In my first article titled “Cryptocurrency – Is It a Fact or Fiction”, I analyzed the process that blockchain startups use to launch cryptocurrency ICO (Initial Coin Offering) whiuch is promised to be used  an alternative to today’s legal tenders. In my first article I identified conflicting objectives between cryptocurrency and blockchain. In this my second article, I wanted to understand what drives the significant fluctuations in isstroduced cryptocurrencies.

To understand why all cryptocurrencies fluctuate so much, I needed to understand the business model for each new blockchain startup. To do that, I analyzed many whitepapers published by these startups, startups that have already launched and completed their initial ICO’s. In this article, I share my analysis on five randomly selected companies’ whitepapers.

Let’s put a context around this new technology market.  When I published my first article week ago, the total number of completed cryptocurrencies rose from 1,527 to 1,548. And at the time of writing this article, there were 87 live ICO’s in the active stage of ICO launch and 34 pending ICO’s.  As of March 9, 2018, the total market cap for all cryptocurrencies peaked to $ 741.6 billion USD and it all happened in less than a year. This is a major event.

 

 

To analyze each startup business and to understand possible reasons why their tokens values fluctuate dramatically, I applied a common sense business template  to each company. The key areas that I looked at were:

  • Leadership Team – Who is the leadership team and what value they add to the business
  • Business Vision – What business problem the company is solving, their solution and what’s unique about it
  • Competition – Who are the key competitors, what differentiates the startup and how well this is understood
  • Revenue – How will the startup generate revenue and what is their sales model and execution plan
  • Launch date – When will the startup launch their service

The following are results from of my analysis:

Company 1Lunyr Token (LUN) price as of Mar 8, 2018, $ 17.00 USD  https://lunyr.com/

Company Founders

  • CEO Cofounded Leadigest Inc – Not able to find the company he founded
    • Strengths – Programmer
  • COO – Insurance sales, account executive in technology sales
  • Advisors – Technical skills and focus

ICO – March 2017

  • Whitepaper Presence – No white paper on website, found it on a different website https://bravenewcoin.com/assets/Whitepapers/Lunyr-WhitePaper-ENG.pdf
  • Business Vision
    • Initially focus on fine-­tuning the system to improve accuracy, increase content, and grow readership. Once the knowledge base matures, we will attract a wider audience by encouraging contributions of near real-time data on world events and translations in multiple languages. Ultimately, Lunyr intends to establish its brand globally as a reliable, accurate decentralized knowledge base
  • Business Problem – Current crowdsourced knowledge bases face problems with centralization, censorship, and inaccuracy.
  • Business Solution – Lunyr’s innovative platform solves the problems of centralization, censorship, and inaccuracy seen in current knowledge bases.
  • Competition – Wikipedia offers very similar solution and is nonprofit with donations as revenue

Solution unique approach

  • Decentralization, token incentive system
  • Mandatory peer review, LUN reward, pool

Revenue

  • Future advertisements similar to Quora
  • No revenue projections or sales strategy and forecasts stated

Service launch – Milestone Lunyr API 2019

Company token (LUN) price chart

 

Company 2 – MinexCoin Token (MNX) price as of Mar 8,2018, $ 27.4 USD – https://minexcoin.com/

Founders – Mostly Ukraine based

  • CEO – Owner of large mining farm, economist, founded & managed private & public companies. No reference to which companies founded.
  • CTO – Interest & experience in IT and finance
  • Advisors – Not stated

ICO – May 15, 2017

  • Whitepaper presence – Whitepaper on company website
  • Business Vision
    • Global payment system built on the eponymous low-volatility crypto-asset regulated by an autonomous algorithm with methods proven in traditional financial markets
    • MinexCoin asset is a low-volatility cryptocurrency
  • Business Problem – Merchants and service providers are reluctant to accept cryptocurrency payments as it involves additional risks of exchange losses and regulatory issues. High volatility is amongst the biggest disadvantages of Bitcoin and similar cryptocurrencies. It hinders it from becoming a means of storage and exchange of value on the global market.
  • Business Solution – MinexCoin offers an innovative solution which creates an autonomous financial system that meets the demands of all three kinds of market actors.
  • Competition – Not identified in white paper

Solution unique approach

  • MinexCoin a unique innovative solution with low volatility, predictable and controllable
  • MinexBank – Smart algorithms
  • Main exchange – MinexBank will invoke asset price

Revenue

The long-term value of the coin is based on its annual growth of 33.6% with No specifics on how the company will earn revenue and no revenue or sales strategies and forecasts stated

Service launch – MinexExchange Q 2, 2018 and MinexMarket  Q 4, 2018

Company token (MNX) price chart


Company 3 – Byteball Token (GBYTE) price as of Mar 8,2018, $ 326.56 USD https://byteball.org/

Founders –  Not identified

ICO – Feb to Nov , 2017

  • Whitepaper presence – Whitepaper on company website
  • Business Vision

Byteball is a decentralized system that allows tamper proof storage of arbitrary data, including data that represents transferrable value such as currencies, property titles, debt, shares, etc.

  • Business Problem – Not clearly stated. It appears to be a detailed statement of weaknesses in Bitcoin based blockchain and how Byteball blockchain addresses these weaknesses. The whitepaper is more like a technical design document.
  • Business Solution – A very detailed technical description of how Byteball solution will work
  • Competition – Not identified in white paper

Solution unique approach

  • The white paper provides detailed design explanations suggesting a different version of blockchain technology.

Revenue

  • No specifics on how the company will earn revenue and no revenue or sales strategies and forecasts stated

Service launch – Not stated

 

 

Company token (GBYTE) price chart


 

Company 4 – Tezos Token (XTZ) price as of Mar 9, 2018, $ 2.95 USD https://www.tezos.com/

Founders – Identified on the company website

  • Key executives are software developers
  • Advisors have strong technical background

ICO – Oct 2017

  • Whitepaper presence – Whitepaper on company website. Whitepaper is not finalized
  • Business Vision

We aim to remedy the potential for atrophied evolution in the crypto-currency space by presenting Tezos, a generic and self-amending crypto-ledger.

  • Business Problem – The popularization of Bitcoin, a decentralized crypto-currency has inspired the production of several alternative, or \alt”, currencies. Although most alt currencies harbor their own source of innovation, they have no means of adopting the innovations of other currencies which may succeed them.
  • Business Solution – Tezos attempts to represent a blockchain protocol in the most general way possible while attempting to remain as efficient as a native protocol.
  • Competition – Not identified in white paper but almost every blockchain platform is a competitor

Solution unique approach

  • Tezos attempts to represent a blockchain protocol in the most general way possible while attempting to remain as efficient as a native protocol. White paper explains Tezos blockchain system.
  • We feel we’ve built an appealing seed protocol. However, Tezos’s true potential lies in putting the stakeholders in charge of deciding on a protocol that they feel best serves them.

Revenue

  • No specifics on how the company will earn revenue and no revenue or sales strategies and forecasts stated

Service launch – Not stated

Company token (XTZ) price chart

 

 

Company 5 – Aeternity Token (AE) price as of Mar 9, 2018, $ 1.85 USD https://www.aeternity.com/

Founders – Identified on the company website

  • Key executives technical background in programming and blockchain knowledge

ICO – June 2017

  • Whitepaper presence – Whitepaper on company website
  • Business Vision

We present highly scalable blockchain architecture with a consensus mechanism which is also used to check the oracle. This makes the oracle very efficient, because it avoids layering one consensus mechanism on top of another.

  • Business Problem – Blockchain technologies show great promise when it comes to providing first-class financial and legal services to anyone. So far however, they have failed to come together to a unified whole that actually fulfills the promise.
  • Business Solution – New blockchain platform that promises to address these issue
  • Competition – Not identified in white paper but almost every blockchain platform is a competitor

Solution unique approach

  • Saleable blockchain architecture with consensus mechanism. State channels are integrated to increase privacy and scalability.

Revenue

  • No specifics on how the company will earn revenue and no revenue or sales strategies and forecasts stated

Service launch – Not stated

 

Company token (AE) price chart

 

 

Summary:

In all of the randomly selected startups 5 of which are presented here, there is a definite troubling pattern. Not one company has a clear vision or plan on how they will generate revenue. All companies analyzed focused on building technology. It’s as if let’s build a better technology and clients will come.

Should we worry, absolutely? The key elements for a successful startup are missing in all whitepapers analyzed. Let’s look at each key element in more detail.

  • Leadership Team – Nearly all startups analyzed haVE leadership team made of individuals with technical backgrounds in programming, technical research. Little to no evidence of leaders with strong business experience. One startup didn’t identify their team.
  • Business Vision – Whitepapers didn’t describe specific business vision that each startup is focusing on. Most write about building better technology or an application. There are no mentions of target clients and how they will will present their value to them and why future clients would want to use their services or technology.
  • Competition – Reading the white papers it was clear to me that many of the competitors are the new startups behind each new ICO. The white papers simply don’t identify competitors.
  • Revenue – Unfortunately all analyzed whitepapers failed to identify how they will;  generate revenue, grow their company, sell and to whom, and what is the relationship between the price of newly introduced token to their actual business, what will the company do to meet the ICO investor’s objectives.
  • Launch date – Few of the analyzed companies actually had a completed or nearly completed technology. Many were still at the conceptual design level of in early development stages

Conclusions:

Conflicting objectives – My initial suspicion was that ICO investors and blockchain technology share conflicting objectives was confirmed to be true.  The whitepapers make no business connection or promise to investors on what the startups will do to ensure that their tokens grow in value. There is no mention of investor’s expectations.

Business growth – Sadly all startups that I analyzed failed to demonstrate that they have a business plan on how to generate revenue, how to sell, who their target clients are.

ICO Investors –  Examining these two conclusions prompts a serious question, what do ICO investors actually buy when they invest in ICO’s cryptocurrency ? This point is worth examining in more detail. I will expand on this in my 3d article.

Posted by Jerry Witkowicz on 9 March 2018
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