Finally the ICO craze is hitting Malaysia in 2018. Fortunately we are in a crypto bear market thus most of the questionable projects didn’t really got traction they never deserved. What happened in 2017 was pretty spectacular, the ICO closely assemble the IPO (dotcom bubble) craze we saw in 2000. Just to put things into perspective the dotcom bubble in US popped when the total market cap for all stocks were at 3 trillion USD, currently the total crypto market cap is only at 200 billion USD (globally!). Many would agree there are more pumps to come, sooner or later. One thing for sure when this bubble does popped, many of these coins/tokens are going to zero. I think this craze will end up even worse. This is because compared to current ICO, there was at least some barrier to IPOs entry back then. To create a coin/token you don’t really need anything, you just have to copy and paste a few lines of code. These coins later are listed on exchanges and buyers will buy them unsuspected-ly after being convinced by team of marketers that the coin will increase in price soon. One can only imagine the amount of dumb money in the crypto space. Now we are done with the intro, we will now look into Lavida Coin, the hottest ICO hype in Malaysia at the moment.
The ICO world is quite new to me, I was only been here for 1 year. To summarize I joined 6 ICO in the span of 1 year and I only exited 3 on time (too early actually) and left holding 3 heavy bags, and as we speak I’m at least 40% down from my initial investment. And to put things into perspective all of this 6 ICOs actually have way better whitepaper proposal, a clearer road map, and very experience team members compared to Lavidacoin could offer (well at least to me it is).
When evaluating ICO things that I will look into (mainly taken form Ian Balina list)
3. Fund target
4. % of pre mine coins
5. Credibility of teams and advisors
6. Genuine idea and relevance to market needs
7. Community, github commitments
Before we proceed with the evaluation, let see what is Lavida coin aims
1. A new online entertainment channel with an entrepreneurial focus (while this definitely sound like a good idea, there are more solid projects out there such as Steemit and Basic Attention Token (BAT). These platforms basically rewards content creators with their coins/token whenever people ‘consume’ their material. From lavida whitepaper I can see they are going in the same direction, except that no details on the project were discussed, and no prototype were disclosed. Just to be clear, BAT and Steemit are working projects that are evolving from day to day, even with massively experience developers in their team , their project still didn’t get the expected traction to date. (BAT marketcap: 0.2 billion usd, STEEM marketcap: 0.25 billion USD). My concern here is this “online entertainment channel with an entrepreneurial focus” is not a unique project in itself. Thus it lacks the pioneer advantage and I can’t see it compete with the current platforms that are technically working as we speak and are improving from time to time. We are living in a borderless world please don’t tell me “we are focusing on the Malaysian market” crap.
2. A new payment gateway built on proven block chain technology. So basically it is just another “Bitcoin”. Even the technology are similar but with additional Scrypt implementation . I can’t really comment on the codes architecture because I’m not familiar with Scrypt myself. But technical aside, WE DO NOT NEED ANOTHER CURRENCY (we have 1800++ cryptos already). Just use bitcoin, ethereum, or litecoin or even dogecoin.
3. A non-profit making construction project to build a Muslim community hub. Basically crowd funding to built a mosque. Again why do we need ICO for this? Can’t we just send money to Vida’s account? Why we need a new coin for this? Even if you wanted to pay with crypto, can we just use bitcoin. Bitcoin have survived through years of attack and are strong AF, it definitely will take time for Lavida coin to be proven safe. Putting a transaction on block chain doesn’t mean it is immutable! It can always be 51% attacked, even a high market cap coin like BTG got attack this year (FYI strength of a block chain depend on computational power behind it, in general the higher the market cap, the higher the hashing power)
So now let dive into the metrics I set up 1 by 1
- Prototype-[ At this time, the entertainment platform is in the inception stage, and there is no overall strategy in place regarding the types of programming it will broadcast, and the exact viewer demographics it will target. These tasks will be completed during the initial development stage once development funding has been secured. ] so basically they wanted to collect $1 billion for only ideas (which is not even ground breaking). This is just insane.
2. Roadmap. The road map only starts on May 2018 this year, that’s like less than 4 month. I don’t think that’s enough time to prepare for a $1.5 billion project. And the plans ended on July 2019, I would expect far ahead plans like at least more than 2 years. And while it is not impossible to achieve all tasks stated on the road map within a year, I still feel that they are really rushing with the project. Again, If they are really serious with the project progress should be taken cautiously and meticulously.
3. Fund target. 1 billion for entertainment platform.100million for a new payment system. And another 400million for the mosque. I can’t really comment on mosque and entertainment platform construction cost (I don’t have any clue) but 100 million to pay developers to copy paste bitcoin code and implement some Scrypt function to it, is way too much. Pay me RM 1000 and I’m happy to make a coin that used bitcoin technology for you (no kidding) you can even choose what kind of ticker symbol you want for your newly created currency.
4. % of pre mine coins. 20% for the team, so if the fund target is achieved that would be $300million. If the project is real and going to achieve what it aims to, then no issue. Just make sure you are clear with SEC direction, if this is a security? Is it registered?
5. Credibility of teams and advisors. I don’t see any team or block chain expert names on their website. And the UK contact address is a huge red flag for me. I understand we are living in a borderless world but this coin will mainly be used in Malaysia (I think) and it only makes sense the home base should be in Malaysia. I can only suspect they want to stay away from local jurisdiction. They might have other reasons though.
6. Genuine idea and relevance to market needs. For this 1 I would give 0 marks
7. Community, github commitments. Nowhere to be seen.
8. Security. In the whitepaper the writer emphasis on how safe the block chain is and how it is immutable and everything. While what he said are true, it is not technically accurate. No matter what kind of function you used SHA-256 or Scrypt (pronounced ess crypt) they will always be possibilities of 51% attack. I don’t want to dive really deep into this. But the point I want to make here is, an Open block chain work based on game theory. Since Lavida coin will be using SHA-256 and Scrypt (the two most famous cryptographic function), being a new player in the space, it can easily be attacked since miners from other coins can simply shift their processing power to attack Lavida. Well of course there are no good reason for them to do that, since the incentive to attack a small network is just not there, but human are mysterious being, some people can just decide to have fun(like me, unfortunately I don’t have that kind of hashing power).
This is just another block chain marketing stunt, crowdfunding project that’s taking advantage of ICO conveniences. There a no reason to store a media file on a block chain to be share by users. Block chain is an inefficient way to store and send data (at least for now). The only reason we should be using it is for its data immutability (hard to change) feature. The SQL database most companies using right now can achieve way higher efficiency, there’s no reason to use open decentralize block chain, plus it doesn’t make any sense for a private company who will need to impose control on materials (in case porn etc) on their media platform will be using an open block chain for their system. Open block chain are not meant to be CONTROLLED. Last but not least the payment gateway idea is just ridiculous; there are other safer and open systems out there. We should be moving towards a single global currency, as of now Bitcoin is leading the way. If Vida and Co really wants to support the crypto cause, start to encourage people to use Bitcoin and even better invest some money into new bitcoin devs development.
The end goal of this crypto revolution is for us to have OPEN, DECENTRALIZE, UNCENSORED, IMMUTABLE means of transferring and storing value. Success of this revolution will depend heavily on the preservation of these core principles, price appreciation should be treated as after-effect (I wished LOL), it shouldn’t be the main goal. Lastly, after reading this and if you still decide to invest into it, I wish you all the best and I honestly believe you actually have a good chance to get away from this richer (given you play your card right) I’ve done my part, now I can only hope you won’t be part of the problem.
disclaimer: this is not a financial advice. Contents are author’s personal opinions.