Polybius: “a contemporary banking institution with a progressive approach.” Do what? A banking institution and an ICO? What sorcery is this?
This is our obvious first reaction to the words “banking institution” in reference to an Initial Coin Offering. Bitcoin, which never had an ICO and whose exchanges sprouted organically, was and is very much about “being your bank,” as in, not relying on centralized entities to steward your wealth. The biggest problems Bitcoin has faced have arisen when centralized entities experienced problems – enter Mt. Gox, Bitfinex, and the Silk Road.
Nevertheless, since we brought it up, we’re obligated to take a close look at Polybius, which claims on its website to have raised over $11 million already by time of writing.
Is Modern Banking An Oxymoron?
Banking itself dates to a time when people’s currency was heavy and constantly vulnerable. Bankers were able to make money by using the funds when their owners were not using them, and for a long time this was the best civilization could do in terms of guarding assets. As the modern age has progressed, we have witnessed more and more legacy institutions fall behind the pace of technology. Our governments and banks remain vulnerable to virtual attack; our institutions are increasingly unreliable and inefficient by comparison to the technological solutions which have arisen.
Polybius, unlike nearly every other cryptocurrency initiative ever, doesn’t appear to believe the banking system is broken fundamentally. Instead, they think it can be reformed through technology, and this is what they apparently aim to do with Polybius.
Polybius Foundation, a team of financial, security, legal and technical experts is raising funds for its project Polybius Bank. Our goal is to capitalize on the broader digitalization trend […] It will have all the functions of a classical bank, but will not host any branches nor physical front-offices and will rely fully on the latest digital technologies.
Okay, so you mean like Ally Bank, ING Direct, Green Dot, or any of the myriad of other online banks that do not have any physical services? Thus far we’re not hearing much difference between those and this, other than that those did not go to the public with an ICO in order to raise funds for their businesses. What else?
It will aim to enable secure and seamless connections between life and the things we love and use every day.
Not just vague, this, but boring! Thus far, in the Polybius Prospectus, we’re not seeing anything more than you’d see in a destined-to-fail slide deck at any VC meeting. In fact, the problem that Polybius purportedly wants to solve arguably has dozens, if not hundreds, of solutions on the market, probably none of which are trying to crowdfund their bootstrap funds.
For the purpose of this article, we put forth the following notion: banking itself is archaic and therefore can only be modernized to the extent that it can ease the transition to era-native solutions like the blockchain. This being the stance of the author, the idea of creating a “modern bank” for the “digital generation” is already underwhelming, as a concept, and probably futile as en effort.
But regulatory concerns persist in the cryptocurrency space. Ripple has seen significant gains due to its regulator-friendly approach to blockchain implementation, while Bitcoin, which has few if any regulator-friendly features, has seen even greater gains. Therefore, a project which aims at compliance from the start does have some potential for growth. In theory.
More A Traditional Investment Than An ICO
The token produced in most ICOs has some later purpose like trading or using within an ecosystem, but in this case, the only purpose is to hold in order to collect profits. At the end of each year, 20% of the bank’s profits will be transferred to a designated Ethereum wallet, and from there they will be distributed to token holders. This means that the tokens can still be sold between people, but that speculation will probably not be the primary usage of PLBTs.
Therefore, this analysis is not so much about the token but about the potential profitability and performance of the bank it is underwriting.
Polybius will only operate in the European Union at the outset, due to its familiarity with the region, according to the business model. It would seem ironic if they were to remain in this mode, as they wish to serve the “digital generation,” which is essentially a borderless generation.
The business model document only plans for a fundraising of up to $6 million, but at time of writing the bank claimed to have already raised over twice that amount. At this level, in terms of products and services, they intend to offer:
- E-commerce gateway
- Peer-to-peer loan facilitation (on which Polybius will profit by commission)
- Managed cryptocurrency investments
- Debit cards/EFT services
The model does not go into specifics as to the actual meat and bones of the company at this point in the game. Presumably Bitcoin and other cryptocurrencies, as well as Euros, would be usable for an account holder. The question of profitability comes to mind. By their own forecasts, Polybius believes that by the end of 2018 they will be operating somewhere between a 35 and 40% profit level. The question is how they will achieve that, and how valuable any of the above listed services are to consumers and businesses.
The e-commerce gateway model is dominated by Coinbase, Bitpay, Bitgo, and a few others. A new addition, despite the rise of cryptocurrencies, does not exactly raise eyebrows in terms of prospects.
Peer-to-peer loan facilitation, however, conducted by a regulated and state-certified entity, via cryptocurrency, could be a big hit. BTCJam, a Bitcoin-only version of Kickstarter, has faced regulatory issues everywhere it has operated, and last year halted operations in the United States as a result. Firms which can deftly navigate the micro-loan and peer-to-peer loan market are potentially embarking on huge returns.
Managed cryptocurrency portfolios might be interesting, but these funds will have to prove themselves before they will actually reach a real profit for the company via commissions and fees.
Debit cards are a dime a dozen anymore. It would seem obvious that if they’re going to be a traditional bank then debit cards would be a requirement. The ceiling on fees for these is pretty low, as well, given the level of competition.
Overall, this 40% figure can only derive from the fact that the actual costs of launching these initiatives is relatively low, not from the bombast of the offerings.
The Polybius Foundation
Like many of the Ethereum ICOs, the heavy lifting for this project has largely been done or can be contracted, so most of their team is focused on business operations.
The project is mostly being spearheaded by HashCoins, an Estonian company which focuses on blockchain technology. They don’t list a lot of credits on their site, but testimonials are present from CryptoPay, AdVendor, and EmerCoin, none of which are massive names. This is not a drawback, necessarily, but what we’re saying here is that the company doesn’t have some huge track record of giant profits.
At the helm of HashCoins is Ivan Turygin. Turygin has not made a lot of public statements during his professional life. His LinkedIn profile lists HashCoins and Burfa Capital as his two primary positions for the past four years, and before that he worked as a CEO for a company called Delirium. According to the Internet,
Dilerium Ou is a relatively mature organization in the lumber and other building material companies industry located in Tallinn, Estonia.
Turygin’s experience at Burfa Capital might be helpful to his current venture. Unfortunately, the English-speaking Internet doesn’t know much about projects which Burfa Capital has backed, so a good track record can’t really be garnered that way.
Moving over to the co-founder, Sergei Potapenko, it becomes more evident that both Burfa Capital and Burfa Media are projects the two started together. From what we can gather, they made their money in the Siberian timber trade and are looking to put their money into more financial instruments through HashCoins and Polybius, among others potentially in the future.
Potapenko has no other work history besides his entrepreneurial endeavors, post-college.
They have a handful of other people working with them at HashCoins, and then an equivalent number of advisors, none of whom are overly notable from this perspective, but some of whom have important offerings, like Ugo Bechis, a financial advisor and economist with a long career.
The team itself doesn’t appear to be lacking in the abilities required, nonetheless, although, as previously stated, much of the technical work has either been done or can be contracted, which could be the intention, although HashCoins of course has developers on staff. The lead developer for the Polybius project is Renna Reemet, who has numerous employment credentials since leaving college, including as a PHP Developer for something called Creditstar Group.
There are some angles in this project that can be worked into a profitable mode, but the likelihood of failure is pretty high from this writer’s perspective, given that there are no truly revolutionary offerings here. Their managed trading portfolio offering will probably be overshadowed by ShapeShift’s Prism, their Debit card, as noted, is anything but special, and their other services are likely to take a long time to really gain traction.
But the approach is there, and there is potential due to their regulator-focused approach.
Therefore we will give Polybius a 4.9 out of 10 in terms of likelihood of recouping funds invested. A bit higher (5.1) if you intend to recoup them by trading, shorting, or otherwise messing with the token itself, but on simple profitability of holding the token itself, we’ll say your odds are a little less than half in this case.
There will be no fixed supply of PLBT tokens, but the price is fixed at $10. An unlimited number of tokens can be created and purchased during the crowdsale. The tokens primary function is for redemption of stake in the bank itself, not trading, although they are of course tradable, and secondary markets are likely if the growth of the ICO continues. So far, at $10 per token with a declining (by week) discount, they have raised over 12 million dollars. This means they’ve minted at least 1.2m PLBT tokens so far. According to their FAQ, you can make purchases in multiple ways:
- Wire transfer in USD and EUR (Minimum purchase amount 10 PLBT)
- BTC, ETH, USDT direct transfer (Minimum purchase amount 1 PLBT)
- Multiple cryptocurrencies supported by ShapeShift.io (Minimum purchase amount 1 PLBT)
- Emercoin (EMC) direct transfer (Minimum purchase amount 100 PLBT)
- Debit/Credit card payment (Visa/Mastercard) (Minimum purchase amount 1 PLBT)
It should be noted that the project is in no way stating that there is some kind of $10 floor on the PLBT token. To guesstimate a floor based on the initial price, you have to rely on the rationality of the initial purchasers, most of whom, it would seem, are investing with an eye toward reaping rewards at the end of the business year.
You can invest today, if you wish, by going to ico.polybius.io.