In 2017, when everything to do with cryptocurrency and blockchain was still looking fresh and interesting, there never seemed to be a day without a new “revolutionary” project or idea. Decentralized financial system, decentralized torrent tracker, decentralized office documentation system. Decentralized, decentralized, decentralized.
The overuse of terms like “transparent,” “distributed,” and “blockchain-based” soon made most press reports look generic. The closer we got to the peak of the Bitcoin price at the end of 2017, the more absurd the names of new projects became: “Ethereum-based payment system for workers in the slaughterhouse industry”, “Decentralized blockchain-based dwarf horse breeding platform”, “Peer-to-peer banking for divorced people.” Blind “and so on.
Who would ever need any of this, one might ask. Well, in many cases, nobody. Of the several thousand cryptocurrencies that have been introduced since the spread of blockchain technology, only about 30 are currently of investment interest.
After cryptocurrencies, many crypto exchanges that started on the wave of blockchain popularity are dying – they just have nothing left to trade. The situation is particularly evident on review platforms that store cards from hundreds of closed projects, often along with disgruntled user reviews.
Let’s look at some projects and analyze the reasons for their failure.
Telegram Open Network or TON
From the end of 2017 to the beginning of 2018 it was reported for the first time that Telegram was planning to introduce its own blockchain platform and a native cryptocurrency.
The TON coins, also known as grams, should be based on Telegram Open Network, with the TON blockchain being the core of the platform. In the project white paper, the developers presented this future coin as a potential standard cryptocurrency that could be used for the regular exchange of values in daily life.
It was stated that Bitcoin (BTC) was viewed as “digital gold” and Ethereum was a platform for selling token crowds. However, this new TON cryptocurrency would be a replacement for traditional money and traditional payment systems like Visa and Mastercard. According to the white paper, other cryptocurrencies lacked the properties necessary to attract a mass consumer. Telegram, in turn, would be able to implement a system that is suitable for mass use because it has experience in encrypted distributed data storage, experience in creating user-friendly interfaces, and an enormous user base.
While the company had a point in some of its claims, it all looked like a huge PR campaign to me. Why would Telegram implement this new financial system rather than a company with experience in the financial services industry? How could this new currency be distinguished from other similar products? How about better than traditional financial systems implemented by a large centralized company?
No answers were given. However, Telegram’s first coin offering, launched in 2018, was a huge hit. The company raised $ 1.7 billion from investor money in two private token sales rounds, and that was really promising.
Connected: Exclusive: New Report Reveals Details of Telegram’s TON Blockchain
But it didn’t end well. On May 12, 2020, Pavel Durov announced that Telegram would officially end its involvement in the project after a long legal battle with the US Securities and Exchange Commission. Certainly the company did not have the legal resources to implement such an ambitious idea. Most likely, technical difficulties and strong competition in the market also played a role.
Connected: SEC vs. Telegram: Part 1 – Important takeaway insights
For me, this case embodies the entire cryptocurrency hysteria of 2018 – a company getting involved in a company for which it is neither legally nor technologically ready, without a clear positioning of the product. The end result is a mistake.
Petchains was presented as the future global information management system and trading platform for the pet market. According to press reports, the system would enable its users to maintain and save data on animals living in houses and animal shelters. The presented project objective was to create a community of animal owners, experts, professionals, institutions, service providers and volunteers. As usual, the system should be developed using blockchain and big data technologies. The initial funding should be collected through an initial coin offering process.
It’s a good question whether the world really needs a blockchain-based information and trading platform for the pet market. I wouldn’t say there are a lot of over-centralization issues there. Pet stores are typically selected by customers after analyzing their brand reputation and online presence.
Problems that customers in this market may face include unreliable information about the health of the purchased animal or about previous owners. However, these difficulties are not a technical problem, but a legal one that blockchain technology is unlikely to be able to solve.
Since animal welfare laws differ from country to country, the creation of a uniform international platform in this area is a legally challenging task that is hardly suitable for a small technological startup.
The Petchain project team was mostly made up of no-names who had no proven experience with serious projects. It wasn’t even possible to say for sure if they were real people – some of the project consultants had fake photos.
Despite some marketing efforts, no serious funding was attracted for the project. Currently, the project’s official website is inactive and the social media accounts have not been updated for over a year. The link that previously led to the project’s whitepaper now contains text describing the reasons for errors in the cryptocurrency industry in general.
Another dead project with an incoherent, ill-conceived idea.
The Wiki Token (WIKI) was an ERC-20-compatible token based on Ethereum, which is to be used as a means of payment at the so-called Crypto University. This future platform, based on the Bitcoin Wiki project, has been described as a completely independent, decentralized, censorship-free education system.
The learning courses for the Crypto University should be created by members of the project community. For writing articles and creating courses, these members will receive the aforementioned ERC-20 wiki tokens. These tokens would be listed on various crypto exchanges and could be issued for other Crypto University courses.
I first noticed this project in 2018 and it made little sense from the start. What kind of secret knowledge is there in the cryptocurrency industry that should be disseminated using token-based payment systems? How would it compete with other content that is available for free?
In theory, it is possible to create a platform similar to Coursera based on blockchain. Like Coursera, Crypto University could become a platform on which developers and consumers of teaching materials come together. However, there are some difficulties here.
The value of an educational product is usually based on the reputation of its creator. Most of the courses at Coursera are university education programs created by well-known, highly respected institutions. These courses involve interaction with a teacher who is also a well known education professional. After completing a course, students usually receive recognized certificates from companies and educational institutions. All of these factors add up to the value of the course and it is thanks to them that people are willing to pay for it.
The Wiki Token Project, on the other hand, could hardly offer any of the above offers. No cooperation with large institutions or renowned educators. In addition, the highly specialized area chosen (cryptocurrency and blockchain) did not mean the presence of educational professionals who could potentially create valuable educational content. Why would it be better than free YouTube videos or easily searchable internet articles?
What we see here is just another technical embodiment of a dubious business idea. The team didn’t have a well-thought-out concept or product and hurried to make it happen using fashionable technology. The result is a technical wrapper with no content and no interest outside of the blockchain hysteria.
As of October 2020, the project’s website will no longer be available and the social media accounts have been dead for a few years.
The projects listed above actually offered nothing more than the technical execution that was in vogue at the time. Hastily embarking on the wave of blockchain popularity, without market or audience research, they couldn’t offer any significant value to a potential customer.
One of the most important marketing rules: sell the problem you want to solve, not the product you are offering. Product developers should always think about consumer needs first. Otherwise, there is a risk that they will end up in the same way as the developers of the above projects and only create product packaging that has no intrinsic value.
The views, thoughts, and opinions expressed here are the sole rights of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Bert Kozma is author and associate editor at Cryptogeek.info. Previously, he was a sales and marketing professional and has been a cryptocurrency and financial markets writer for a decade. He holds a bachelor’s degree in international business from Saimaa University of Applied Sciences.