Airtoken is an upcoming ICO that has some big goals. They’re basically looking to disrupt how people pay for their mobile data and create an entire economy based on their token that will work with mobile users and mobile providers.
Here is a snippet of from their website:
Mobile internet affordability and mobile capital accessibility are the main prohibitors for users to have unfettered internet usage.
Centralized big telcos, big banks and governments make it unfeasible for users in emerging markets to create capital and have access. In fact, the poor end up paying more for banking and telco access than the rich.
AirFox is solving the Mobile Dead Capital problem to unlock mobile accessibility for the underserved.
AirFox’s solution harnesses the decentralized power of the Ethereum blockchain and advertising to give users “AirTokens”, a new crypto-currency redeemable for mobile data, and eventually physical and digital goods. Users can then establish credit history through their opted-in device data and advertising behavior, enabling AirFox to fund spots via the AirTokens to any person with a smart phone.
Now, telecom is one of the hardest industries to break into because it has such a massive capital requirement. Either you’re building your own infrastructure or you’re renting someone else’s. And if you’re renting, then you’re basically paying for the cost of that infrastructure over time.
If you’re a software or other layer in telecom, then you’re hoping for adoption by the larger carriers. Because they are the gatekeepers to the users and to the technology. You are at their mercy when it comes to using their network or accessing their users. And because of this, many companies have failed in breaking into the industry because they couldn’t get adoption from the carriers.
Not only this, but the industry is notorious for simply taking ideas from someone else and releasing their own version of that idea. For instance, you know Apple Pay, Google Wallet, and other online payment portals. But the big telecom companies didn’t want to give even more power to these two massive tech groups. So they banded together to create Isis. No, I’m not kidding, that was the name of their payment solution before the terrorist group started calling themselves that. In a scramble to fix the name, they quickly rebranded to Soft Card to avoid the headlines that their mobile wallet was bombing innocent people. This was a join venture by AT&T, T-Mobile, and Verizon. Seriously, those three groups came together to create a company just to avoid having to bow even further to Apple and Google.
Well, Google ended up buying them for pennies on the dollar in February 2015, just a little under 5 years after founding.
Even the big telecom companies had trouble launching their own payment ecosystem.
And this is what Airtoken is trying to do.
Basically they want to advertise to mobile phone users and earn money from those advertisements, then repay the users with tokens that they can then use to pay for data. But there is a MASSIVE problem here. And we’ll cover that in the next section.
Look, our advice on this site is from a business and realism point of view. We’re not going to dig deep into the tech of each ICO out there. A lot of groups are spoofing Github or are making massive promises on their tech that they’ll have to later try and fulfill on. Instead, we’re going to look at the realities of the market, how likely the company will be able to do what it plans on doing, and what some of the barriers will be. This will give you insights into whether or not this is a solution that has any merit and whether you should invest your hard earned money into these ideas.
First, let’s look at a few of their claims on their website.
They claim that there are 5.5 Billion consumers in emerging markets by the year 2020. Okay, cool. Big numbers to try and make the solution sound huge. And they’re saying that 4 Billion of them are offline. Which is actually not true. Over half the world is currently online, and more than that have access to the internet. In addition to that, even if we’re talking about cell phones, more people have access to cell phones than the internet. In fact, the number of mobile phones in use is over 7 Billion. Sure, lots of those are owned by the same people. But even if everyone owned two phones, we’d still be at over 50% saturation for the population.
Again, I like their big numbers, but I’m not sure they’re accurate and I’m not sure they’re really telling us anything of use.
Now, as we foreshadowed earlier, here is why they have a BIG problem with their business plan.
Do you know how much advertisers are willing to pay for ads? It’s really not that much. I have several sites that make money from ads and we get paid per THOUSAND impressions or views of the ad. And Google and other groups then turn around and charge the advertisers per THOUSAND impressions or views. And how much are we talking per thousand? Anywhere between .25 cents and $3.00. Which means that each individual user seeing an ad is worth a fraction of a penny. So, how on earth am I, a user supposed to see enough ads in order to make enough money to pay for ANYTHING?
It’s impossible. I would have to have ads running on my phone 24/7 and clicking on everything that comes across my screen to even make a few cents per day. But that would all be trash advertisement because I’m only clicking to get data and those clicks don’t mean shit to the actual advertiser. Very quickly they would sour on buying these ads.
Okay, so let’s play devil’s advocate and say that they’re going to be able to charge a lot because they’re going to have lots of data for personalization. And they’ll do this by having their users opt-in for ads and fill out forms explaining who they are. But this is just a dumbed down version of what Google and Facebook already do. Facebook and Google already own every scrap of data on us. And they know more about us than we know about ourselves. Trust me, I buy million in ads from both of them every year, and I hate paying them, but they are the gatekeepers to people’s data so you have to play the game.
They track EVERYTHING! I can target people based on what they like, do, buy, who they are, where they live, and a million other factors that Airtoken could never hope to duplicate. So, they’re going to be selling subpar inventory to advertisers and then giving a fraction of that revenue back to the user. And that fraction won’t be enough to pay for a text to their mother.
They have on their site that they’re partners with groups like Techstars. Cool….
I know of hundreds of companies that went through Techstars and fizzled immediately after exiting. In fact, two friends of mine went through the program with two different companies and both failed within 3 years.
This does not mean that this is a guaranteed win just because they’re backed by some Silicon Valley money. They’ve only raised 1.2 Million dollars through other channels. And in the VC and Silicon Valley world, 1.2 Million is NOTHING. This means that no one has taken any real chance on them.
Also, if you look at how they’re allocating the funds they raise from the ICO, none of it is actually going into making the token have any value. It’s all going into the pocket of the company for engineering, Sales, admin, and reserves. In fact, they flat out state that only 13% of the funds will be used to BUY DATA. you know, that part of their business plan where they are selling something of value, the data. Well, they’re only using 13% of their funding to buy THE THING OF VALUE. I mean… Come on.
SCORE (out of 100): 14
Move along folks, this is not the ICO for you.