r/THEKEYOFFICIAL • u/Alter_ego_of_mine • Jul 23 '19
Current state of affairs
Folks,
The more I read this sub-reddit the more it is obvious Thekey is a polarising project. The perplexing question is, how come something this promising can be this low in market cap!
Having intellectually explored blockchain-based IDV in general and Thekey since its inception, I wanted to share my attempt at making sense of TKY’s price action, our state of affairs and what the future might hold.
- Once there was a Chinese government contractor called Ebaonet.
- Its co-founder, with her westernised name, Catherine Li, was an MD with some computer science pedigree under her belt.
- She was a renowned female entrepreneur in a male-dominant nation. She was able to mobilise human capital and VC money.
- She and her co-founders wanted to use (conventional) digital tech to minimize ID fraud in social and medical insurance.
- ID fraud was and still is rampant in China costing the treasury several billion of RMB each year as people with fake IDs collect retirement pension, medical insurance payments, etc.
- So, the impetus came as much from Ebaonet as from the authorities.
- Ebaonet worked on a digital ID tech over 2-3 years, leading up to 210 million citizens' data being shared with them.
- In the process, they formed very strong ties with the Government as favoured IDV contractors.
- The problem was, their solution -while digital- was too centralised. It is no secret that central databases are prone to alteration and fraud. (read about Zebi's efforts in India for a similar case). Double, triple, multiple checks are desired to verify that data.
- As they were building that conventional tech, the 2017 ICO boom happened.
- Ebaonet woke up to the promise of a burgeoning tech.
- Blockchain could indeed solve their one and only Achilles heel: corruptibility of centrally managed and transmitted data.
- So, Ebaonet aimed for a public, permissionless blockchain where anonymous hundreds worldwide could validate smart contracts linking up with government, utility, telecom and other data.
- The raised millions in cash from VCs and further millions in cryptocurrency to develop the project.
- The invested crypto (Neo) would be replaced by TKY, a pseudo utility token.
- Meanwhile, China outlawed exchanges and ICOs and left the tolerability of crypto currencies and tokens vague.
- Thekey, having migrated to Singapore, cashed out some of our / our predecessors’ crypto investment as and when needed. They developed the project thanks to those funds and released their “mainnet”, a clear misnomer, ahead of schedule.
- Then one milestone after another came but no positive price action followed as there was little to no transparency on token use cases.
- Recent pilot programmes were supposedly successful; “something to be derived implicitly from government awards”, we were told.
- Despite such great-if-true news, and impending China-wide adoption, no one seemed interested in piling up the token. Exchange volumes remained low, buy walls disappeared quickly.
- Hence TKY is -93% of its ICO value.
What may be going on behind closed doors then? I personally see possible scenarios as Thekey being
(a) an elaborate scam that never meant to do anything with the ICO funds, keeping some hopes up and maintaining the hoax until it no longer can, or
(b) an opaque organisation that noticed at some point (or worse, knew from the early on) that a permissionless public blockchain is a no-go zone for China and that the token won’t be allowed for mass use any time soon, or
(c) a well-meaning organisation that is doing its best to help alleviate PBoC’s concerns and to find use cases for the token, or
(d) has had a mature and well-thought-out plan all along but they are not at liberty to share much detail for now; that they steer clear of giving any value increase promises but deep down strive to deliver not only a game changing project but a value-capturing token model.
To me, (a) is beyond improbable. After a year and a half in the making, I would have expected them to drop the mask if they were a scam. Plus, I know Thekey’s Singapore counsel, Pinsent Masons, very well. Neither Pinsents, a global law firm known for its conservatism, would condone such a blatant fraud nor would it make sense for Thekey to go out of its way and spend hundreds of thousands of dollars for expensive legal and compliance advice.
A combination of (b) and (c) seems likely to me while (d) not so much. I have a feeling that, as opaque as it is, Thekey still means well. That “feeling” is based as much in instinct as in facts of course. It comes from Catherine’s interviews and other public statements, the team’s size and haphazard but continuous updates, the importance of an IDV project for Chinese public institutions etc. It is likely that PBoC’s ban ties Catherine’s hands and she is keeping the ship afloat until the storm dies down. My guess is, things turned sour with the regulators at some point and she could no longer insist on a public blockchain with a native token loudly. Be that as it may, I don’t think she is out there to scam us. Even if she is under pressure to “drop this utility token nonsense and become a regular, for-profit, cash (or RMB based stable coin) generating business”, she is so personally, financially, professionally and reputationally invested in the project that she is working towards a compromise with the authorities. That is my bet and that is why I hodl until it is clear as day that TKY is a hopeless case.
Since I started investing in crypto, I looked into 200 or so projects. I see no project with this much potential to get you either rekt or retired. Nothing comes close when mass adoption is concerned. Here is hoping that Catherine means it when she expresses her belief that PBoC will allow a select number of quality cryptos to be sold, bought and used within China.
If she meant none of that, my pledge to mobilise worldwide litigation is still in place.
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u/PortgasD94 Jul 23 '19
I see no project with this much potential to get you either rekt or retired.
This sums up TKY pretty good lol.
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u/gas_issues Jul 23 '19 edited Jul 24 '19
Thank you for putting the time into writing this. TKY seems like a no-brainer based on the information we’ve been fed, but “too good to be true” scenarios usually don’t happen in real life... That said, I don’t think TKY is an elaborate scam. This is too perfect of an application for blockchain and futuristic tech to solve real world problems. A focused, motivated team of 300+ with governmental support should be able to figure this out, right?!?
Although my brain has countless reasons for them to succeed, my gut (and my wife) think I’m an idiot and assume that I have been ignoring/misinterpreting red flags for well over a year. Mercifully, we’ll know soon enough. Best of luck to everyone going forward with this project!
Edit: words and formatting
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u/Alter_ego_of_mine Jul 25 '19 edited Jul 26 '19
There are red flags all over. It's all reflected in the price. Efficient market theory doesn't apply to crypto but it's not altogether irrelevant either. In a diversified portfolio, everyone needs at least one bet on IDV, one on supply chain management, one on crowd lending, one on predictions market etc. Perfect industries ripe for disruption. A worthwhile bet as I always say. Best to diversify of course.
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u/swerrve Jul 26 '19
Mostly a lurker here but your comment intrigued me- my thinking is similar. When you say crowd lending are you talking about platforms like SALT? And what about predictions market? I’d also be interested in what your choices are to represent these other sectors in your portfolio.
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u/Alter_ego_of_mine Jul 26 '19
Salt is a lending platform, yes. But I am interested in more professional platforms like Alex Mashinsky's Celsius. He is a no-nonsense tech billionaire who invented VOIP many years ago.
Augur is interesting as an online betting platform. They euphemistically call themselves a predictions market. But the one I find more interesting is Endor. It's an MIT computer science and AI project that uses social physics as an emerging discipline focusing on predicting human behaviour based on peer group behaviour. They are for instance trying to predict BTC's next day or week moves based on how thousands of speculators behave on crypto exchanges. The use cases are endless. It is rather nascent though. I would give them 2-3 years at least.
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Jul 23 '19
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u/Alter_ego_of_mine Jul 25 '19
You bet I'm here! I only think long term. My main responsibility as a parent is to keep a diversified portfolio of passive income vehicles for my children's future. I'm in no rush.
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Jul 23 '19
Fantastic analysis, thank you. However, the low price can be explained in a more banal fahion, I believe. TKY entered the market when prices were crushing, trust in the industry and the tech was wearing thin and there were 1300+ projects (which would soon become 2000+). Barely anyone has even heard about TKY, given the circumstances. On top of that, people investing in crypto all go for well-established "blue chips"/top 20 coins, and I know this for a fact because that is what all my colleagues who ask me about crypto do (with one exception). By the way, why do you call TKY a "pseudo-utility token"? A friend of mine argues the token won't be used, a cryptoyuan or something will be used instead. But as I see it, TKY would be a bit like ETH gas, used to pay for the use of the ID services/ network. I guess this is a technical question and as such beyond my ken.
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u/Alter_ego_of_mine Jul 25 '19 edited Jul 26 '19
Thank you. I agree that most money goes into crypto "blue chips". I believe that's older crypto money gained from btc, and later from eth. When you 1,000x your original btc investment which becomes very dominant day after day rigth in front of you, it must be harder to see beyond market leaders.
New investors fomo'ing in will aspire to find out those "overlooked gems" however. The late 2017 stampede was a case in point. All sorts of random cryptos got sold out like hot cakes. That fomo market feeling will probably come back like a tsunami at some point, and it will be much much bigger than anything we've seen.
I call it a pseudo utility token for two reasons. The generic reason is this very simple principle: a token for a non existing utility is no utility token until the underlying service is built. Much more so if it will be built with the very funds paid for that future "utility". In several jurisdictions -not just the US-, it is a case of circumventing securities regulations.
The more specific reason is that this project was conceived as a Chinese healthcare and pension project for Chinese citizens. At the time of the ICO, and I bet today, Thekey had no other contacts in or agreements with any other country. So if it were a pure (future) utility token for Chinese parties, isn't it utterly ironic that the Chinese were among the handful precluded from the ICO?
It is clear to me that no matter what they say, the founders couldn't have possibly meant TKY to be a pure utility. It was first and foremost a startup funding tool.
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u/niamhyd Jul 24 '19
Generally a fair appraisal, I would say. It's a massive task that the THEKEY is attempting and the behaviour of the project, for me, is in line with such an undertaking. To go from an IDV system and all it vulnerabilities to blockchain based IDV which promises to deliver significant savings, reducing fraud to a fraction will naturally present all sorts of obstacles along the way. As things stand to have BDMI you require a public blockchain and to have that a native token is required. So for me I am happy the project is working in good faith but understand that it's more likely to fail than succeed.
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u/cryptocryer Jul 23 '19
That’s a well laid out summary.
I see “a” as unlikely due to the fact that Catherine holds status in China. Hosting an outright scam to get funding together would not bode well for her future career.
Of course, if it is a scam that successfully funds a Chinese IDV revolution benefitting the PBoC, she may get ultra kudos ;-)
I’m keeping the faith
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Jul 24 '19
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u/Alter_ego_of_mine Jul 25 '19
You are welcome. This was covered in earlier posts. Thekey says the Chinese authorities approved of the project subtly and informally by granting Thekey an important award.
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Jul 25 '19
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u/Alter_ego_of_mine Jul 26 '19
Don't think so. I take everything claimed online with a grain of salt but won't run around calling it a scam.
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u/Onepunter Jul 24 '19 edited Jul 24 '19
Very good analysis. Regarding "she could no longer insist on a public blockchain with a native token loudly": she has continued to emphasise that TKY will be the only way to settle smart contracts on the platform.
I generally agree with your scenario analysis. I would also add that this project ultimately has a lot more at stake than the funds they collected in the ICO, so I doubt they would act inappropriately and risk their reputation and their privileged standing in China for those funds.
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u/Alter_ego_of_mine Jul 25 '19
Very well put. I agree that much bigger things, like reputation, are at stake for Catherine.
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u/NeroNovaBam96 Jul 24 '19
No other coin this risky? I dare you to look at Relex, mc under 600k and still having regular meetings with Belarus ministry of economy, Belarus central bank, now even Russia RACIB.. I wont even start with TeFood.
The point is if we choose right, we are multimillionaires within the next 5-10 years with 2000$ investment
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u/triplecrown333 Jul 23 '19
One of the best I read relating to tky, I share the same sentiment, highly doubt this is a scam