Five cryptocurrency projects going nowhere…

Orphan Blocks

It only takes a little bit of scrolling down a Facebook/Twitter or Reddit feed before you come across an article touting the latest hottest cryptocurrencies that you absolutely must invest in before they take off. In fact we wrote one of those articles ourselves last week.

So instead we wanted to focus on cryptocurrency projects which seem to be going nowhere special.

We don’t want to pick obvious ponzi scams (Bitconnect), cheap forks (Bitcoin Gold) or coins with no real utility whatsoever (Dentacoin). Instead this is a list of cryptocurrency projects which in our opinion were once hailed as promising but are now ultimately doomed for failure.

Remember, these are just our opinions!
So if we have hurt your feelings by trashing a coin you own or believe in strongly - feel free to respond below as to why we suck or berate us on Twitter instead.

1. Tezos (XTZ)

Ah Tezos. They raised $232 million earlier this year in one of the biggest ICOs to date. Tezos itself has been in development since 2014, and is the work of a couple called Arthur and Kathleen Breitman.

For those that have no idea what Tezos is about — it is supposedly a competitor to Ethereum with a few major differences:

  • Tezos has a process for upgrading the protocol to prevent hard forks. Developers submit proposals and token holders can vote on which ones they prefer.
  • Ethereum is planning to switch from Proof of Work to Proof of Stake. Tezos already uses a Delegated Proof of Stake consensus method.
  • The smart contract language in Tezos is “functional” and whilst that doesn’t guarantee bug free code, it does provide better mathematical proof of the properties of the contract.

Platforms like Neo, Cardano and Eos have seen incredible gains recently as either new ICOs are launched or investors speculate as the projects come closer to completion. So you might be asking — why is Tezos floundering?

Well Tezos also has a non-profit foundation and the husband and wife duo running the development company are at loggerheads with the president of the foundation, Johann Gever.

The company owned by the Breitman’s owns all the intellectual property related to Tezos. The foundation was set up to give Tezos independence and the duo were planning to sell their company to the foundation for a cool $20m at some point.

The dispute means the cryptocurrency funds raised during the crowd sale is stuck in the foundation’s accounts. It means investors have not received their Tezos tokens either. Six months after the ICO, development has been stalled with the Breitman’s funding offices and salaries out of their own pockets.

In recent weeks, the Tezos community has called for Johann Gever to resign, one of the directors of the foundation has stepped down and class action lawsuits have been filed against the Breitmans and the foundation.

In short, this once promising project is stuck in legal mire and in-fighting and it remains to be seen whether the project will ever see the light of day.

2. Verge (XVG)

Verge is a privacy coin. Whilst it boasts sexy video trailers and a cool sounding name, it actually began with a much more humble and down to earth background. Verge was forked from Dogecoin back in 2014 and used to be called “Dogecoin Dark”.

Since the rebrand to “Verge”, the coin has come a long way and in fact has one of the most fanatical followings in the crypto space. But Verge has slowly been pushing the patience of it’s supporters to the limits in recent months.

Verge’s emphasis is on privacy, and it layers TOR and i2P technologies over it’s Bitcoin roots to make sure that the IP addresses of users are obfuscated and that transactions made using Verge are completely untraceable

The Verge team have been working on a something called the Wraith Protocol which in a nutshell is a way to switch between private and public ledgers on Verge. By default the protocol will be “on” which means your transactions will be recorded on a private ledger.

A litany of errors, mishaps and bad PR has blanketed Verge in the last few months:

  • First there were claims that the lead developer had fired most of the team and hadn’t spoken to the devs in months. It was later claimed that this was just FUD.
  • A notorious XVG supporter called XVG Whale delivered an update in the absence of any info from the team. Sitting in his parent’s bedroom, in pyjamas with a row of boxes surrounding him didn’t exactly ease investor concerns.
  • John McAfee had XVG in his cross hairs and shilled the coin causing a massive price increase and subsequent crash. A few days later, the XVG Whale was back in the centre of things claiming with screenshots of a conversation from his phone that McAfee had threatened to blackmailed Verge + himself for $1.1m in Ethereum due to being unhappy at not being adequately compensated for the pump that he (McAfee) had created.
  • Prominent XVG supporter “Marquis Trill” who spent months backing the project had a change of heart and urged his Twitter and Patreon followers to dump the coin, which they proceeded to do.

And lastly, Wraith Protocol was due to be released at the end of the year. It’s been delayed since September. A good software dev team finishes work early and then does last minute testing before release. As the new year’s deadline passed, Wraith Protocol went unreleased causing investors to bail out on Verge en-masse.

XVG later released the code for Wraith but there were reports that the IP addresses associated with Verge transactions were being leaked. Which were then refuted.

<sigh> and that’s just touching the surface of the issues with Verge.

3. Tron (TRX)

We’ve got to be honest with you, we have absolutely no idea what Tron actually does and we’d like to hazard a guess that not a lot of other people do either!

But Tron is currently 10th on the CoinMarketCap listings and the reason for a lot of positivity is founder Justin Sun, who was featured in Forbes “Asia’s 30 under 30” list.

Justin has the exclusive privilege of attending an “elite leadership programme” at a university funded by Alibaba founder Jack Ma and is considered to be Ma’s protege. This explains why investors have been falling over themselves to throw money at his project.

The problem is Tron has absolutely no product but a market cap of around $16 billion. Tron’s roadmap is just a list of titles and dates (e.g. Star Trek 2023–2025, Eternity 2025–2027).

Like XVG earlier in this list, the project has not exactly shied away from controversy either!

  • Justin earned the wrath of Monero’s developer Riccardo Spagni who called out one of his over-enthusiastic substance less posts but later admitted that whilst he was sure Tron was a scam, he still bought some to make money.
  • Critics are claiming after combing through the white paper (remember there’s no actual proof of concept or product yet) that it’s just a rehash of an idea already implemented by LBRY.
  • Speaking of white papers, recent reports suggest that the Tron white paper may have plagiarised other projects including Filecoin and IPFS. Justin made a counter claim that this was a result of poor translations of the original Chinese white paper.

Lastly there’s also a little bit of controversy over the fact that it’s alleged that Justin has recently sold 6 billion of his TRON.

The plan is apparently for a main-net launch in March of this year… but we have no idea how realistic that deadline is. With the founder working on promoting the project before building it, we think Tron holders might be hodling bags for a long time yet.

4. Ripple (XRP)

Unlike some of it’s competitors, Ripple is one of the most established cryptocurrencies in the space. Released in 2012, it’s purpose is to serve as a real-time settlement system between banks. The fact that it’s a tool for banks and goes against the “decentralised” cryptocurrency ethos has meant it lingered around without major price movement for a long period of time.

At the end of last month however, Ripple managed to usurp Ethereum’s no 2. spot on CoinMarketCap which was quite a shocking turn of events for most people used to seeing a settled order at the top of the charts.

Whilst Ripple itself has some form of purpose — the same can’t be said of XRP, the token powering the network. The Ripple network allows users to transfer Bitcoin, traditional fiat and even mobile minutes and frequent flyer points. Ripple’s only requirement is that all accounts have a minimum deposit of 20XRP as an anti-spam measure. When a user elects to transfer a non-XRP asset, they get charged a small fee.

One thing to note is that banks don’t have to use Ripple, they can simply use the software created by Ripple and run their own ledgers.

So why has the Ripple price soared recently?

And why do we think that Ripple is going nowhere?

Well most investors buying the XRP token right now believe that the new partnerships will lead to increasing demand for the XRP token. But as we mentioned earlier, there’s no obligations on banks to use XRP.

More worryingly, out of the hundreds of partnerships actually signed, reports actually suggest that nobody is actually using XRP for making high value transactions as intended. In fact only one Mexican bank is utilizing Ripple as a “test case” at present.

Moving onto the actual token itself. Ripple has a total token supply of 100 billion XRP. Of that Ripple actually owns 62% itself. Another 20% was awarded to the developers. It’s quite astounding that people predict that Ripple might be a $100 coin at the end of the year given it’s centralised and pre-mined nature.

Calculating the actual market cap of Ripple would mean it’s higher than Bitcoin which is something new investors do not factor into their calculations (if they do any at all!).

Ripple have obviously promised to lock 55 billion tokens into an escrow account in order to build trust in the platform. These coins are periodically unlocked and released onto the market affecting the scarcity. It’s worth noting that Ripple has no programmatic governance like Bitcoin does, so it’s entirely up to Ripple whether it decides to later change it’s mind about the scarcity of the coins.

Most XRP investors however probably aren’t concerned about the underlying tech or fundamentals from what we’ve seen and heard on Telegram groups and Discord server. But with the price dropping from it’s ATH of $3.84, and investors bailing back into the safe heavens of Ethereum, it seems the bonkers mini-rally is over for now.

5. Litecoin (LTC)

Ooof! We saved the most controversial pick for last. Unlike some of the projects on this list which are just complete vapourware, beset by civil war or managed by incompetent founders — Litecoin is an actual functioning coin.

Litecoin is the creation of Charlie Lee, who used to work for Google before moving to Coinbase. In 2011 he copied the Bitcoin code, changed a few variables and created Litecoin. Whilst Litecoin was no technical marvel, the marketing message that Charlie crafted was genius.

Charlie Lee claimed that Litecoin was “silver to Bitcoin’s gold” and that helped position his coin although he largely abandoned it when he moved to Coinbase. The coin notoriously dropped from highs of $40 in 2013 to just $4 but in January of 2017, Charlie had an epiphany. Or perhaps the growing surge in interest in cryptocurrency alerted him to an opportunity!

As a literal clone of the Bitcoin source code, Charlie Lee was able to adopt Segwit into Litecoin. Segwit was a proposal in Bitcoin to increase block size limits without actually increasing the hard coded block size limit. It required users and miners to upgrade their software and the miners in particular weren’t in too much of a rush to do this.

So Charlie managed to convince miners on Litecoin to adopt Segwit and pushed through the scaling proposal. Proving that Segwit could be achieved on a clone coin had two effects

  • The Bitcoin supporters of Segwit were galvanised and later on in the year Segwit was enabled on Bitcoin as well (but resulting in a messy hard fork which led to the creation of Bitcoin Cash).
  • Litecoin recovered from the doldrums of sub <$10 and the price rallied to $50 before a recent meteoric increase to $300+.

So why do we think think that in light of all this, that Litecoin is going nowhere in the new year?

  • Firstly and not most convincingly, Charlie Lee has a habit of sticking his foot in his mouth with his public statements. For example many neutrals thought it was absolutely mental to claim multiple year bear markets are imminent in the midst of a Litecoin rally.
  • Secondly and also not entirely convincingly, Charlie Lee spooked many of his investors by claiming to have sold all his Litecoins. He did it under the guise of not wishing to have a huge conflict of interest. But coming off the back of a month long promotion for his coin on the likes of CNBC, many took it as the founder dumping his coins after a huge pump. With many claiming that Charlie Lee has an uncanny habit of knowing when to make exits / move due to insider info, it might well be that he gets a new nickname in addition to the self given “Satoshi Lite” moniker — Charlie “Houdini” Lee!

But less then savoury actions by founders aren’t exactly death knells for projects so the real reasons we think Litecoin has a bearish future is:

a) Ethereum and Bitcoin Cash are widely available on most exchanges and provide the same function that Litecoin does right now, fast and cheap transactions. In the case of the former, Ethereum handles this whilst handling the highest transaction volume.

b) The creation of Bitcoin Cash means those opposed to the Segwit/off chain scaling solutions have their own coin in which they can pursue their dreams of on-chain scaling via larger blocks. This means Bitcoin itself was able to continue with the Segwit/Lightning Network schedule which removes the need to use Litecoin as a form of test net.

c) Litecoin hasn’t seen much activity code wise since September and as a clone of Bitcoin, the way the code base progresses is through copying in features from other projects. There’s very little innovation in Litecoin and projects such as RaiBlocks for example have the potential to leave it in their dust. Charlie Lee has promised focus on privacy (implementing zk-SNARKs for example) but it remains to be seen whether LTC blazes it’s own trail this year.

But in a market where a coin for dentists currently has over a $1bn in market cap, we’re not sure what to think so we expect LTC to have another positive year and defy naysayers like us.

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Orphan Blocks

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