In this article, the third in a series on cryptocurrencies, I will detail five initial coin offerings (ICOs) and decentralized applications (ÐApps) that hold a lot of promise.
Difference between ICO and ÐApp
First of all, a few words on the difference between an ICO and a ÐApp. A ÐApp is an application of which the backend runs on the Ethereum blockchain, in the form of (a series of) smart contracts. A ÐApp can have a frontend written in any (programming) language, but always makes use of decentralized storage (for example through Ethereum Swarm) and messaging (Ethereum Whisper).
An ICO is a monetary event, a way of raising capital by issuing a specific coin or token. It is possible to introduce a ÐApp through an ICO, but an ICO could also lead to an entirely new blockchain, unrelated to Ethereum.
How many ÐApps?
Even though not all applications I list below are Ethereum based, most decentralized application activity takes place within the Ethereum ecosphere. The Stateofthedapps website (https://www.stateofthedapps.com/) lists 877 ÐApps, as of early December 2017.
Only 255 out of the 877 ÐApps are live, with 501 listed in some sort of demo, concept, prototype or work-in-progress stage. About 30 of the currently available ÐApps are related to gambling, with tell-tale names such as Ponzi Unlimited and DoubleDouble (“a money multiplying system”).
Profitability
The profitability of these applications and their accompanying tokens when compared to just owning or trading in Ethereum remains to be seen. There is a site which keeps track of this profitability, ICO versus ETH or BTC at https://icostats.com/. Picking out a random ICO (Patientory) shows that it has a decent return on investment, even though there are healthy warnings that its business practices are at best dubious: https://www.reddit.com/r/ethtrader/comments/6e682v/patientory_ico_warning_7_red_flags/
1. Mona.co (https://mona.co/)
Mona.co is a debit card that allows the owner to spend Bitcoin or Ethereum at any place (offline or online) that accepts such a card. To make sure it is widely accepted, Monaco claimed early on to have a deal with Visa – but whether it actually had such a deal was unclear for quite some time (see for example https://www.bloomberg.com/news/articles/2017-10-02/cryptocurrency-gained-695-on-deal-with-visa-that-didn-t-happen). As of November 1st, Visa has endorsed the card in Singapore.
Until recently, Monaco offered a feature called “asset contract”, which meant that on their platinum cards, a percentage of the amount spent was awarded to the card owner in MCO tokens. Why the asset contract was dropped is not known, but it might have to do with the SEC paying more attention to cryptocurrencies – or an outcome of the recent Visa deal.
Monaco also offers better exchange rates by emulating local currency when using the card in a foreign country and intends to produce their top-of-the-line cards in high quality metal.
Is Monaco a good idea? It might not be, as this article points out: https://gyrovague.com/2017/06/16/monaco-doing-the-math-on-an-ico-where-the-house-always-wins/.
2. Sia.tech (https://sia.tech/)
Sia offers an open source, blockchain-based solution for file storage. It trades free disk space between connected users, offering two types of rewards: mined coins or rented-out diskspace. The company has created its own blockchain – in other words, Sia is not based on Ethereum. One of the developers clearly stated why this is the case, at https://www.reddit.com/r/siacoin/comments/6bqvqn/sia_on_the_ethereum_network/. In particular, the perceived (by Sia) lack of security within the Ethereum community and the fact that a potential Ethereum fork has serious consequences for all involved, convinced the developers to take an alternate route.
Sia is potentially a lot cheaper ($2 per Tb per month) and more secure (it splits files apart, encrypts and distributes them across the decentralized network) than alternative, cloud based solutions such as Amazon, Microsoft or Google. A caveat is that the price is set by people on the decentralized network renting out their storage space. Sia is Proof-of-Work, which means it has mining (a hardware miner was available at https://obelisk.tech/), with pools available at https://siamining.com/ or https://sia.nanopool.org/.
There are competitors and alternatives offering blockchain-based storage, such as Storj, Filecoin and Burst. Storj (https://storj.io/) is priced at $0.015 per GB per month, which actually is more expensive than for example the regular, off-blockchain service Backblaze B2 ($0.005 per GB per month). Filecoin (https://filecoin.io/) has just completed its ICO (raising $205M), with no storage prices set as of yet. Burst (https://www.burst-coin.org/) is exactly the opposite of these blockchain storage systems: its miners do not need fast CPUs, GPUs or ASICs but rather free disk space. A positive side effect of this way of mining is that the energy consumption is very low.
3. Augur (https://augur.net/)
Augur is a prediction platform that relies on the idea of wisdom of the crowd and rewards the correct prediction of future (world) events. The wisdom of the crowd basically means the collective opinion of a group. Research has shown that this collective opinion is at least as good, but often better than individuals in providing the correct answer to questions, such as further explained in this MIT article: http://news.mit.edu/2017/algorithm-better-wisdom-crowds-0125.
Users of Augur can buy positive or negative shares that predict the outcome of a certain event. If the prediction turns out to be true, users are rewarded according to the number of shares bought. Next to this, Augur has its own currency (Rep) which is employed by users to submit outcomes to events. Correct predictions (similar to consensus) are rewarded with more Rep, incorrect predictions (against the consensus) punished by taking away Rep and automatically reducing the reliability of this particular user. Owning Rep is not necessary to partake in this ÐApp.
A competitor of Augur is Gnosis (https://gnosis.pm/), which offers a similar service. One of the examples it presents on the application of wisdom of the crowd is price discovery for pre-auction art, which – if it holds true – would support auction houses in setting an initial price for such art.
4. Steem (https://steem.io/)
Steem is a publishing platform that attempts to solve the problem of publishers not making enough money or profit from digital content. Steem itself lists a few reasons, which sound reasonable enough: the rise of adblockers and the difficulty in acquiring enough critical mass of consumers. A platform such as Facebook could help out, but most of the profits on Facebook do not go to the people publishing on it.
Steem Smart Media Tokens, based on Ethereum Smart Tokens (which basically described how to transfer tokens) can be earned by demonstrating so-called Proof-of-Brain properties. In other words: publishers need to use their brain to earn the tokens, which are awarded based on their social value. The process is described in the Steem bluepaper at https://steem.io/steem-bluepaper.pdf.
The first application of the Steem blockchain was Steemit (https://steemit.com/), an article platform not unlike Medium. Publishing and voting on content is rewarded with Steem Dollars, pegged to the US dollar at $1, with a 10% annual interest rate. These can be converted to Steem in order to cash out. Next to this, another reward is available in the form of Steem Power, which – in videogame analogy – denotes level or rank of the publisher. People with a lot of Steem Power are called wales or dolphins, the average Joe is a minnow. Cashing out on Steem Power is difficult and would take a full two years, which keeps people on the platform.
At first sight the platform seems confusing, with its large ecosphere of connected tools, sites and diverse content, making it a strange combination of Tumblr and early days Youtube.
Examples include Steempixels (https://steempixels.com/), where you can buy (a set of) pixels on an eternal canvas, or Radio Steem (http://radiosteem.com/), an application where tokens are used to propose and keep music tracks in a playback chart. A lot more are listed on Steemtools (http://steemtools.com/).
According to Steem, a total value of $22,728,958 (early December 2017) was paid out to publishers. There are some 450.000 content publishers (https://steemdata.com/stats) connected to the platform. As an example of the controversy surrounding the platform, read https://decentralize.today/the-ugly-truth-behind-steemit-1a525f5e156.
5. Etherisc (https://etherisc.com/)
Etherisc is an insurtech, a startup firm entering the insurance world using technology as a disruptor – not unlike fintechs do in the finance world. It aims to reinvent insurance by providing a platform for decentralized insurance applications based on Ethereum, which it calls DIP (Decentralized Insurance Platform).
Its first (live) ÐApp (available at https://fdd.etherisc.com/) concerns flight delays. Participants pay an insurance fee in ETH and when a flight is delayed, the smart contract automatically pays out. With the application, Etherisc aims to make flight delay compensation – which often is deliberately complicated – accessible to anyone. A showcase ÐApp (https://crop.etherisc.com/) focuses on crop insurance, where a farmer pays an insurance fee in ETH and a compensation is automatically payed out when a specific area is hit by a natural disaster (such as a flood or drought).
In December 2017, the United Kingdom Financial Conduct Authority (FCA) accepted the Etherisc application as the only Ethereum based project in its technology innovation program, the Regulatory sandbox. The company has received several awards, such as the Blockchain Oscar for most innovative Blockchain startup (2017), the Jury awards at the ICO Summit (2017) and was winner of the Blockchain startup contest (2016)
Etherisc is based in several cities including the Swiss municipality of Zug, also known as Crypto Valley (https://cryptovalley.swiss/).