The cryptocurrency industry is overflowing with dead projects

In 2017, when everything related to cryptocurrency and blockchain still looked fresh and interesting, it seemed like there would be no day without a new “revolutionary” project or idea. Decentralized Financial System, Decentralized Torrent Tracker, Decentralized Office Documentation System. Decentralized, decentralized, decentralized.

Excessive use of terms like “transparent”, “distributed” and “blockchain-based” soon made most newspapers seem generic. 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 slaughter industry workers”, “decentralized dwarf horse breeding platform based on blockchain “,” Peer-to-Peer Personal Banking Service for Blind Divorced “and so on.

Who would ever need it, you might wonder. Well, in many cases, none. Of the several thousand cryptocurrencies launched by the spread of blockchain technology, only about 30 are currently of investment interest.

As a result of cryptocurrencies, many cryptocurrency exchanges launched on the wave of blockchain popularity are dying – they have nothing left to trade. The situation is particularly visible on review platforms, which store tabs of hundreds of closed projects, often alongside reviews from angry users.

Let’s take a look at some projects and analyze the reasons for their failure.

Telegram Open Network, or TON

Between late 2017 and early 2018, it was first reported that Telegram had plans to launch its own blockchain platform and native cryptocurrency.

Also known as Grams, the TON coins were to 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 the regular exchange of value in daily life.

It was claimed that while Bitcoin (BTC) was considered “digital gold” and Ethereum was a platform for selling crowd tokens, this new cryptocurrency TON 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 necessary to attract a mass consumer. In turn, Telegram would be able to implement a system suitable for mass use, given its expertise in storing encrypted distributed data, experience in creating user-friendly interfaces, and a huge user base.

While the company had a point in part of its claims, it seemed like a huge PR campaign to me. Why should Telegram implement this new financial system and not some company with experience in the financial services sector? How would it be able to distinguish this new coin from other similar products? How would it be better than traditional financial systems implemented by a large centralized company?

No answer was given. However, Telegram’s initial coin offering, launched in 2018, was a huge success. The company was able to raise $ 1.7 billion from investor funds in two rounds of private token sales, and that was really promising.

Related: Exclusive: A 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 lengthy legal battle with the US Securities and Exchange Commission. Surely the company did not have the necessary legal resources to carry out such an ambitious idea. Technical difficulties and strong competition in the market most likely also played a role.

Related: SEC vs. Telegram: Part 1 – Key takeaway for now

For me, this case embodies the whole cryptocurrency hysteria of 2018: a company getting involved in a business it isn’t ready for, either legally or technologically, without clear product positioning. The end result is failure.

Petchains

Petchains was introduced as the future global information management system and exchange platform for the pet market. According to its papers, the system would allow its users to maintain and store data of animals living in homes and shelters. The goal of the presented project was to create a community of pet owners, experts, professionals, institutions, service providers and volunteers. The system had to be developed using blockchain and big data technologies as usual. Initial funding would be raised through the initial coin offering process.

It’s a good question if the world really needs a blockchain-based trading and information platform for the pet market. I wouldn’t say there are many problems with over-centralization. Pet shops are usually chosen by customers after analyzing brand reputation and online presence.

Some problems customers in this market may encounter include unreliable information about the health of the acquired pet or previous owners. However, these difficulties do not constitute a technical, but a legal problem that is unlikely to be solved using blockchain technology.

Furthermore, as animal welfare laws vary between countries, creating a unified international platform in this field is a legally demanding task, hardly suitable for a small tech startup.

The Petchain project team was made up mostly of non-names who had no proven experience in serious projects. It wasn’t even possible to say for sure if they were real people – it turned out that some of the consultants on the project were. introduced with fake photos.

Despite some marketing efforts, the project did not receive any serious funding. At the moment, the project’s official website is down and its social media accounts have not been updated for more than a year. The link that led to the project’s white paper now contains text describing in general terms the reasons for the failures in the cryptocurrency industry.

Token Wiki

Another dead project with an inconsistent, unweighted idea behind it.

The Wiki Token (WIKI) was an Ethereum-based ERC-20 compatible token designed to be used as a means of payment at the so-called Crypto University. This future platform, built around the Bitcoin Wiki project, has been described as a totally independent, decentralized and censorship-free educational system.

The learning courses for Crypto University were to be created by members of the project community. To write articles and create courses, these members would get the previously mentioned ERC-20 Wiki Tokens. These tokens would be listed on various crypto exchanges and could be spent on other Crypto University courses.

I first noticed this project in 2018 and it didn’t make much sense from the start. First of all, what kind of secret knowledge is there in the cryptocurrency industry that should be distributed using token-based payment systems? How could it compete with other content, available for free?

Theoretically, it is possible to create a blockchain-based platform similar to Coursera. Crypto University, like Coursera, could become a platform that brings together creators and consumers of educational materials. But here some difficulties arise.

The value of an educational product is usually based on the reputation of its creators. Most of the courses in Coursera are university education programs created by well-known and highly reputable institutions. These courses include interaction with a teacher, who is also a well-known education professional. Upon completion of a course, students usually receive certificates recognized by 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.

In turn, the Wiki Token project could hardly offer any of the above. No collaboration with large institutions or renowned educators. Furthermore, the highly specialized area of ​​expertise (cryptocurrency and blockchain) chosen did not involve the presence of education 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. Having neither a well thought out concept nor a product, the team was quick to implement it using trendy technology. The result is a technical wrapper with no content and no interest outside of blockchain hysteria.

As of October 2020, the project’s website is no longer available and its social media accounts have been dead for a couple of years.

Conclusions

The projects listed above, in fact, offered nothing more than the technical execution that was fashionable at the time. Quickly launched on the wave of blockchain’s popularity, with no market or public research, they were unable to deliver any significant value to a potential customer.

One of the key rules of marketing: sell the problem to be solved, not the product you offer. Product developers should always think about consumer needs first. Otherwise they risk ending up the same way as the developers of the aforementioned projects, creating only product packaging that has no intrinsic value.

The views, thoughts and opinions expressed herein are solely the author’s and do not necessarily reflect or represent the views and opinions of Cointelegraph.