Not every scam looks the same
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A fitness trend that became popular in 2019 and is growing in 2020 is the fitness-assistance market.
These are products that help us work-out while having non-fitness related benefits as the carrot that drives us to keep going.
My favorite example of this is fitness video games.Games such as Nintendo?s ?Ring Fit Adventure? is a way for gaming enthusiasts who would otherwise never work-out to get in some exercise without leaving the living room.
Sweatcoin is an app that promotes itself as a way to lose weight while also making money, an exciting premise that feels almost too good to be true.
According to Sweatcoin, the motivation to make a profit will encourage us to walk more than we usually would, helping us to lose weight while making money. Some people have gone as far as to call this app a ?passive income,? a claim that immediately set the alarm bells ringing in my head.
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Getting Started
Upon downloading the app, you?ll become familiar with the sweat economy very quickly, because the system couldn?t be more straightforward.
For every 1,000 steps you make, you?ll earn 0.95 sweat coins. I?m someone that gets in roughly 17,000 steps a day for my job, an amount that can make me approximately 16 Sweatcoin a day (484 a month).
This level of earning depends on my willingness to keep the app open all day, with tracking settings left on, of course. This earning potential also relies on me upgrading my membership tier to ?Quaker,? as the base membership level only allows me to earn 5 Sweatcoins per day. The levels are –
- Mover ? Costs nothing and allows earning potential of 150 Sweatcoins a month
- Shaker ? Costs 4.75 Sweatcoins per month, bumps earning potential to 300 Sweatcoins per month
- Quaker ? Costs 20 Sweatcoins per month, bumps earning potential to 450 Sweatcoins per month
- Breaker ? Costs 30 Sweatcoins per month and caps total potential earnings at 600 Sweatcoins per month.
This means that earning potential is capped at 570 Sweatcoins per month.
With the value of one Sweatcoin ranging between 5 cents and 10 cents, this means earning potential is capped between $28.50 and $57 per month. But have you really earned that money?
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Getting Paid
When I used Sweatcoin, I never saw a way to cash out. But after watching reviews online, I?ve been seeing different reports of people saying that you can cash out once you?ve reached specific values.
Of those that claimed to be allowed to cash out, the most consistent report is that you can cash out 20,000 Sweatcoins and receive $1,000. If that?s true, it?s in-line with the lowest estimated value of the currency at 5 cents per Sweatcoin.
But if they?re dolling out $1,000 payouts to everyone who reaches 20,000 Sweatcoins (which would take years to achieve), how can they afford it? The first way is through their store.
Sweat Store
Once you?ve downloaded the app, Sweatcoin encourages you not to think of their currency as a path to actual dollars. Instead, they want you to earn and then spend your money on the store inside the app.
This store has a lot of the same products you see on scammy websites that want your credit card in exchange for free and discounted stuff. Stuff that can include vouchers for yoga classes, exercise swag, and gift cards. The items on the store are contingent on the deals they?re able to make with retailers.
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What Defines a Scam
A scam isn?t always a system in which the scammer is the only beneficiary, while the person being scammed gets nothing. While those scams are the most well known, they?re also the most likely to be shut down for being predatory.
The scams that stick around are the ones that give the victim just enough to keep them around and happy, while finding the most efficient path to the motherlode. These scams only work because all too often we have no idea what we?re worth. Scammers find a need, then find other people who?ll fill that need while both sides direct all the money back to them.
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Becoming Known
Retailers are desperate to get products into your hands, even if it comes at a loss.
If you?ve received a product for free from a particular brand and are enjoying it, you?re a lot more likely to go back and spend money. You feel grateful that it was free, but best of all, you?re aware of who they are and may talk about them.
99% of brands would kill to have name recognition. Only a tiny fraction of brands that exist are brands that are well known by the public. For every McDonalds, there are a million burger places that wish you knew who they were. Brands are only too happy to pay Sweatcoin to be featured on their store and have the opportunity to give their products away to you. You benefit because you?re getting a free or discounted yoga mat, and Sweatcoin benefits by making money from the retailer.
Sweatcoin would like to track your location? Allow once? Allow while using the app? Allow always?
By far, the most significant way an app like Sweatcoin makes money is by tracking and then selling/boasting about your movements.
It?s not something they like to talk about, because it feels icky when it?s brought into the light. Apps benefit a lot by being used every day, and this is a monetizable asset.
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The Value of Value
Apps track downloads, the percentage of users who use the app every day, and how long they use the app every day. (Every minute the app is open in the background and is tracking your steps counts towards time spent using the app).
All this data is tracked and then used to determine the value of the app and the value of the developer of the app.
Having an app that is opened by its users every day is precious, and increases the value of the app for resale. It also increases the value of the developer who may be looking for financing or a job.
He might need investor confidence to develop another app and will use the statistics of this app to convince a venture capitalist of its worth.
But tracking you isn?t just boosting the value of the app, unlike the Sweatcoin users, tracking data generates stone-cold cash.
Tracking = Marketing
Information about where people go and how long they spend in different locations is exceptionally monetizable information.
If this app can determine that I go to a Dunkin Donuts every day and bypass a Starbucks to do it, this is a goldmine. You?re generating a fortune through your phone, and you?re not being compensated even close to what it?s worth.
If you were to save up for years and cash out $1,000 (in exchange for 20,000 Sweat Coins), you?d have generated tens of thousands of dollars for Sweatcoin in the process. This level of disproportionate compensation is what makes this operation a scam.
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The Modern Age
We?ve moved into an age when the only apps worth funding are the ones generating enormous revenue through data trade and marketing (and micro-transactions).
The more we prioritize privacy and try to lock them out, the more valuable the ones become who can crack through with offers of free money and yoga mats.
If Sweatcoin is still valuable enough for you to use it then by all means, please go ahead. But use it with the freedom that comes with knowing who?s benefiting from your activity and why.
Because information isn?t just power anymore, it?s also unbelievable amounts of money.
