By Reeve Collins
Utility tokens have been taking a beating lately. The problem: These tokens aren’t actually providing any utility. At BLOCKv, we’re setting out to change that.
Too much hype
Today, the prices of utility tokens are based purely on speculation and hype. For most of these tokens, the accompanying product hasn’t actually been released yet. As the market wakes up to this fact, we’re seeing sharp price declines with these tokens. In 2017 there were 109 companies who raised over $20 million through ICOs, according to Coindesk. The majority of these coin offerings were utility tokens and when you look into company information or the white papers, it is hard to point to a single company that has a product out of beta, much less a product being widely used.
It’s worth stepping back and looking at the larger picture though. The fact is it’s difficult to build and scale a business in less than 12 months, especially when you add in the complexities of an ICO. It’s not surprising that we haven’t seen successful products from these companies yet. It’s quite possible they are still in the embryonic stages of development.
We certainly understand these challenges at BLOCKv. The technology behind BLOCKv was developed over the two years prior to our ICO. And putting the final polish on it for an open, public release has taken almost an additional year. Our perspective: It takes a long time to bring a product to market. However, this lengthy head start will also provide us with a competitive advantage that will make us leaders in our space.
A viable business?
The sad truth of many ICOs is they lack the foundation of a viable, working business. This graph (below) shows the distribution of projects staging an ICO by development stage of the product at the start of their ICO. Only 37 of 412 projects had a working business (and we were one of the 37) before their ICO.
Plenty of people are saying 99% of all ICOs out there will fail. But why is that a surprise? 9 out of 10 of all start-ups fail — and they’re typically raising money from professional investors. Why would a new global phenomenon fueled primarily by hype, and plagued by scams, fare any better? It’s no surprise our industry has wound up in this situation.
It’s time for real utility
There’s a silver lining to all this. Moments like this separate the wheat from the chaff. Now is the time for real teams doing real work to shine. It’s time for their products/services to materialize. It’s time for real leadership to emerge. It’s time to move away from speculation in the utility token market to creating real value.
Until now, the market has been driven by speculators, investors, and people who want to support the growth of these companies. Soon though, the products that all of these companies have been working on will hit the market. That is when we will see the real winners emerge. We’ll see the ones who have an underlying product that really does live up to the hype.
At BLOCKv, we are excited to lead that charge. In just the past few months, we’ve demonstrated how we’re separating ourselves from the pack with exciting partnerships that yield real world results:
– The Los Angeles Football Club (LAFC), Los Angeles’ hot new soccer team, is offering fans a chance to meet star player Carlos Vela via a promotion created by BLOCKv and Greenfence Consumer.
– BLOCKv and Meda teamed up to launch a wildly successful customer engagement program in Mexico based on BLOCKv’s Vatom technology. So far the project is a massive hit, generating response rates that are 6x higher than normal.
– BLOCKv and Grammy-nominated DJ Sasha partnered yet again during the Winter Music Conference (WMC) in Miami, FL, reinventing the live event tickets market.
– We have developed a plugin for the High Fidelity platform allowing Vatoms to be visualized and interacted with in a High Fidelity Virtual Reality world.
– BLOCKv partnered with CataBoom and Alienware, a Dell company, to create the world’s first game inside of a Vatom.
And behind the scenes, we’re creating a platform that encourages developers:
– We have implemented an integration layer to the EOS blockchain to allow developers to create programmable, non-fungible tokens (Vatoms) on EOS.
– To help guide our developers and simplify the interaction with our platform, we are continuously working on adding new documentation manuals, tutorials, and features on our developer portal.
– We have released our BLOCKv Platform and Developer Portal to the public. This allows developers to build smart digital objects on or off blockchain, bringing the digital world to life.
– It’s all part of our effort to move beyond the hype stage and focus on creating a viable business. It’s also worth mentioning the strong team we’ve built.
Gunther Thiel, CTO and co-founder of BLOCKv, put it this way:
“We’ve got a very serious and experienced team with a proven track record. And we are executing on our mission. I think the ICO theme fit very well into our nature because of VEE and the economics model. But we’re on a true mission. We know and understand what we need to do. We’ve been working on it very hard, we’re up for the next steps, and we’re in it for the long haul. There are people here who have done it before who are doing it again. We know what we’re doing. The experience of our team and the clarity of our mission also set BLOCKv apart.”
We’ve only just begun!
My take: The market will price Utility tokens at the price of the underlying asset that people are accessing — factoring in just a bit for the “extras” and then sprinkling a little speculation on top.
It’s understandable that returns on these tokens are down. But keep in mind that no one is even selling products yet.
There is lots of gloom and doom because of the big crash. “It’s over.” It’s not over, it hasn’t even started. The real work has only just begun.
For BLOCKv and others building truly valuable products, this is great news. It’s our time to emerge as leaders in this new world of utility tokens. We look forward to the challenge.