The great "detoxification": do Fintech companies abandon cryptography?

It seems that tokenization is "eating the world", in the same way that Marc Andreessen said that the software was "eating the world" in 2011. ICO and blockchain are everywhere, and an increasing number of platforms seem to bring activity off-chain on-chain.

However, last week, Latvian startup Digipulse announced that it would "de-tokenizing" itself in a rare industry event.

Time to buy the plunge?

We certainly hear the indignation that our recent news has brought. We did not expect anything less from a community of dedicated, encrypted individuals. That said, our final goal remained unchanged. Our CEO explains: https://t.co/IOSz1hLLm1 #digital #inheritance

– Digipulse (@DigiPulseIO) 3 August 2018

"We need to create Value ", not" speculation on the prices of tokens "

Normv Kvilis, the CEO of the company, explained in a blog post that the decision was made because" we need to create value with our service rather than with price speculation ".

"For all its advantages", continued the post, "the value of the Digipulse token fluctuates based solely on speculation, a process that does not support a sustainable business development", adding that "of the 320 service registrations that we had until July 25, only two people actually assigned token to the service, which means that only two people actually used the DGPT token for its main purpose. "

In other words, the Digipulse cryptographic tokens do not they were actually used on the platform; they were bought and held as speculative investments.

Kvilis did not see a future in that kind of community. Therefore, he concluded the post by making an offer to "members who supported our vision, rather than mere speculations on tokens" – tokens can be exchanged for participation in society. The DGPT tokens will be officially excluded from the cryptocurrency trade on December 15th of this year.

Is a trend forming?

Digipulse is not the first company to renounce its association with blockchain and it will not be the last. LL Bean canceled a blockchain project in March; Telegram has demolished its public ICO in May. Stripe called him with his Bitcoin payment option in April.

Could there be a trend? It may be too early to say – the words "blockchain" and "cryptocurrency" still add too much value to a company's stock price for the cryptic global craze to be really over.

So, why did these companies choose ix-nay the lockchain-bay ?

Stripe Cut Crypto because it was impractical, overwritten

Some say that Stripe was ahead of its time when the payments company developed an option to accept Bitcoin payments until 2015. Therefore, Stripe was more than prepared when the cryptocurrency hit the mainstream in 2017. All of a sudden, Bitcoin has been everywhere.

But something surprising happened in April of this year: Stripe cut BTC completely from its payment options. Could this be another example of Stripe's foresight?

Coldly speaking at the Fortune Brainstorm technology conference in July, the COO of Claire Hughes Johnson said the decision was nothing more than a practical measure: Bitcoin and other blockchain networks of payment is too slow, too impractical and too overwhelmed.

Here's the thing: he was right.

Using a traditional debit card issued by Visa or Mastercard, a purchase can be canceled within a few seconds. Using the Bitcoin network, the same transaction may require an hour or more; other blockchain networks are not much better.

"I think we have reached the moment of the shark in which you just said" da-da-da blockchain ", he added, referring to the explosion in the companies that veered the word" blockchain " "on themselves to attract financing. He also said that the SEC was right to act against these companies

Telegram may have cut its public ICO to avoid the examination of regulators

The messenger giant Telegram has shocked the world twice 39; beginning of this year: first, when he announced the success of his massive $ 1.7 trillion ICO, and the second when he announced that the public part of the ICO had been canceled and that the funds collected during this period would be returned.

According to Recode, the reasons were simple: "Telegram does not need money, and probably does not want control," reads the May report. In fact, the Telegram roadmap outlined only $ 400 million of spending over the next three years.

Therefore, "why risk more regulatory control by opening the ICO to the public?", The report is requested. The SEC of the United States has not yet issued a clear set of guidelines on ICO legislation – a number of ICOs have been postponed or canceled due to general legal uncertainty.

It is still unclear when the US SEC will succeed in creating guidelines that would make the business of keeping an ICO simple and easy. Until then, many companies could see the process as a major problem than it is worth.

Blockchain Experimentation is "Incredibly Expensive"

In an exclusive interview with Finance Magnates conducted at the start of this year, cryptoGeeks CEO Malcolm Cauchi said that "blockchain is a technology surprising ", but" not everything should be built on it ".

Cauchi added that the foray into the sphere of blockchain can entail a heavy cost: "experimentation with blockchain can be extremely expensive." Indeed, Financial News reported that a major developer in a blockchain project it can cost a company $ 650,000 a year in salary.

It is a simple question of supply and demand. BlockchainDevelopers.net estimates that among the 18.5 million software developers on the planet today, less than 5,000 of them are experienced blockchain developers; the cost of hiring a team of developers to build a blockchain will eventually decrease – but when?

Of course, most companies that decide to build blockchain platforms assume that financing a blockchain will far outweigh the cost of building it. And indeed, the proof is in the pudding: the ICO continue to grow bigger and bigger. More funds were raised through ICO by April this year compared to the whole of 2017; $ 5.4 billion was raised in June alone

The immutability is a two-edged sword

While "immutable" may not be the word blockchain more common in the world, it is definitely out there; one of those words that really makes its user seem more intelligent than it actually may be. (In case you are trying to add it to your lexicon, it essentially means "immutable".)

It's true. Without extreme effort, a blockchain transaction is absolutely permanent and can not be canceled. While this protects users from certain types of fake transactions (ie, double spending), it makes them vulnerable to others.

Think about it: accidentally hit the "send" button twice by buying a pair of pajama pants online. Pay two pairs of pajama pants. The seller will not send you back to cancel the transaction, but you can call the credit card company to cancel the duplicate transaction. Could you do it on a blockchain network? Absolutely not.

What if someone gets hold of your private keys? What happens if you permanently lose access to your hardware portfolio? Sayonara!

There are some blockchain networks that have been created with a mechanism that (at some level) lets you block and return the compromised funds. However, these networks are often criticized for being too centralized.

In addition, there are a lot of blockchain networks that have been (and are underway) developed to eliminate – or at least alleviate – some of the risks associated with blockchain networks and cryptocurrencies. However, none of these has been adopted on a scale large enough to serve as a practical solution.

Other blockchain trends, such as tokenization, may not be as prolific as many believe they will be.

Blockchain could still have a future, although it might not look so much like the present

Not everyone is so down in the future of the blockchain. In a Fortune report, Bridget Van Kralingen, SVP of IBM's Global Industries, Platforms and Blockchain, said the blockchain has already interrupted the supply chain, in addition to cross-border payments and identity verification.

In fact, it seems that IBM is very bullish about the future of the blockchain. Its blockchain department boasts over 1500 professionals; IoT networks based on blockchain, stablecoins and other products have been explored by the company.

Similarly, JPMorgan Chase, Goldman Sachs and a growing number of other Wall Street companies broke into blockchain; virtually no industry has ever been touched by the blockchain.

And even if the financial networks in the first world find blockchain networks too clumsy to compare with the most widely available electronic payment networks today, people in developing countries rely on cryptocurrencies to store their savings.

In any case, the blockchain industry is going through some serious growth problems. Where will it be in ten years? Who knows. However, the blockchain industry of the future may be very different from what we know today.