Electroneum - In pursuit of the 99%
Electroneum — A Cryptocurrency Project Pursuing The 99%
Today I am disheartened, discouraged and deeply disappointed with Electroneum, which was one of the most hyped, Crypto projects from late 2017. I’ll explain why after I first give a brief history of the project’s progress over this past year. The project started out as an ICO (initial coin offering) where they brought in over $40 million worth of Bitcoin, Litecoin and Ethereum in exchange for their currency ETN. As a fork of Monero, a popular privacy cryptocurrency, there was nothing really groundbreaking about the technology they offered. Electroneum didn’t change much to the Monero code at all except for the max supply which was increased to 21 billion! With the influx of new crypto investors due to mass media giving Bitcoin and crypto markets attention during the enormous bull run of late 2017, Electroneum was able to capitalize on all the new blood joining the crypto space. Most cryptocurrency veterans and influencers on twitter and YouTube were not impressed with Electroneum and several even warned against investing it.
Newbies to crypto and to ICOs, which were rampant in 2017, saw that they could get 100 ETN for just $1 USD. That sounds amazing right? I mean when Bitcoin came out it was going for pennies and those who got in early are millionaires now right? All you had to do was buy as much ETN as you could afford and HODL (hold on for dear life) or maybe it’s just hold with a typo. For example, if you put in $10,000 you would have over 1 million ETN! If you bought during the ICO and sold during the peak than you did very well, however, if you are or were one of the many believers that ETN is going to go to a $1 or more in value than you have seen your holdings go up in value significantly and then drop down close to what your bought in at. Now, I’m not implying ETN will not eventually reach $1, maybe it will, maybe it won’t. I just wanted to give a brief example of what the ETN community mantra is, which is HODL all the way to the moon. I also wanted to shed some light on how Electroneum was able to receive $40 million mostly by investors who were new to crypto. Let me add here, they didn’t require any KYC during their ICO either.
Electroneum was first introduced as a privacy cryptocurrency that would target the gaming and gambling markets. However, they quickly pivoted and made their goal mass adoption with the route to market being the mining experience which would be simulated and accessible through their mobile wallet. Since they have the mobile miner in the mobile wallet, another genius route to market was for them make deals with cell phone carriers around the world, that would accept ETN as payment for mobile phone bills. Although literally every single carrier they have made deals with I have never heard of before, these deals were touted to bring in tens of millions of new customers, new miners and mass adoption! Over the past 5–6 months Electroneum has removed layers of the privacy features they once had and they have also implemented a mandatory KYC (know your customer) process. The graphic below shows an example of the different KYC levels required for you to withdraw your ETN.
Essentially, you can’t remove any of YOUR ETN until you have completed at a minimum Level 2 KYC. This requires quite a bit of PII (personally identifiable information) and essentially removes 100% of any remaining privacy features that Electroneum once offered.
Electroneum’s route to market through the deals and agreements they claim to have made with mobile carriers who would in return accept ETN as bill payments is why Electroneum says it has to enforce the KYC process. Additionally, when logged into your electroneum dashboard you will see that they won’t even keep your account enabled if you don’t comply with the new KYC requirements. With Electroneum “going after the 99% that are not already into crypto” I can understand why they are going this route and actually, whether I like it or not, this is actually not the worst part.
Are you ready?
Bitcoin, which paved the way for every other cryptocurrency, was created to remove the need of a middle man, a bank, a government or permission to access YOUR money. That reason alone is one of the principles that makes Bitcoin so valuable today. Electroneum has turned into the middle man, does not allow you to have access to your funds without knowing as much about you as a traditional bank does and the worst part is “the 99%” they are after will never even truly own the ETN they store in their mobile wallets or web wallets.
Paraphrasing here, but Richard Ells (the CEO of Electroneum) essentially said
that cryptocurrency is complicated, there are far too many decimal places, learning how to mine is too difficult and expensive for most people so Electroneum is going to use the same 2 decimal places that people are used to with their normal FIAT money, and Electroneum is going to offer a simulated mining experience where the 99% will be able to mine ETN just by pressing a button.
So, what’s the big deal really? I mean why should I bother writing this article? What’s my point? Am I just spreading FUD? FUD, a term used when saying anything that may cause fear, uncertainty or doubt. It’s also used as a way of trying to discredit whatever is being said or whatever concerns are being mentioned. I assure you I do not want to spread FUD. What I want to do is shine a light on what is really happening and hopefully a few people who are stuck in a trance chanting HODL, HODL, will see the light! If you are HODLing a bunch of ETN in hopes that it will have a dramatic increase in value, know this, there is zero chance that mass adoption is going to increase the price. Why? Because the 99% do not speculate, they do not buy, sell or trade on 10 different crypto exchanges and probably never will. The 99% will never download a paper wallet or run a CLI (command line interface) wallet on their desktop computer to store their ETN. The 99% will download an app and push a button to start mining ETN. The 99% will not be able to withdraw even a single ETN from their wallet without going through KYC. Each ETN they mine, or receive in some other way to their mobile wallet will only be available to withdraw or send to an exchange after Electroneum knows enough about them to send them a 1099 and they now need to pay taxes on that ETN too.
What does this mean? This means that the 99% that Electroneum claims to be after is not going to have any impact on the price of ETN. It will still be 100% speculation based and with only 10% of the total supply being available through the simulated mining experience, the rest of the coins that will be mined with expensive ASICs that are designed specifically to mine cryptocurrency. I can assure you those miners will not be mining to an ETN mobile wallet or web wallet. Why not? The reason is Electroneum not only requires as much of your personal information as a bank does in order to withdraw your funds, they also do not allow access to your private keys. If you don’t own your private keys than you don’t own your funds and if Electroneum knows everything about you and they have your private keys, what is the point is using ETN over your traditional FIAT, credit or debit card?
I tweeted @electroneum a few times regarding these concerns, I didn’t get a response. I tweeted at a few electroneum supporters and they said “don’t use the mobile wallet then, or download a paper wallet, or use the CLI desktop wallet.” I understand if you are a holder of ETN you will not like this article. However, I am not writing this article will Ill intent, I truly am writing it because I see the writing on the wall but I know that when someone is invested they don’t want to see the writing on the wall. Open your eyes HODLers! If ETN is truly going after the 99%, the people who will never have an offline paper wallet or run a CLI wallet, the people who will only adopt ETN because it is easy. Don’t the 99% also deserve to have full access to their funds? Don’t they deserve access to their private keys? They already have to tell Electroneum everything about themselves just to be able to use the ETN they accumulate, shouldn’t they have control over their funds too?
I joined the Electroneum Telegram channel this morning to express my concerns. I got a bunch of responses, they were all similar to the same responses I received via tweets though. I remained polite and cordial throughout the discussion. However, as I presented more concerns and they ran out of good reasons as to why the 99% cannot have access to their private keys, I was removed from the telegram server. Before I was removed, the final response they gave me, as to why someone who uses the mobile wallet or web wallet will NEVER have access to their private keys, is that it is a ‘tech problem.” To which I replied “A tech problem, really? You mean to tell me that a cryptocurrency going after the 99% that are not into crypto is unable to provide the 99% with access to their private keys because of a tech problem?”
…. You have been removed from this server… I tried to re-enter… this server doesn’t exist…
My conclusion is, Electroneum, whether it ever gets even close to a fraction of a fraction of the 99%, forcing its customers to go through the same requirements that a bank does in order to open an account, I do not see the value of ETN ever offering any investor a ticket to the moon! Hodlers, snap out of it!