Electroneum - Crossing the Chasm
23 Sep 2017 • 0 Comments[DRAFT] this was a draft post I planned to be paid for by Electroneum, but didn’t end up publishing because I didn’t like the project enough
Electroneum, in short, is the mobile cryptocurrency that anyone with a smartphone can use.
There is a very hot new ICO on the block. Duncan Logan, the CEO and founder of Rocketspace, a start-up accelerator that had backed companies such as Uber and Spotify, had tweeted that this is the first ICO he will buy into. The founder is the CEO of a top marketing firm in the UK that works with Fortune 500 companies, and he has a team of about 20 engineers on this project. A thread on Bitcointalk posed the question, not of what people thinks or of whether to invest, but of how much to invest.
So I’m reviewing the merits of this project, as well as the risks. It sounds like some people who have invested in very successfull ICOs in the past are betting big on this project, but I’m going to put in just around four ethers, which to me is not a small amount, but not a very big amount either, and here is my complete reasoning. Full disclosure: I’m also going to submit this post to the bounty program.
Crossing the Chasm
Some of you may have heard of the “Technology Adoption Lifecycle”:
This is a model that describes the adoption of radically innovative products in five phases – the early market consists of the innovators, and then of early adopters, and then slowly moves into mainstream adoption. In between early adoption and mainstream adoption is a so called “chasm”, which some products cross and others don’t.
I like this picture here which graphs the adoption lifecyle with expectation. (It comes from a nice blog post about how bitcoin has not reached early majority because it’s not easy to use)
I think we can safely say that cryptocurrencies are in the early adopters phase (and at peak hype) – but has not reached mass adoption. (A study by Cambridge University found that there are only about three million active cryptocurrency users, which is only ~0.04% of the world’s population.) Vitalk Buterin had said recently that there are two kinds of average person - the average person who has never heard of bitcoin, and the average person who has – it’s important to remember that the vast majority of the world still consists of the first type of average person. For crypto to the vast majority, it needs to:
1. be accessible
2. be easy to use
3. have great marketing
This is where electroneum comes in as a very promising project that addresses all three areas.
What is electroneum?
Electroneum is a new cryptocurrency, built on its own blockchain, that is developed with the explicit intention of gaining mass adoption through the 2.2 billion smart phone users. It comes with a mobile app where a user can experience mining and earn a little bit of the coin, and play games and earn even more coins. If the user is interested, he/she can mine more coins on his/her computer. The Android beta is on google play. If you don’t have Android, I have a demo video to show you what it’s like.
The use cases for the currency are also very exciting, and include online gaming, gambling, and serving the underbanked – and I have some things to say about the last point – but before we get into these, some other details.
A decentralized blockchain with a centralized app
This is a point that I’m sure will come back to this project in the future, so it’s good to understand it now – and if you’re thinking about investing in electroneum, it’s important that you understand this.
The mobile experience is an essential part of electroneum, but here it is – the app is not a dapp, and the mobile mining is just a mining experience that doesn’t do any actual cryptographic proof of work or transaction validation.
The founder Richard Ells is very open about this and has talked about it in an interview (he also seems like a very dedicated, hardworking, and likable person from this interview.)– his team has spent a long time developing mobile mining, and found that it drains power and bandwidth and ended up melting a bunch of phones. So what they had decided to do with their mobile app is to give users real electroneum tokens benchmarked to their phone’s CPU, while real mining is done elsewhere.
Let’s take a moment to understand what this means. It means that mobile mining is not quite here yet as a technology, which I don’t find surprising. But what it also means is that people will not be melting their phones to mine tokens, and honestly gives me much more confidence that the app will have a reliable user experience. It also seems that the tokens given through mobile mining are essentially a cost to electroneum, and I wonder how sustainable this would be in the long term.
So it’s important that you understand this up front, but for practical considerations, I think it’s ok.
Now let’s talk about why I think electroneum will help take crypto across the chasm.
Accessible mobile app, accessible CPU mining
People can get started with this coin just by downloading a free app! Additionally, the electroneum team has done a lot of work in making an anti-ASIC, GPU-resistant mining algorithm, so that most of the mining can be done on a personal computer. This means that average people can participate in the mining, and that the system is designed to not to be dominated by whales running lots of servers.
Intuitive user experience
Details are important, and every detail is geared towards an intuitive user experience.
At this moment, $100 US dollars can be represented as 0.025766 BTC - that doesn’t feel like a lot to most people, and is a pain to deal with. Electroneum will solve this by moving the decimal place over – while there will only be 21 million bitcoins, there will be 21 billion electroneums, so that each electroneum can represent less value so we don’t need so many decimal places – in fact electroneum will never have more than two decimal places. This may seem like a small detail, but speaks to how Ells is dedicated to an intuitive user experience.
I think this attention to detail is seen even in the token sale – lots of token sales require you to send tokens from a wallet where you control the private key, and if you accidentally sent from Coinbase, then tough luck, you’ve lost your tokens! –this is a great example of the ease of use (or lack thereof) problem that crypto has. This is not the case with electroneum - they create a wallet for you, and you can send in your funds from anywhere without the possibility of losing your funds. Caring about the user is important when crossing the chasm, so this reflects very well on the team.
Additionally, another great feature about electroneum that is important for widespread usage is – no transaction fees! People are used to paying their friends without transaction fees through apps like paypal, venmo, or square cash, so for crypto to be competitive, there must be no transaction fees.
Going for virality
Electroneum is going for a viral app that will get people talking. A free app where you can earn money? This can appeal to anyone.
Use case: serving the underbanked
Electroneum cites three use cases in their white paper - gaming, gambling, and serving the underbanked. While the first two may be much more lucrative, I’d like to end on some thoughts on the last one