Social blockchain and global reputation: is it profitable to worry about customers in Russia? Opinion of Vladimir Popov
ICO opens up opportunities for promising projects that, for some reasons, cannot receive investment through IPO or crowdfunding. According to Smith + Crown consulting company, in 2017, startups received about $180 million through tokensales.
But the lack of regulation in the ICO market results in many problems. First of all, it is fraud. The Wall Street Journal study showed that 18.6% of all startups conducting ICOs turned out to be potential fraudsters who earned more than $1 billion from scam.
The attackers flooded the market, scaring away potential investors and limit the possibilities of promising startups. Due to their actions, it is quite difficult to earn trust now: even a perfect white paper and an adequate roadmap do not always attract investors, and traditional reputation systems can be fabricated or bribed.
One of the possible solutions here is blockchain, because no one will be able to change data in it. How reputation systems on the blockchain change business and what happens on the market of such blockchain projects in Russia – read in the article.
How reputation systems on blockchain work?
The reputation system on blockchain stores information about users who have made certain transactions in it, for example, via smart contracts. Each of the chain participants sees the history of the relationship of their counterpart in the form of a counter of positive and negative reviews.
Each user also has a unique identifier. So one person won’t be able to create multiple accounts in order to increase their reputation for themselves or other users.
In some projects, user can register only after the invitation of one of the authorized users who will vouch for the accuracy of the newbie’s data.
Thus, all participants in the system are deliberately motivated to be honest, responsible and friendly with others.
Blockchain projects with reputation systems in Russia
Reputation risk management is not only a decency among large companies, but also a means of survival on the market. Listed below are four projects that develop blockchain-based reputation systems in Russia.
Founded in July 2017, a blockchain startup forseti.im is developing a system for assessing user reputation. The project won the Blockchain Challenge contest held within Crypto Valley Conference. Thanks to the victory, the team also received $20 thousand of funding.
According to Alexander Nikolaev, CEO at Forseti, it is the reputation system in a decentralized economy that will help to make reliable deals and control ratings without the intervention of centralized marketplaces. Amazon or eBay can be marked here as an example.
One of the first state blockchain projects, not only in Russia, but also in the world. It is an electronic voting system. In 2017, the project received the Blockchain Economy award in the category The Best Digital Practice of Using Blockchain in Social Projects.
Voting data in the Active Citizen cannot be deleted or changed, and the uniqueness of each vote is confirmed confidentially.
Waves is an open blockchain platform with a market capitalization of $1.7 billion (as of December 19, 2017), which collected 30 thousand bitcoins ($18 million) via ICO in 2016. The project created by Alexander Ivanov, became the second most successful after Ethereum.
The benchmark for creating the project was the NXT blockchain platform — a decentralized infrastructure with the ability to issue cryptographic tokens.
In March 2017, Waves and the Party of Growth announced the opening of the joint blockchain startup People of Growth. People of Growth is a rating system that provides opportunities for crowdfunding and conducting intraparty voting on blockchain. There is also a special token, Upcoin, created within the project.
It is a startup that develops a platform for collecting analytics for ICO, where users can create risk and prospects ratings for various tokens.
“The idea of Dolphin BI is to offer a new level of analytics that is lacking in the ICO market. Our goal is to build an independent objective ICO rating and become a bridge between blockchain projects and large business angels so that promising teams could find investors”, says the project co-founder Andrey Varnavskiy.
The reputation of experts, application ratings and votes relevancy are calculated using a smart contract. it is also used to distribute reward among user: in proportion to their contribution to the analysis and verification of information.
Currently, the project is carrying out a pre-ICO, which will last until October 26.
Are blockchain-based reputation systems popular in the Russian market? Opinion of Vladimir Popov
As you can see, blockchain startups with reputation systems are developing and offering solutions in various fields, both for business and for charity. But how popular are they in Russia and what can they offer in the realities of the local market? Vladimir Popov, a crypto expert and CEO at the law firm Synergis, answered these questions specifically for Blockchain Conference Moscow.
Vladimir believes that reputation systems on blockchain have many advantages over traditional systems. The expert highlights three of them: security, openness and cohesion.
“No matter what anyone says, but blockchain solutions haven’t yet been cracked. Yes, there is “attack 51”, but it is a rare thing. In general, all hacks in the industry are connected with centralized services. As for openness, for example, WeChat strikes terror in many minds. Today a person cannot come to the key metro stations at rush hour, if his rating is shaky, and what will happen tomorrow? Most anticipate the implementation of the Black Mirror scripts, and they can only be prevented by a distributed system with open source code and principles.
In addition, reputation systems on blockchain are cohesive. The fact is that the future reputational system is a unification of the concept of subject and object. In traditional structures, it is impossible”, the speaker says.
Vladimir also believes that reputation systems will not only help to carry out ICO, but will also organize business and other social processes in general.
“In short, the reasons for this optimization are as follows:
- first of all, everyone will not only think about how much money to raise, but also how to spend it effectively. Restoring your reputation is more difficult than earning the expertise;
- secondly, global access will allow everyone, even the smallest investor/participant, to evaluate a project of any complexity and thereby minimize risks and build predictions not on the basis of some obscureness, but using the ratio of three quite understandable criteria: subjective, temporary and quantitative. Their interaction generates the most important thing – the quality of service;
- thirdly, the existing rating systems are completely vendible. Absolutely. And this is wrong, because to buy a rating means to make it biased. Our blockchain industry is not about money in general (in its modern sense). And this needs to be corrected: now everyone is criticizing it, and the system of global reputation just gives a countdown: the protocols of social interaction”.
But what about reputation systems in Russia? The speaker could not give an unequivocal answer to this question.
“Are reputation systems popular in Russia? Yes, and no. Yes, because we are simply overwhelmed with ratings, starting with the credit history and ending with different agencies that believe that for 10-20 thousand dollars they can adequately evaluate a particular project. No, because all these ratings are based either on semi-closed grounds, or they are paid.
It is for this reason that we need an independent, fully decentralized history, which will no longer be just blockchain, but a P2P solution for capitalizing social capital. Of course, reputation alone is not enough, but it is the best foundation”.
At Blockchain Conference Moscow, Vladimir will tell why reputation systems are important in 2018, what the basis of the blockchain philosophy is, and why reputation is the P2P system of the future. The expert will also analyze real examples of ICO launching by IT projects.
To listen to Vladimir Popov and other experts, register for Blockchain Conference Moscow, which will be held on November 20, 2018 in the capital of Russia.