In 2017, when everything to do with cryptocurrencies and blockchain technology seemed fresh and interesting, there never seemed to be a day without a new project or a “revolutionary” idea. Decentralized financial system, decentralized torrent tracker, decentralized office documentation system. Decentralized, decentralized, decentralized.
The overuse of terms such as “transparent”, “distributed” and “blockchain-based” soon made most press releases appear generalized. The closer we got to the peak of the Bitcoin price at the end of 2017, the more absurd the names of the new projects became: “Ethereum-based payment system for workers in the slaughterhouse industry”, “Horse breeding platform” Dwarfs based on a decentralized blockchain “,” Peer-to- Peer banking service for divorced blind “and so on.
Who would need some of this? 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 interested in investing.
According to cryptocurrencies, Many cryptocurrency exchanges that started on the wave of blockchain technology’s popularity are dying – they simply have nothing left to trade. The situation is particularly evident on project review platforms, which store cards from hundreds of closed projects, often along with disgruntled user reviews.
Let’s look at some projects and discuss the reasons for their failure.
Telegram Open Network or TON
Between the end of 2017 and 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 the Telegram Open Network, with the TON blockchain at the heart of the platform. In the project’s white paper, the developers presented this future coin as a potential standard cryptocurrency that could be used for regular exchange of value in daily life.
It was alleged that Bitcoin (BTC) was viewed as “digital gold” and Ethereum was a platform for the massive sale of tokens, 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 qualities to attract mass consumption. At the same time, Telegram could launch a system for mass use based on its experience in storing encrypted distributed data, its experience in creating user-friendly interfaces, and its huge user base.
While the company was partially correct in its claims, it all seemed like a huge PR campaign to me. Why would Telegram implement this new financial system and not a company with experience in the financial services industry? How could you differentiate this new coin from other similar products? How about better than traditional financial systems implemented by a large centralized company?
No answer was given. However, the Telegram ICO launched in 2018 was a great success. The company raised $ 1.7 billion in investor money in two private token sales rounds, and that was really promising.
But it didn’t end well. On May 12, 2020, Pavel Durov announced that Telegram would officially end its participation in the project after a protracted legal battle with the US Securities and Exchange Commission. The company certainly 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.
To me, this case embodies the entire cryptocurrency hysteria of 2018 – a company getting involved in a company for which it is legally or technologically unprepared, without a clear product positioning. 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 his press releases, the system would enable its users to care for and preserve the data of animals living in houses and animal shelters. The aim of the presented project was to create a community of animal owners, experts, professionals, institutions, service providers and volunteers. The system should be expected to be developed using technologies such as blockchain and big data. The seed capital funding should be raised through an ICO 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 problems there. Pet stores are typically chosen by customers after analyzing their brand reputation and online presence.
Some of the problems that customers may face in this market are the lack of reliable information about the health of the purchased pet or about the previous owners. However, these difficulties are not technical, but legal, and blockchain technology is unlikely to solve them.
As animal welfare laws differ from country to country, Creating a unified international platform in this area is a legally difficult task that is hardly suitable for a small technology company.
The Petchain project team consisted mostly of nameless people 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 were presented with fake photos.
Despite some marketing efforts, no serious funding was attracted for the project. Currently, the project’s official website is unavailable and the social media accounts have not been updated in over a year. The link that used to lead to the project’s white paper now contains text detailing the reasons for the errors in the cryptocurrency industry in general.
Another dead project with an incoherent idea that was not thought of from the bottom up.
Wiki Token (WIKI) was an ERC-20 compatible token based on Ethereum that 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 and censorship-free education system.
The training courses for the Crypto University should be created by members of the project community. P.To write articles and create courses, these members would get the aforementioned ERC-20 tokens from the wiki. These tokens would be listed on various cryptocurrency exchanges and could be issued for other Crypto University courses.
I first became aware of this project in 2018, and it made little sense from the start. First, 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 freely available content?
In theory, it is possible to create a platform similar to Coursera based on the 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 generally based on the reputation of its creator. Most of the courses on Coursera are college education programs created by well-known and respected institutions. These courses involve interaction with a teacher who is also a well known educational professional. After completing a course, students often receive certificates that are recognized by companies and educational institutions. All of these factors add to the value of the course, and thanks to them, people are willing to pay for it.
In return, the Wiki Token Project could hardly make any of the above offers. There is no collaboration with large institutions or renowned educators. In addition, the highly specialized area of specialization chosen (cryptocurrencies and blockchain technology) did not mean the presence of educational professionals who could potentially create valuable educational content. Why is it better than free YouTube videos or easily searchable internet articles?
What we see here is just another technical incarnation of a dubious business idea. The team had neither a well thought out concept nor a product and hurried to implement it with trendy technology. The result is technical packaging with no content or interest outside the hysteria of blockchain technology.
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. Thrown in a hurry on the wave of blockchain technology’s popularity, without market or audience research, they failed to deliver significant value to a potential customer.
One of the most important rules of marketing: sell the problem you want to solve, not the product being offered. Product developers should always think about consumer needs first. Otherwise, they run the risk of ending up in the same way as the developers of the above projects: they just create the appearance of the product without delivering any intrinsic value.
The views, thoughts, and opinions expressed herein are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.