ICOs, Initial Coin Offerings

Cryptaur ICO: Evaluation and Analysis

Cryptaur ICO

The Quick Pitch

Cryptaur is pitched as an ecosystem for decentralized applications (dapps) that plans to incentivize the onboarding of new users to blockchain technology. With a focus on mainstream users, Cryptaur intends to remove many of the complexities involved with these new, decentralized platforms from the user interface.

The Cryptaur ICO will start on November 1, 2017 and end on November 30, 2017. Those who wish to participate in the token sale can do so by registering on the Cryptaur website.

The Problem and Solution

According to the Cryptaur whitepaper, the platform aims to expand the availability of dapps by creating an ecosystem around the general concept of applications with no central point of trust or control.

The platform has a focus on mainstream users. For example, payments can be made via Cryptaur Pay, which allows for the acceptance of both cryptocurrencies and traditional fiat payment rails by merchants.

Cryptaur Pay, according to the paper, simply makes an ethereum-based payment to a decentralized application on behalf of the user after the user has made his or her payment with a traditional fiat-based method.

It is unclear how Cryptaur will be able to make those ether payments at a low cost when traditional payment rails come with substantial chargeback risks. A similar product already on the market, the Coinbase Buy Widget, comes with relatively low limits and 3.75 percent fees for credit card transactions.

The whitepaper refers to shared economy dapps, such as ridesharing and food delivery, as the perfect fit for this new technology.

One of the key issues with other cryptocurrencies and blockchain-based platforms pointed out by the Cryptaur whitepaper is the steep learning curve that comes with this new technology. The paper cites a 2015 SCPC survey, which indicated 17.8 percent of respondents do not use virtual currency because they do not understand the technology.

According to the Cryptaur whitepaper, the project plans to address this challenge through a platform that:

  1. Allows its users to maintain their established behavior, without having to learn about blockchain or cryptocurrencies
  2. Is relevant and useful for a large, global population
  3. Leverages blockchain and cryptocurrencies to promote transparency and security
  4. Creates large viral networks that grow organically
  5. Offers a clear and tangible benefit to the users as compared to existing models

The paper also discusses the possibility that corporations in the shared economy space, such as Uber (not mentioned by name), may be succeeding based on advertising and exposure rather than their true value. A proposed solution to this “issue” is the use of a connected web of trust rather than advertising for the promotion of decentralized applications.

It should be noted that there is nothing blockchain technology can do about Uber’s advertising and marketing practices. For this proposed solution to succeed, people would have to consciously decide to take recommendations from their social circle rather than advertisements, which does not necessitate the use of a blockchain. This is more of a social commentary than anything else.

The Cryptaur whitepaper discusses the following benefits of their own decentralized ridesharing app:

  • Imagine an on-demand rideshare service where the driver earns 100 percent of the money the passenger pays.
  • The community at large vets both the drivers and the passengers above and beyond the local jurisdictional requirements.
  • The community at large gets a piece of the decentralized economy that they help build.

The paper mentions “full transparency” for consumers on multiple occasions, but the value of that transparency is unclear. It appears that this transparency is effectively the same information one would get about an Amazon seller or an Uber driver.

“This information includes volumes of sales, returns or complaints, previous buyers and repeat customers, etc.,” says the paper.

The Team

Much like the Ethereum model, there is a Cryptaur foundation that focuses on the technology and its ongoing development. The foundation is based in Singapore.

According to the Cryptaur website, parts of the team behind this project have been involved in the cryptocurrency space for some time. For example, co-founder Greg Bachrach is said to have been an early professional bitcoin miner. His LinkedIn page lists him as the CEO and co-founder of Coinware from November 2011 to December 2016.

Coinware was the parent company of NimbusMining, which had a partnership with the notorious Butterfly Labs back in 2014 for the purposes of providing bitcoin cloud mining services. Butterfly Labs was accused of deceptive business practices by the U.S. Federal Trade Commission in 2014.

Andrey Zamovskiy is an advisor to the project, and he has been involved with multiple blockchain-related projects over the years such as HolyTransaction and Tether.

Jean-Marc Jacobson, who is the chairman of the Montreal Bitcoin Embassy, is also a co-founder of the project.

The Token

There is no cap on the Cryptaur token sale, and anyone can participate via ether or bitcoin payments. The token of the Cryptaur project is CPT, and the base rate for distribution is $1.00 per 100 CPT.

Early participants in the token sale will receive a 40 percent discount on their CPT. The discount will become progressively less as the token sale runs its course. The exact schedule of the discounts is unclear as the website says the token sale will start October 1st and last two months while the whitepaper claims the crowdsale starts November 1st and will last one month.

Proceeds from the ICO will be handled by the Cryptaur Foundation, but specifics related to the use of the funds are not mentioned in the white paper. The cryptocurrency raised during the ICO will be sold off to avoid price volatility risk.

Thirty percent of all CPT tokens will be available to token sale participants. Twenty percent of tokens will be handed to the Cryptaur team over a period of three years. Another 20 percent of the tokens will be allocated to the Cryptaur Foundation for the purpose of implementing projects based on stakeholder votes. The final 30 percent of tokens will be issued to promoters and influencers to encourage the growth of the Cryptaur ecosystem.

The total supply of CPT will depend on the results of the ICO.

According to the white paper, CPT token holders can vote on changes to the protocol. These changes require a supermajority of 75 percent support. Stakeholders may also vote on a monthly budget for new projects.

In addition to the governance aspect of the CPT token, it is also used to pay “platform fees for provider transactions”. The details of this aspect of the token’s usefulness are not covered in the whitepaper.

The Community

There is not much discussion regarding Cryptaur happening on Reddit or Twitter.

It appears that someone (perhaps not the Cryptaur team directly) was falsely marketing the project as the work of Ethereum creator Vitalik Buterin at one point.

There is no GitHub page linked on the website, and a search for “Cryptaur GitHub” did not return anything of use.

Next Steps

While Cryptaur does not appear to be an outright scam, that does not mean this is a project that will achieve any level of success. There seem to be at least a couple of longtime cryptocurrency figures behind the project, but that does not mean this is a project that will lead to huge profits for CPT token holders.

There are already a couple of “decentralized Uber” projects, such as La’Zooz and Swarm City, in existence, and it is unclear if this is something the world needs. Even OpenBazaar, which does not use its own token, could be viewed as a competitor to Cryptaur.

Additionally, there is no direct connection between the success of the platform and an increase in the CPT price (See this Nakamoto Institute article).

Other areas of concern include the discrepancies between the white paper and the website in terms of the ICO schedule, the lack of a publicly-viewable GitHub repository, and the lack of information related to the use of the funds raised during the ICO.

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