Colu Abandoning Blockchain
Colu Abandoning Blockchain, Numerous companies wanted to be a part of the blockchain atmosphere during its 2017 boom. Cryptocurrency popularity was rising dramatically, and everyone wanted their piece of the money being brought in. There were multiple company’s that put blockchain beside their names, such as Long Island Iced Tea. They tried to brand themselves as the Long Blockchain Corporation. However, it seems that a fundamental shift is beginning.
Some of the firms that entered the blockchain space are now removing cryptocurrency &blockchain entirely from their business plans. Colu, the Israel-established company that’s building economies by creating relationships amongst communities and business leaders, is deciding to eliminate these service from their company. Typically, when these announcements are made, it revolves around significant layoffs and substantial loss of funds. However, Colu hasn’t fired any employees and hasn’t lost any funds. This announcement is purely based on a tactical decision to restructure the company. Colu will now primarily focus on creating partnerships amongst municipalities.
Colu will be maintaining their launch of two community-coins for the Tel Aviv and Belfast communities. These community coins will keep the same design elements as a blockchain. Currently, the company is focusing on raising funds with NGO’s. This will allow them to further the strength amongst communities. The company has implored that this is not a scam and that Colu is currently in talks with multiple municipalities worldwide to bring this service to their citizens.
Colu’s decision also came with an announcement on their offshoot website, “Colu DLT”. The subsidiary firm from Gibraltar will be the first to provide these community coins as an ICO to citizens in these municipalities and businesses. The website’s statement reads: “The company will now look to acquire the entirety of tokens as issued during the ICO crowd sale period or purchased on the secondary market, amounting to approximately 54 million tokens.”
Blockchain companies have increased their cryptocurrency scarcity by using buybacks for years. However, at the level that Colu is implementing buybacks hasn’t ever before been seen in the industry. It’s unprecedented and will surely make them the most prominent leader in the CLN Token Space. There’s always the chance that this level of investment could backfire on Colu in the future.
Professor of Behavioral Economics, Dan Ariel, spoke about Colu’s decision by stating: “The Colu Group is focused on fostering relations between municipalities, local businesses, residents, and other city stakeholders. These relationships rely on the very same kind of trust and consideration, which is now being shown towards CLN token holders. Such acts of giving up profits for the benefits of customers, partners, and investors are crucial to this tech sector if we want it to continue to evolve and grow.”
It’s currently unclear if the price of these tokens will return to regular valuations or ICO valuations.
The price of these community coins when they’re sold as an ICO is different than when they’re sold to the public. During the ICO, the valuation of the currency was at $0.095, and during the press time, it was listed at $0.010051. However, sources close to Colu have stated that the original purchasing price of the tokens will return to normal. Unfortunately, nobody from the community exchange has commented on the significant differences in valuations. The discrepancies of the coin were revealed by Gary Bernstein, the CEO of CoTrader.
Investors will face a significant loss of profit if the coins are turned to their average valuations. This will come as a considerable blow to Colu with their professional clients and business partners. However, Bernstein, who owns a few community coins, publicly informed clients that there are currently no restrictions on who can sell or buy back the currency at the ICO Price. This could change with new policies enacted by Colu.
Gary Bernstein owns a blockchain investment funds market space that is blockchain-powered and employs non-custodial investments with Ethereum. He also maintains a new exchange under the Bancor Ecosystem that allows clients to trade with zero restrictions. Bernstein stated: “This means that arbitrage should make the [current] price get close to the ICO price as the time of refund approaches. Depending on confidence that the refund will happen, and the time value of holding CLN compared to other things like Bitcoin. Once the refund is happening, the price may move up faster.”
Colu refusing to reward back refunds will be considered blatant manipulation of clients. This is primarily because the announcement implies that prices will move up by 1/8600 ETH. Technically, if the coin doesn’t maintain this growth in cost, it’d be false advertising. Clients asking for a refund due to the false advertising & not receiving it could sue for multiple reasons.
Colu’s Confusing Buyback Program
There has been a significant concentration of coins. This possibly could point out that the buyback program being implored by Colu is a staged stunt. There’s a chance that the company could’ve purchased these tokens and then create the buyback program. There’s a low chance of this being the case though, as the Colu wallet reserves haven’t changed in a long time. So, it’s highly unlikely that they purchased these coins to avoid paying them back to others during the refund period.
The large concentration of funds does ensure that Colu ICO Funds will be returning to primary holders and investors. There aren’t too many other funds available to be repurchased by others, that is unless Colu determines otherwise. Colu hasn’t confirmed if the tokens will be returned at their original price or the lower price mentioned above. The company hasn’t replied publicly to any press.
Similarities with Digi-Pulse
Colu isn’t the first to decide to leave the blockchain space entirely. Last year, a similar decision caused by the same events to unfold for Digi-Pulse. The Latvian BlockchainStartup chose to leave the blockchain and cryptocurrency marketspaces precisely a year ago on Colu’s decision. When Digi-Pulse first made this decision, they immediately went to de-tokenizing themselves by purchasing back the tokens they sold. All DGPT Tokens were exonerated from cryptocurrency &blockchain exchanges on December 15th, 2018. This should give investors a rough time-frame as to when Colu will fully de-tokenize themselves.
Digi-Pulse’s reasoning to why they abandoned blockchain& cryptocurrency is slightly different than Colu’s. Both companies made this decision on the premise of pro-friendly values; however, unlike Colu, who is focusing on price speculation. Digi-Pulse concentrate on the amount of their service. This is the critical difference between the two companies.
Digi-Pulse’s CEO Explained: “For all its advantages. Digi-Pulse token value fluctuates based solely on speculation, a process that doesn’t support a sustainable business development,” adding that “out of the 320 service sign-ups we’ve had until July 25th, only two people have actually allocated tokens to the service, meaning that only two people have actually used the DGPT token for its main purpose.”
Furthermore, Digi-Pulse decided to shut down their social media accounts & business services after leaving the cryptocurrency n blockchain space. Colu will maintain its operations going forward. However, it’s expected that they’ll now use regular currencies and the community coin only to generate revenue.
Blockchain being Abandoned
There has been an ethical problem with blockchain since it first arrived as a digital currency trend. The fact that companies like Digi-Pulse and Colu have left these spaces shows a growing trend. Numerous companies are considering or now leaving the blockchain space entirely. These decisions aren’t being made based on finance, but instead on friendly & family values. The trend has grown substantially in the last year, with the first signs of actual abandoned showing in the first quarter of 2018. These could all be significant indicators showing that blockchain and cryptocurrency technology might’ve not been the magic bullet everyone desired for the digital currency era.
There have already been several major unnamed companies that have shut down their blockchain programs. Reuters claims that this is another effect of financial hype meets reality. The named companies that have stopped their blockchain services include CitiBank, the Six Group, BNP and DTCC. The biggest hit to the blockchain market space was CitiBank. Reuters believes that there are underlying reasons like cost & industry effectiveness that has caused these companies to shut down their blockchain programs. However, when the technology becomes grandfathered into financial markets worldwide, there’s a chance that these companies will restart their blockchain services.
Multiple companies believe there’s a more effective technology that can be created for digital currencies. Murry Pomander & Malcom Cauchi both believe that there are similar systems out there that can be adopted for the digital space. This would ultimately provide a more secure & cost-effective currency to clients. Malcolm Cauchi, the Crypto Geeks CEO, stated: “Blockchain is amazing, but everything doesn’t need to be built on it. The integrity of data on a public blockchain can be trusted not to change, but that says nothing about whether the data is right in the first place.”
Blockchain Losing Popularity
Blockchain hasn’t been what everyone wanted & has disappointed countless investors. People believe that it was a futuristic technology that would solve all the world’s financial problems. However, it turned out that blockchain was an untrustworthy technology that couldn’t support a worldwide infrastructure. Dan McCrum of the Financial Times explained the lack of trust in his official statement, which reads: “The integrity of data on a public blockchain can be trusted not to change, but that says nothing about whether the data is right in the first place. For votes, tuna, shipping containers or mango supply chains, a blockchain registry would only be as good or as trustworthy as the people contributing to it.”
Furthermore, its popularity is dropping due to a lack of scarcity for clients. Every time a piece of data is created on the blockchain, it remains on the internet unchanged for life. This level of input scares countless consumers & creates a lack of trust immediately. Nobody wants their information residing on a forgotten server for eternity.
Quantity vs Quality
There is also a significant amount of regulation challenges that’s facing companies using blockchain services. The United States, Europe, India and China have all expressed their unwavering concern about blockchain. In the USA, companies maintaining blockchain services are finding it challenging to locate acceptable banks. Every country is currently debating what to do with blockchain in the coming future.
Whether legislators decide to ban blockchain for ethical reasons or approve it for commercial growth purposes, the trend of companies withdrawing from the blockchain market will continue. It’s estimated that 90% of the blockchain-related companies operating in India, China and the USA will shut down by 2020. These are significantly high projections that have investors & retail clients both equally worried. The chance of the entire industry crashing down is growing with each company that abandons the marketspace.
The Forrester published a Blockchain article in 2017 that read: “Predictions 2018: The Blockchain Revolution Will Have to Wait for A Little Longer. Those who failed to translate the headlines into reality will write off their investments and give up, while others that have a deep understanding of the technology and its transformational potential, in the long run, will continue to forge ahead.”