EncryptoTel: An Analysis

EncryptoTel promises to be a blockchain-enabled PBX system. Their white paper is available here.

As with previous analyses in this series, I will go through a heurstic to determine whether this market and model makes sense. Following are my evolving set of questions, and answers to them. Note that future sets of questions will likely change, as this heuristic evolves over time.

A brief note about this white paper: though it is admirably free of obscurantist jargon, it is also fairly thin on details. Therefore the answers to the following questions are somewhat insubstantial.

Does the technology require a decentralized solution? It’s not clear to me why there needs to be a decentralized, blockchain-powered PBX system. Current telephony works well. The white paper correctly notes that surveillance of telephone networks has increased, and it implicitly claims that a blockchain-enabled telephony network cannot be surveilled. But, so, too, can Whataspp, Signal, Telegram, and other end-to-end encrypted communications systems be hidden from government’s prying eyes. So what’s the benefit here, other than that ‘blockchain’ and cryptocurrency is suddenly sexy?

Does the proposed network have the potential for exponential growth? Telephony networks generally grow exponentially. Given the answer above, however, I don’t know that this particular network will grow exponentially. If the business case isn’t there, will anyone really use this network?

Does the token increase in value the more it is used? This white paper gives no information about the token mechanism being sold to investors/speculators, etc.

Is the underlying technology already built and running? This white paper gives no information about the state of its technology, other than to assert, briefly, that there is a beta test of the software being used. No detail is provided about how much of the token sale will be used for development and other purposes.

Does the company or team have a first mover advantage? If not, does this matter? Given that there are innumerable PBX systems in existence, this company is not the first to market. It claims, of course, that its PBX is a decentralized, blockchain-powered one, and therefore better than existing PBX systems. However, as mentioned above, the white paper gives no reason why a blockchain-powered PBX system is preferable to the ones that already exist. Some claims about surveillance are made, but no explanation is given as to why a blockchain-powered PBX system is immune to surveillance.

Do the assumptions about potential token users make sense? I don’t think so. The white paper hasn’t established a need for this service, aside from some vague claims about surveillance, and there’s no evidence that people interested in cryptocurrencies won’t use encrypted messaging apps like Whatsapp, Signal, etc., for their communication needs.

Does the team have the technical knowledge and experience to complete the project? The white paper provides no information about team members’ names or their backgrounds. Some information about the team members can be found here. The principals don’t seem to have much background in blockchain technologies, though the escrow team does.