BTU Protocol ICO review. Unfortunately it doesn’t solve the critical problems of trust and discovery.

Michal Bacia
Apr 30, 2018 · 5 min read

tl;dr

BTU (https://www.btu-protocol.com) is a decentralized blockchain protocol for (hotel and similar) bookings. Unfortunately, the solid team behind it doesn’t really solve the business problems it’s addressing. I don’t see a lot of demand being generated for the BTU Tokens in the future, unless the strategy is revised.

CONCEPT & STRATEGY

BTU Protocol creators correctly identified the problem of the powerful, centralized online intermediaries (like Airbnb, Uber, Booking.com, Expedia) dominating markets to the detriment of independent service providers and final users. Bookings/reservations aggregators are major players capturing huge market shares and are becoming de-facto monopolies. This leads to a situation where the interests of the monopolistic intermediary come first, fees are higher and information about the market are biased.

The BTU team wants to change this situation by creating an open, blockchain based protocol for any kind of bookings. They claim it will create a situation where many service providers (hotel owners for example) will make their offers available on the blockchain, so that many booking agents (like Expedia) can offer them to the final users. This is supposed to lower the costs of booking and increase the competition among the booking agents. Sounds good, but I don’t think it will change the market dynamics in any meaningful way. If anything, it will only help the big players generate even more money in fees (due to lower costs of booking).

Here’s why: Airbnb or Expedia grew so big because they add significant value to the final customers. They solve 2 major problems: 1) the problem of discovery and 2) the problem of trust. The discovery problem is solved by aggregating all of the hotels in one place, in a searchable database. This is much more convenient for the clients than calling or emailing every individual hotel to ask about room prices and availability. The trust problem is solved with reviews and rating systems. One may argue they can be biased or skewed, but it’s still better than nothing, especially when you are traveling to a completely foreign country, don’t know the language or the local culture. Once these two problems are solved, the network effect takes over and if a booking agent exceeds a critical mass, it becomes the dominant player in the market — the default go-to website or service for clients. Large, monopolistic intermediaries and aggregators are created by market forces, not by conspiracies.

What the BTU Protocol does, is create a situation where the 2 problems (discovery and trust) are not solved but transferred. Instead of many competing hotels there will be many competing booking agents. It’s only logical to expect new intermediaries to emerge, who aggregate the booking agents. Also, people are drawn to large aggregators for convenience and peace of mind. Having more unknown booking agents will not change the dominant position of players like Airbnb or Expedia.

BTU does not change or challenge the market dynamics, nor does it solve the 2 key problems of the booking industry. This is why I don’t see it revolutionizing the market or creating a high demand of the BTU tokens.

TEAM

The BTU team looks good. Both founders have blockchain experience on top of their academic and corporate background. The core team is 8 strong (including the 2 founders) and include experienced business people and real, solid blockchain developers.

There are 13 advisors and ambassadors working for BTU. Advisors include lawyers, tax accountants and academics. It’s also good to see they have specific industry ambassadors, like healthcare or travel. You can tell someone is thinking about strategy, marketing and adoption in a sensible way.

Overall, the team is the best part of the BTU project.

COMPETITIVE ENVIRONMENT

The market potential is huge. Only the travel alone, including hotels, transportation and rentals is a $2,000B industry. Laisure, with restastaurants and different events is worth $1,700B. The marek is there, it’s defined correctly and It has a potential for disruption, but BTU’s model will not crack it.

Also, It’s a tough and competitive market. Highly centralized, with very powerful competitors, including companies like Google (2017 revenue: $109.68 B) , Airbnb ($2.6B) , Expedia ($10B) or Uber ($4.5B). These competitors won’t give up their market easily, have unlimited resources to fight back and are tech companies themselves. They won’t be easily disrupted.

TOKEN ECONOMICS

BTU Tokens are ERC-20 Ethereum fixed supply tokens. They are also supporting the ERC-808 standard, which is a standard created by the BTU Protocol team. The utility of the token is described as “a network token facilitating (off and on-chain) signaling between a Provider and a Booker”. The whitepaper also mentions rewarding bookers with it, anti-spam and potential “other adoption mechanisms” without explaining much details. This is all vague and I don’t understand how the token economics will actually work. However, as mentioned above, BTU tokens will not solve the 2 key problems of the booking industry (discovery and trust).

On the other hand, It is good to see scalability considerations within the whitepaper. The team is looking into Cosmos, Raiden, IPFS and IPDB as possible scaling solutions.

PROJECT PRESENCE

The website and the papers (both whitepaper and the lightpaper) look professional and explain the project objectives clearly. The team profiles are easy to find and include useful information, like bios and links to LinkedIn profiles, personal Twitters and direct emails. There is a separate, gated (requires registration) website dedicated to the token sales.

The Social media presence is limited to Medium, Telegram and Twitter. There are only 60 Medium followers and 2 posts. Twitter is also in its nascent stage with only 231 followers and 45 posts. The Telegram group is the strongest social asset, with almost 32,000 members. All of the social media presence doesn’t look like a pushy sales campaign. More like responsible communication and community building. This is refreshing.

Another refreshing thing is the Github content. There is the actual code of the MVP of the BTU protocol and the ERC20 token contract (2 repositories in total).

Please feel free to post your comments or questions here, get in touch on twitter (https://twitter.com/HiEnergyPeople) or Linked In (https://www.linkedin.com/in/michalbacia/).

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