I’ve been in the Startup world for five years with three product-launching experiences, and now I’m running a Steem blockchain-based app service. I’m going to tell you how crazy my experiences in the blockchain and ICO world have been so far.
- The VERY FIRST thing that most “blockchain-labeled” projects do is look for funding. No working product, no users, they just try to raise money first. Oh wait, they have one “product” a weird looking landing page that has more than a dozen team members, advisors, partners, media logos … Seriously, I’ve never seen this kinda landing page from ANY early-startup EXCEPT for scams.
- The “product” for them seems to be a WHITE PAPER. It’s located on the top section of the website and written in five different languages (generally English, Korean, Chinese, Russian, and Japanese).
- They spend 99% of their working time managing Telegram chats, flying abroad to sit in fireside chats with their legs-crossed, running meet-ups in five-star hotels, and doing interviews to say that they will change the world. You know that 99% of the time in normal early-startups are spent on creating their products and gaining users.
- They fill their team with at least five C level team members like CEO, CTO, CMO, CSO, COO, and dozens of devs and marketers. Normal startups expand their team like this when they try to scale up their product/business. Whereas, blockchain/ICO projects generally create a mid-size company before they even try to create a product or entice a single user.
- Who the f*** are these reams of advisors? What exactly do they “advise” for the project? Why does a project that doesn’t even have a single user need a gazillion advisors? You know what? The advisors who “list” their name on the website get 0.5 ~ 2% of the tokens in general, and these will be dumped in the market as soon as it opens. Remember that more advisors = more tokens that are waiting to be dumped.
- Most tokens claim that they are a utility token, but the initial token holders WON’T be the users who seek for the utility. Let’s say I’m creating 100 lemon coins that you can use to buy lemonade. But the initial tokens are distributed to people who:
40%—wish to sell to others who believe that the lemon coin will be used to buy lemonade.
30% —wish to sell to people mentioned above.
30% — don’t care about lemonade — just randomly received from airdrops.
(The guy in this video got the lemon coin to buy the lemonade, so the utility token is distributed well actually.)
- The gazillion-page-long white paper that NOBODY bothers to finish reading is the most hilarious thing in this world. The project which has no single prototype is talking about entire features of their platform and Dapps. The project which has no single user is talking about the token economy that should have millions of participants by the incentive metrics. At the end of their roadmap (when they have no working product), they have already defeated Facebook, Instagram, Google and Amazon. White papers should be called fiction papers.
- The token investors (I’m talking about the VC-like token investors) are also comical. I’ve contacted multiple token investors for my project, and they mostly care about how much of a discount they can get in the pre-sale stage, and how many “pumping” ingredients the project has so that they can dump tokens when they are listed in exchanges. None of the VC investors cared about our core users or how much they love our product, whether the utility token works well, or how big the size of the potential users who wish to consume the utility — most VCs try to verify this information in the general startup scene.
- The white papers always say their technology is the best and Bitcoin/Ethereum are old-fashioned. Ok I get your point, so I visited your Github to see the “top-notch” technology you’re talking about, and the only repos are the ETH smart contract forked from someone else. Oh I know what you’re going to say… “Most of our repos are in private mode.” Hmm… then HOW THE HECK will you create the dev ecosystem for your top-notch protocol?
- Some projects say their “closed-beta” app had millions of downloads and beta testers. (Not sure if I’m wrong but) the Apple’s TestFlight has up to 10,000 testers maximum. Without TestFlight, it’s super complicated to use the beta app. Regardless of that, it must have huge buzz if the beta-testing app really had millions of downloads in the real world because that would globally news worthy in the general startup world.
2018 saw a market crash — I believe partially (or perhaps fully) because of these issues. Regardless of the burst bubble, these are the facts:
- 78% of ICOs are identified as scams, 7% have failed or gone dead (Satis Group).
- 86% of 1,375 live Ethereum DApps have zero users and 93% have zero tx volume (Cryptoglobe).
- Only 2% of Ethereum wallet owners are actual DApp users (Dapp.com).
- There are only 64 live projects that have at least one git commit out of 4,139 total listed projects in CoinGecko over the space of 30 days (CoinGecko).
If this happened in the startup world it would mean that:
78% of startups are scams. 86% couldn’t gain any single user. 93% have users but no any user transaction. Only 2% of some smartphone users have downloaded the apps from its app store. 1.5% of the startups have at least one git commit for the past 30 days.
Wouldn’t that be a weird world? Huh?
YoungHwi Cho is a co-founder of Steemhunt — Blockchain-fueled community for hunting cool new products by tech early-adopters.