In 2017, when everything concerned with cryptocurrency and blockchain still looked fresh and interesting, it seemed that 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.
The overuse of terms like “transparent,” “distributed” and “blockchain-based” soon made most press papers 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 slaughterhouse industry workers,” “decentralized blockchain-based dwarf horse breeding platform,” “peer-to-peer personal banking service for divorced blind people,” and so on.
Who would ever need any of that, one might ask. Well, in many cases, nobody. Of the several thousand cryptocurrencies launched since the spread of blockchain technology, only about 30 are currently of any investment interest.
Following cryptocurrencies, many crypto exchanges launched on the wave of blockchain popularity are dying — they just have nothing to trade anymore. The situation is especially visible on review platforms, which store cards of hundreds of closed projects, often together with angry user reviews.
Let’s take a look at a few projects and analyze the reasons for their failure.
Telegram Open Network, or TON
In late 2017 to early 2018, it was first reported that Telegram was planning to launch its own blockchain platform and native cryptocurrency.
Also known as Grams, the TON coins were intended to be based on Telegram Open Network, with the TON blockchain at 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 value in daily life.
It was stated that while Bitcoin (BTC) was considered “digital gold” and Ethereum was a platform for token crowd sales, this new TON cryptocurrency would be a substitute for traditional money and traditional payment systems such as Visa and Mastercard. According to the white paper, other cryptocurrencies lacked the qualities required to attract a mass consumer. In its turn, Telegram would be able to implement a system eligible for mass use, given its expertise in encrypted distributed data storage, experience in creating user-friendly interfaces, and an enormous user base.
While the company did have a point in part of its claims, to me all of it looked like a huge PR campaign. Why should Telegram implement this new financial system and not some corporation with experience in the financial services industry? How would it be able to distinguish this new currency from other, similar products? How would it be any better than traditional financial systems being implemented by a large centralized company?
No answers were given. However, the Telegram initial coin offering, launched in 2018, was a huge success. The company was able to raise $1.7 billion from investor funds in two private token sale rounds, and that was really promising.
Related: 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 terminate its involvement with the project after a long legal battle with the United States Securities and Exchange Commission. Surely, the company didn’t have the legal resources necessary for implementing such an ambitious idea. Most likely, technical difficulties and strong competition on the market also played a role.
Related: SEC vs. Telegram: Part 1 — Key takeaways for now
For me, this case epitomizes the whole cryptocurrency hysteria of 2018 — a company that gets involved in an enterprise for which it is not ready, either legally or technologically, without a clear positioning of the product. The end result is failure.
Petchains
Petchains was presented as the future global information management system and trading platform for the pet market. According to its press papers, the system would allow its users to maintain and keep data of the animals living in homes and shelters. The presented project goal was to create a community of pet owners, experts, professionals, institutions, service providers and volunteers. The system was intended to be developed using blockchain and big data technologies as usual. The initial funding was going to be gathered through the process of an initial coin offering.
It’s a good question if the world really needs a blockchain-based information and trading platform for the pet market. I wouldn’t say there are many problems with over-centralization there. Pet shops are usually chosen by customers after…
Read More: The cryptocurrency sector is overflowing with dead projects