These are tough days in the cryptocurrency world.
After the elation of November and December, the value of major coins has crashed.
The bitcoin price has halved in just several weeks. Governments are scrambling to regulate and tax digital currencies. And then there are the scams.
There’s a spectrum: from the huge Coincheck heist of over half a billion dollars’ worth of coins this month, to the comically puny, like Prodeum, which aimed to raise $US6.5 million in an initial coin offering but ended up raising just eleven dollars and being hacked with its website displaying simply the word “penis”.
People in the crypto sector are feeling the pain. At the World Economic Forum annual meeting in Davos last week, cryptocurrencies and their underlying technology, blockchain, were among the big talking points on the fringes of the main conference and there was a palpable anger among some of the players at the damage being done to the industry by criminals and hucksters.
One crypto exec I spoke to, mytime investor relations director Roman Kanunnikov, encapsulated all of the key themes in a 90-second spray, which is below in full. Highlights:
- “Every person who has some brains just went for the blockchain”
- “Blockchain is dangerous now”
- “Investors are afraid … and it’s very hard to convince them to do anything”
mytime, which Kanunnikov takes to investors, is a cryptocurrency that allows users to get coins in return for sharing what they are doing with their time across a range of activities like media consumption and travel. The idea is that by gathering data on people’s activities they can provide richer data to advertisers and marketers, selling the information to them while rewarding consumers with cryptocurrency which can be spent elsewhere.
The company is founded by Eduard Gurinovich, who previously founded CarPrice.ru which attracted $US80 million in funding from investors, so the founders have some business track record behind them, as well as a working product.
Here’s Kanunnikov’s tidy summary of the fear and loathing in crypto circles.
The blockchain has become very popular, and there is a lot of hype. Every person who has some brains just went for the blockchain, but they’ve done it for different reasons. A lot of blockchain projects just raise money and disappear. People invest in them because they have a cool idea to use blockchain, but they’re too lazy to actually do it, so they just get their money and disappear.
If you just take all of the blockchain projects – I have no idea how much money there is now, but it’s a lot. If you take them, and filter out those who have a product, filter out those who have protocols, who have a reputation, who have listings for businesses – if you filter for all of those out, you will be left with like 9% of all blockchain projects.
I’m working on the mytime project, and we have all of this, because we’ve launched our protocol. We have a product. We have a reputation because our CEO is the founder of a huge company, and he raised $80 million for it. We have listings because we’ve already made agreements with some companies.
Blockchain is dangerous now, because everyone is talking about it. So many people try to make easy money out of it, so you always need to look through every project. It is best to meet with the creators to see if they are real people trying to do real things.
It’s damaging to everybody. There are a lot of projects, and investors who don’t know where to put their money. I met an investor three days ago – he’s a huge investor, and he runs the fund, and he told me that he doesn’t know what to do. Even if you want to spread your money around on several projects, you cannot say if even one of them will be successful. So, investors are afraid now, and it’s very hard to convince them to do anything.
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