At the time when the initial offerings of coins (ICO) are raking in billions of dollars and increasing the value of your business could be As simple as adding the word "blockchain" to its name, it has become crucial to ask why businesses need their own distributed registry – and their own cryptocurrency.
That is precisely the question I was asking myself when I came across Synthestech: a cold fusion research company allegedly developing a state-of-the-art technology for "transmutation of electricity". cheap elements in precious elements and isotopes, "Who raised almost $ 600,000 in his own ICO.
What makes this case particularly interesting is that – just as the blockchain – no one was able to use cold fusion technology in a productive way at the # 39, commercial scale. Synthestech is getting ready to do both – at the same time.
The company seeks to raise 1 million dollars and accepts payments to Ethereum and Bitcoin but also in US dollars and euros. In return, Synthestech announces that it will distribute its STT chips (ERC20) via the Ethereum network, offering investors a token for every dollar spent.
Synthestech detailed his crypto-plans in his white paper but the most striking part of this document is the lack of information on its use cases for the blockchain and cryptocurrency. Indeed, the word "blockchain" only appears once in the entire document and the word cryptocurrency – twice (once referring to a Synthestech advisor serving as a "cryptocurrency consultant") .
"[STT tokens] are dividend tokens, which give the right to receive 36 [percent] earnings of ST Global Inc. corporation incorporated in Belize.", The document reads. He goes on to say that tokens "do not grant rights to shareholders".
Blockchain enthusiasts have often mentioned that technology may one day be ideal for managing large volumes of microtransactions, but Synthestech does not seem to have the intention of doing so. "The use of Blockchain technology [sic] will provide regular payments to token holders [STT] in any convenient form," says the white paper. "If possible – on a quarterly basis."
Another popular feature of blockchain-based technologies is that all stored information is immutable, making it impossible to manipulate records. But here's the kicker: Synthestech apparently has no interest in this feature.
So, why does a cold fusion research start-up turn to blockchain technology? According to Roman Karabanov, director of Synthestech's laboratory, the answer is quite simple.
"Blocking the chain [sic] is good for money, but I do not see how to use it for technology," Karabanov told TNW
" Funding for research is scarce for traditional venture capital," he continued. "The chain of blocks [sic] is the fastest way to obtain funds, which helps to reach the implementation phase much sooner."
Synthestech readily admits that the bulk of the funds raised in its ICO will go towards building a state-of-the-art laboratory where the company will be able to continue its research on cold fusion. " The development rights will belong to the laboratory of Synthestech," says the company on its website.
To increase the value of his chips, the start of the cold merger promises to use 36% of the profits to buy his own chips. This approach, Synthestech insists, will eventually pump the price of STT chips to "not less than $ 450". For the context, this amount equals a return on investment of more than 450 times.
One detail to emphasize is that there is no guarantee that Synthestech's research will keep its promises. Asked about the functionality of their technology, Karabanov told TNW that his team had "observed the phenomenon [cold fusion]" but had not yet developed a functional prototype.
According to a roadmap published by the Synthestech team, the technology will not be commercially ready until the end of 2019 – and the first dividends of investments should arrive before. It should be noted that missed deadlines are not uncommon in the blockchain industry, so it remains to be seen if the startup can reach its goals in time.
In the meantime, Synthestech is not content to promote its ICO among blockchain and cryptocurrency enthusiasts, although it hardly uses these technologies.
The company obtained sponsored coverage (paid) in a number of popular media such as CCN Bitcoinist and CoinSpot (in Russian). He also managed to get his press release on the platform Business Insider's Markets .
Contrary to common misconception, blockchain is barely a magic correction for all. On the contrary, it is a very experimental technology that still has to prove its usefulness in practice. The same goes for the cold fusion and low energy nuclear reactions that scientists have pursued unsuccessfully since at least the 1980s.
Earlier in January, the Nobel Prize and esteemed economist Paul Krugman controversed Bitcoin to cold fusion as an example of two overhyped technologies that are still very early in their childhood – and therefore hard to predict when (and if) they will become a commercially viable solution.
Synthestech has since taken Krugman's criticism of cryptocurrency and turned it into a marketing campaign:
But that does not change the fact: Building an entire business around two unproven technologies like blockchain and cold fusion is a huge risk for investors, it's the least we can say .
It's all the more risky that investing in Synthestech chips offers no guarantee that you will be entitled to some of its profits. Instead we expect investors to blindly believe that the company will be profitable – and that it will spend one-third of its profits to buy back its chips.
Tokendata, the oversight service of the OIC, recently published a study stating that 46% of the 902 companies that made symbolic sales last year have already failed. This is by no means a proof that Synthestech will also fail, but it is a pretty clear sign that the chances of failure are extremely high.
So, if I were you, I would think about it seriously twice before giving money to Synthestech hoping it could turn $ 1 into $ 450: l & rsquo; Blockchain alchemy is a cool concept, but it's also an opportunity that to invest in a young Andalusian shepherd dreams of finding a treasure at the pyramids of Egypt .