What is PulseChain?
What is PulseChain, what is HEX, and is PulseChain dead? We're answering all your questions about the controversial project, its founder, and more in our PulseChain guide.
What is PulseChain?
PulseChain is a layer-1 blockchain project initiated by Richard Heart, who also created the HEX cryptocurrency. It was designed to be an enhanced version of the Ethereum network, with a focus on improving energy efficiency, lowering transaction fees, and maintaining compatibility with Ethereum's ecosystem.
One of the key features of PulseChain is its use of a proof-of-stake (PoS) consensus mechanism, which is less energy-intensive than Ethereum's original proof-of-work (PoW) system. However, since Ethereum has also switched to PoS, this advantage has become less significant.
PulseChain also aimed to offer lower transaction fees, making it more affordable for users to interact with the network. Additionally, it was designed to be backward-compatible with Ethereum, meaning that developers could easily port their Ethereum-based projects to PulseChain without major modifications.
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What is PLS token?
A notable, and controversial, aspect of PulseChain is its approach to token distribution. It took a snapshot of the Ethereum network, replicated it on the PulseChain network, and then issued its native token, PLS. Ethereum users were given a copy of their tokens and NFTs on PulseChain as part of an airdrop, effectively duplicating their assets on the new network.
To obtain PLS tokens, users participated in a unique "sacrifice" phase, where they could donate various cryptocurrencies or fiat money to supported addresses or charities. The more they sacrificed, the more PLS tokens they received. PulseChain also introduced its own decentralized exchange called PulseX, which allows users to swap tokens and NFTs on the Pulse network. PulseX also had its own sacrifice phase, similar to that of PulseChain.
The network is currently live on the mainnet, and users can connect to it by adjusting their MetaMask settings to link to the Pulse RPC endpoint. A block explorer called PulseScan is available for users to check their balances and transaction history on the network.
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Why is PulseChain controversial?
PulseChain has become a topic of controversy for several reasons, raising concerns among critics who question its legitimacy and the intentions behind it. Here are some of the main criticisms of the project:
Dubious launch: PulseChain's launch involved a "sacrifice phase," where users could exchange cryptocurrencies or fiat money for PLS tokens by donating to supported charities. This phase raised over $700 million for causes like medical research. However, critics argue that the sacrifice phase was a way to sidestep legal regulations by offering no guarantees or expectations to donors. They also claim it was a tactic to enrich Richard Heart and his associates, who could manipulate the supply and demand of PLS tokens to their benefit.
Buggy mainnet: The PulseChain network has faced several technical issues and bugs. For example, there was a significant spike in the price of wrapped Bitcoin (wBTC) on PulseChain, from $27,000 to $70,000 in just 20 minutes, followed by a sharp drop. This extreme volatility highlighted the network's low liquidity and raised concerns about its stability and security.
Controversial founder: Richard Heart, the founder of PulseChain, is a polarizing figure in the cryptocurrency world. His past includes accusations of involvement in a spam-related scheme in 2002, which went to trial. His involvement in the controversial HEX project, which many have labeled as a Ponzi scheme, only adds to the skepticism surrounding PulseChain.
Doubtful track record: PulseChain's sister project, HEX, has been criticized for having minimal use cases and being more of a high-interest blockchain certificate of deposit than a groundbreaking innovation. Critics argue that HEX operates like a Ponzi scheme, where interest payments are funded by new entrants and inflation, benefiting mainly Richard Heart and his affiliates, who control a large portion of the token supply.
Launch problems: The launch of PulseChain was marred by issues, according to reports. Despite the enthusiasm of HEX supporters, the PulseChain launch was seen as a disappointment, with no major exchange listings, high transaction fees, and numerous fake versions of PLS tokens. Many users found themselves losing value on their locked tokens while being unable to bridge away from the chain. Over-the-counter dealers reportedly charged exorbitant prices to dump locked tokens, further frustrating early adopters.
These issues have fueled skepticism about PulseChain, with some seeing it as a risky or even deceptive project. However, PulseChain also has a dedicated following who believe in its potential to improve on Ethereum's performance and user experience while supporting charitable causes. The controversy surrounding PulseChain largely hinges on differing opinions about its founder, its launch strategies, and its long-term viability as a legitimate blockchain project.
Who is Richard Heart?
Richard Heart, born Richard Schueler on October 9, 1979, is a prominent and highly controversial figure in crypto, known for his involvement in projects like HEX, PulseChain, and PulseX. A mix of innovation, aggressive marketing, and significant legal troubles has marked his career.
Before entering crypto, Heart had a different kind of notoriety. In the early 2000s, he was involved in what became known as the "Spam King" case, where he was sued under Washington State law for sending unsolicited commercial emails with deceptive information. His activities extended to more serious allegations in Panama, where he was reportedly linked to a criminal network involved in money laundering, theft, and extortion.
Heart's most famous project is HEX, a cryptocurrency that markets itself as a blockchain certificate of deposit (CD). HEX allows users to stake their tokens for interest, with longer stakes promising higher returns. HEX has been heavily criticized and often labeled as a Ponzi scheme. Critics argue that the high returns promised to early adopters are unsustainable and that the project primarily benefits Heart and his affiliates, who control a significant portion of the token supply.
Following HEX, Heart launched PulseChain and PulseX, which were designed to expand and improve upon the Ethereum network. These projects have also been embroiled in controversy. PulseChain, for example, involved a "sacrifice phase" where users could exchange cryptocurrency for PLS tokens by donating to supported charities. Critics saw this as a way to avoid legal scrutiny and manipulate the token's supply and demand.
Richard Heart is known for his polarizing persona, characterized by aggressive marketing and lofty claims about the potential returns of his projects. His promotional tactics often include controversial statements and predictions about cryptocurrency markets, which have drawn both significant support and harsh criticism.
Despite the legal challenges and accusations of unethical practices, Heart has managed to build a substantial following. His projects, particularly HEX, at one point amassed a market capitalization of over $40 billion, making it one of the top cryptocurrencies by market value. However, as of now, HEX and PulseChain have seen significant declines in their value, reflecting the ongoing controversies and legal battles.
What is HEX?
HEX is an Ethereum-based token that markets itself as a blockchain version of a certificate of deposit (CD). Richard Heart launched the project in December 2018. Like traditional CDs offered by banks, where you deposit money for a fixed period and earn interest, HEX allows users to "stake" their tokens for specific time frames to earn rewards. The longer you stake your HEX, the more you can potentially earn, which encourages holding onto the token for extended periods.
One of the unique aspects of HEX is that it rewards its holders rather than miners or validators, which is common in other cryptocurrencies. When you stake HEX, your tokens are burned, and you receive something called "T-Shares" in return. These T-Shares accumulate daily interest in HEX, and the longer your stake, the more T-Shares you get, leading to higher rewards. The system is designed to increase HEX's value by a maximum of 3.69% annually, with penalties in place if you withdraw your stake early.
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Is HEX a scam?
HEX has been highly controversial, especially due to its connections to PulseChain and PulseX, two related projects also initiated by Heart. These projects have faced accusations of being scams or Ponzi schemes, partly because of the aggressive marketing tactics used to promote them and the lofty, sometimes unrealistic goals set by their developers. HEX itself has been promoted with claims of astronomical returns, which has drawn skepticism and criticism.
The controversy escalated in July 2023 when the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Richard Heart. The SEC accused him of failing to register HEX, PulseChain, and PulseX as securities and of misleading investors about the use of funds. According to the lawsuit, Heart raised over $1 billion from investors and allegedly misused at least $12 million for personal luxuries, including expensive cars, watches, and a 555-carat black diamond known as "The Enigma."
One of the most damning allegations involves the "Hex Flush Address," a mechanism that allegedly recycled investor funds to artificially inflate the success of the HEX presale. The SEC claims that while the presale appeared to attract $678 million worth of Ethereum (ETH), the actual investment was only about $34 million, with the rest being recycled funds. This manipulation misled potential investors and allowed Heart to maintain control over the majority of HEX tokens.
As of November 2023, the SEC was still facing difficulties serving Heart with the lawsuit, a necessary step for the case to move forward. Heart's residence in Finland has added complexity to the legal proceedings, with the SEC seeking assistance from Finnish authorities to proceed with the case.
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Should I invest in PulseChain?
Given the significant legal issues faced by the PulseChain founder and the myriad of accusations surrounding the project, many crypto investors have avoided PulseChain. As with all projects, you should DYOR and never invest more than you can afford to lose.
Where can I buy PulseChain (PLS)?
If you’ve decided you want to buy PulseChain (PLS), you can purchase it on some crypto exchanges including:
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Is PulseChain dead?
At the time of writing, PulseChain has a daily trading volume of less than $150,000 and is down more than 85% from its all-time high. This alongside the legal challenges faced by founder Richard Heart may lead some to conclude the project is dead. However, the project still remains active, with a relatively large following. Only time will tell how things end.
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PulseChain tax implications
PulseChain is effectively a hard fork from the Ethereum blockchain - which creates tax implications.
If you have assets on PulseChain, the first thing to consider is whether you want to accept these tokens and the associated tax implications. If you don't want them, you can simply choose not to import the wallet, as it wasn't initiated by you.
However, if you decide to claim these assets, you should import the wallet and be prepared to possibly pay income tax on the new tokens. Tax rules on receiving free tokens, like airdrops or chain splits, vary by jurisdiction. You can learn more in our crypto tax guides about the rules where you live.
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