The Touchy Subject of Virtual Reality (VR) and/or Augmented Reality (AR) “Initial Coin Offering” (ICO) Investment Profitabilities and Probabilities of Success.
Things to watch out for in VR/AR ICOs and Token Sales.
Declaration
First of all, it is only fair for me to declare my own interest in a non-commercial VRENAR Community Research Project Token Sale. It is necessary for me to describe it to you here to give you the context of my sources of information and reasoning.
Notice I didn’t call it an ICO. This article is intended specifically to alert would-be investors of the dangers of attempting to profit from ICO’s, or Token Sales.
Community VS Profit
There is some expert guidance around, which outlines a clear distinction between the idea of an ICO, which is for profit, and a utilities Token Sale, which is for Community benefit, not profit.
Physical Product Offerings
There appears quite a few slick looking VR/AR Project Token sale based fundraisers around. Some are offering physical products such as AR, VR, or even MR glasses and goggles. Pretty much all of those seem like fair game for standard commercial exploitation, using the usual business models of competing commercial entities, all competing healthily to see who can manufacture the most desirable physical consumer items for profit, driven by shareholders seeking handsome returns on their investments. Pretty much all have reasonably good chances of success in my opinion. Except maybe if they happen to be offering securities via ICOs.
Intangible Benefit System Offerings
Besides those campaigns offering obvious tangible assets as rewards, the types of campaign I really mean in this article, are the ones offering more intangible, world scale enablers. The kinds of things we instinctively know are needed to revolutionize the world in a similar way as the crypto-currencies have done to date, but normally can’t quite put our fingers on. The specific ones I am interested in are those promising the effect of merging AR & VR, to catapult those technologies together across the gap, from long term specialist enthusiast community use, to mainstream adoption. In my opinion, this would have truly world changing results for the better, and is what the equipment manufacturers have been looking for, especially those of the AR community. Ironically, the VR community already has much of the technology needed to enable the AR community. Hence my use of the VRENAR term. They just don’t seem to be aware of what benefits would be in such a unification for them. Have a look at some relevant discussions in one of the more popular (And in my opinion, most technically capable) VR communities for example.
Winners and Losers
On the face of it, it might appear that everyone can win, there is business to be had by all in a global community, and consumers will be ecstatic with their new toys.
But I think the hard truth is that for that last part to really become true (Happy mainstream consumers of VR and AR equipments), many, many ICO would-be investors, are going to get their fingers burned. These are the ones who have committed to commercially driven intangible benefit projects, which will eventually fail, most likely with the profit making entities running off with any remaining spoils. Don’t get me wrong, I am not opposed to all profit making entities, they are what they are, and they’ve got us to where we are at. They can be quite useful and quite cute. But like cats amongst any kind of fledglings, putting them in the wrong place will always end in pain.
Criteria of a Successful Outcome
My criteria of a successful outcome, is everyone on the planet someday very soon being convinced, and even happy, to be wearing AR glasses most of the time, everywhere they go, in everything they do, in preference to even carrying around a mobile phone.
For such an outcome, two things need to happen:
- AR glasses have to become the new must-have smart companion fashion items to be seen with, replacing even smartphones.
- The world viewed through those glasses will have to be significantly augmented, with relevant, valuable, productive, even priceless attractive virtual additions to the physical environment, everywhere that the user goes, and in everything they do, even whilst travelling. Further, this will need to be consistent across everyone’s glasses.
So the campaigns I mean are the ones offering that second point; an AR/VR holy grail. I won’t provide any links to examples here as my intention is not to aim any criticisms towards particular parties, and besides, we could (And most probably will), all end up working together at some point in the future. I believe everyone means well, but in the end there will only be one of these projects which eventually succeeds, and it won’t necessarily be the one gathering the most initial funds. As I will try to explain here; the only possibility for long term success in that aim, is by a single truly Community driven entity.
In that, as well as for technical reasons, I believe that the VRENAR project currently stands alone.
Pitfalls to look for.
The success of a Token investment has to be intrinsically linked to the success of its associated Community, as explained in this article:
In short, if any Tokens are considered securities, then the campaign will probably crash due to being stopped, or seriously crippled by the law, especially if it has performed way beyond expectations.
To Panic or Not to Panic
The characteristic of a large crash in the value of any utility tokens is likely to deliver a double whammy to would-be investors, because the publicity of a big crash in a particular utility token will likely also have an immediate knock-on impact to the value of the whole crypto-cash community that a dying utility token might be converted to. So firstly, all investors would feel the pain of their immediate market crashing, followed by more pain in the secondary crypto-market that they might retreat to, after conversion of whatever value was left in their dying utility tokens.
The only entities and projects likely to survive such scenarios are non-profits, with sizeable non-investment communities of folks content in the knowledge that they just need to hang in with their modest utilities token stock, to get the community utility benefits that they always knew they were purchasing in the Token Sale in the first place, with a modest team operating well within the boundaries that their funding campaign has in reserve. If you are an existing significant would-be investor reading this article, sitting on large amounts of ICO tokens, and decide to swap investments as a result of reading here, please do it very gently… and please don’t swap to VRENAR.
Checking Tokens Against Securities Definitions
It is worthwhile checking to see how much work the campaign team has done to ensure that their Token does not qualify as a security. A tool I’ve found useful for checking and showing such evidence is this spreadsheet based one from Coinbase*.
(*Courtesy of Micha Benoliel’s article and links above on understanding token types, thanks Micha, and thanks Coinbase).
Profitability & Financial Viability
Now consider the nature of the organisation holding the sale. Are they for profit, or non-profit? Is their offering based on their expected ability of being able to restrict the supply of some key proposed service, except in return for revenue? If the answer is yes, then they are not using the new better-than-free business models demonstrated to work so effectively by the crypto-communities. In truth, most profit making entities simply can’t, due to their need to continually show profit, and return such to shareholders and investors. Hence the reason for my own Ltd. Co. being currently shelved for this project, creating instead a new Community Driven Startup just for the VRENAR Community, which will be monitored and regulated by the UK Community Interest Companies Regulator. It is named REMMI Research CIC, after the main Use Case of my ongoing PhD research project, “Remote-me”, the work of which the concept of VRENAR is built upon, and which is now incorporated within the VRENAR Project, for the benefit of the Community.
It follows that the services of those commercial entities will fail, swallowed up by free alternatives from Communities driven by the Wisdom of Crowds, using better-than-free business models, such as VRENAR, in the same way as the Crypto-communities are sweeping through the financial sectors. Anyone will be able to pick it up and use it, thus becoming a member of the community. In the case of VRENAR at least, even better, anyone will be able to generate an income from it. If they were not lucky enough to be able to invest in it earlier, they will eventually be able to literally work their way into it, given that they will somehow also have access to appropriate equipment. Thus some of the current societal problems we see of how to get following generations into gainful employment without blowing up life savings is solved. In fact, why have life savings at all, if there is always the possibility of making a living throughout life playing in such a “Game”?
Technical Viability
Now look at how the technology is described in the White Paper of the applicable fundraising campaign. Is a clear system identified? Has a clear set of available services from the System been Identified, together with the mechanisms that will generate them? Are the boundaries and system interfaces identified? Has a stakeholder analysis been supplied? Are the Use Cases of what is claimed to be deliverable to the Stakeholders fully populated? Are all of the required technologies clearly identified? Are all areas of remaining technical debt/risk clearly identified? Does the system really include the whole world?
The One World, One System Fundamental Constraint
That last question is key to understanding why only one system can eventually succeed. “The world” is a pretty big place. For everyone’s AR glasses to correctly place the relevant virtual features throughout it, then somehow, the world has to have a complete virtual world equivalent, that all AR glasses can equally draw from, displaying exactly the same virtual items, correctly and identically in all of the right places, superimposed on the real world, wherever they go.
A single complete virtual world equivalent. There is no scope for competition there. Not unless different communities could somehow compete on how much better than free one-another’s services could be. Just imagine how poor the user experience would be if folks had to keep swapping glasses between one another, if different glasses happened to be inadvertently displaying differently defined items from different virtual worlds at the same time. A fundamental feature of the better-than-free business model is, the more members there are in the community, the more benefit is yielded to the community. This comes from an exponential characteristic of Networking theory. We are looking at a whole new highly immersive form of social media. So it makes perfect sense to make that community as large as possible. In the case that the community is worldwide, it can only be in the form of a single unified body. Exactly how the massive data representing the physical world is going to be stored is another key question that must be explained in the White Paper.
Further Technical Questions
Other technical questions that should be addressed in the White Paper are how the data from the real world, including moving objects and people, and animals, is to be scanned and captured to the virtual world. The only reason I have some answers to those myself is because I am in process of carrying out PhD research on the cutting edge of those very topics. How will that data be maintained? How will people make money from it? How will they actually go about placing and creating virtual items in the virtual world, for AR display in the real world? How exactly will virtual users be able to interact with people in the real world, so as for example, to enable virtually attending remote meetings with real people in the real world? How will the system know which data from the virtual world is to be displayed by the AR glasses in the real world?
Conclusions
If all of the above questions are not satisfactorily explained in the corresponding White Paper of a VR/AR ICO or Token Sale claiming to unite VR and AR with world changing results, I would tread with caution.
Again, if you are looking to make big gains from any ICO or Token Sale, or if you happen to be committing funds you cannot conceivably afford to lose, or even if you are considering investing someone else’s money, I would urge to not tread at all. Not into any ICO or Token Sale.
Footnote
All of the above is my opinion only. It is by no means legal advice. Please seek expert professional advice if you might need to sue someone later.
Update 15/08/2018:
The VRENAR project remains in development. The token sale has been discontinued, having made no sales, not even for free. The project team remains “Yours Truly”, or the the Royal “We”, having attracted no recruits.
The project funding continues to be supplied solely from personal resources, having necessarily returned to supplying Engineering Consulting services after a period of around 5 months concentrated on attempting to launch VRENAR with no remuneration. Now that consulting effort again has to to take priority, effort on VRENAR continues in the form of the Remote-me PhD Research project, in the same way as it was conceived, but it is not dead.
If a life story of the founder is ever published, you’ll see why VRENAR was/is inevitable, regardless of apparent immediate setbacks.
I’ve described the “Neoliberalism Prison” in another post. If you look at my other posts, or ask nice, you will find it. Right now, (The royal) we are back there doing some hard time, most likely for a while, maybe a year or so.
But another year of captivity is nothing to an eternity of freedom.
The best news is that the VRENAR project is still free to modify the token solution, having no commitment or obligation to any holder, or co-developer respectively, whatsoever.
Further research of the community value proposition in the six months or so since the token offering suggests that the ideal token should be generated “On the fly”, directly from the action of a human vote, as opposed to being supplied per vote from a pre-minted supply, like the existing ERC20 compatible Wink token. Further, proof that the scaling problems known with Ethereum have been conquered is as yet unseen, so the final Wink token solution might move away altogether from being dependent on Ethereum in any way. Who knows? Time will tell.
