting with the launch of the Hashlet, and moving forward into Paycoin, Paybase, Hashstakers, etc., something has seemed off.

I did not write much about GAW during this time, beyond publishing a few Press Releases, as I was trying to figure out what they were doing.  The community has been screaming that they are a scam, or a ponzi, since Hashlets were launched, but that has never really sat well with me.  Of course, it is completely possible that GAW is a scam, as that has happened before, and will happen again, but I have yet to see conclusive evidence.  Still, recent events, and data that has been presented, has had a negative impact on their image, as well as the image of anyone associated with them.

I always try to look at every angle of a situation, rather than jumping to conclusions.  It has always seemed like there had to be another explanation for why they would switch from a profitable business model, which was selling mining hardware, to one that was very likely to be unprofitable, such as selling cloud “mining power” with a profitability guarantee.  Of course, the mining hardware industry was on a downturn, and it made sense that they may want to try to transition to something new…but what that “new” thing was eluded me.  The answer to that, of course, is Paycoin (XPY).  Paycoin, as outlined in the Paycoin White Paper, is actually a genius idea, but at the same time horrific…at least for people that support some of the issues that Bitcoin was created to address.

Interviewing Josh Garza, Again

When I first heard of “Hashcoin”, Paycoin’s original, temporary name, along with it’s  related services, I wrote an article titled,”GAWMiners: What is HashCoin, HashBase, and HashPool?”  This article was a prediction about what GAW was planning to do.  I was hopeful in a way, because there seemed to be some potential to create a truly awesome payment system, and my article was somewhat accurate…but I was missing a few key pieces of information.

Around the time the final white paper for Paycoin was released, I had an opportunity to interview Josh Garza once again.  However, this time, the interview was on the phone, and went for well over an hour.  The mostly raw transcript of that interview,”Interview With Josh Garza of GAW Miners: Hashlet Profitability, Coinfire, Paycoin, and Paybase,” was published on Coin Brief, so that anyone could read through it, and because I had agreed to not publish the recording.   Had I known all that I do now, that interview would have included a few other, specific questions, but I gleaned quite a bit of insight from speaking to Josh.

While he seemed a bit nervous at first, likely due to the constant onslaught of attacks GAW has received, he quickly loosened up.  In all honesty, he was quite charismatic at times, and I enjoyed most of the conversation.  In the end, I wasn’t completely convinced, but I walked away from the interview feeling more reassured that Josh was not intentionally trying to defraud anyone.  However, just because I was convinced doesn’t mean I was right. There is one thing that can be said about Josh Garza with absolute certainty:  He knows how to talk, and win a person over, especially 1 on 1.  That trait is part of why many do not trust him, as it is a trait that is characteristic of con-men…though it is also characteristic of many people that have success in business.

After the interview, I continued to research the ideas behind Paycoin, GAW as a whole, and the transcript of the interview.  Also, Josh agreed to answer any additional questions I had via email, and has responded to everything I have asked him, except for my last set of questions.  While writing this article, I reached out again, and was told that he missed my last set of questions, and to send any additional questions I have.  After sending those, I continued to write, until Friday evening, when Josh offered to speak with me on the phone.  I spoke with Josh and GAW’s COO, Dan Kelley, to try to make more sense of the recent reports of 350% staking rates, the involvement of some high profile individuals with GAW, and other issues.

In this case, I do not have a transcript to share, as I use Google Voice for recording phone calls, and it was not forwarding calls to my phone correctly.  However, I did take notes, and will mention some of the responses in the sections related to Paycoin.