ICO Analysis: Status Mobile Ethereum OS

Ethereum’s base purpose goes beyond the simple movement of value on a public, trustless ledger. Ethereum includes a Turing-complete programming language which allows it to do much more. The decentralized platform, through use of the Mist browser and other add-ons, is able to host entire websites and decentralized applications. Such extended features have mostly been the realm of desktop environment users, but Status aims to change that, billing itself as a

“strategy toward mass adoption of Ethereum.”

More Than A Messenger?

It seems that, after money, the first thing people think to secure with blockchain cryptography is instant messaging. The sea of decentralized messaging applications is growing, and ultimately any new one added at this point in time is not going to stand out unless it does something incredibly novel. The ability to securely share location data might be a plus, but the critique of secure mobile messaging always comes down to the fact that it is reliant on platform security, which is unpredictable. As far as its own addition to the ecosystem, Status’ instant messaging platform is its primary offering.

But it retains value in other purposes, because the purpose of Status is to allow the up and coming decentralized projects that are being launched on the Ethereum blockchain, including some we have reviewed here, like Aragon, to seamlessly enter the mobile world.

Status is more than a messenger. Send payments and smart contracts to friends from within chats, and enjoy encrypted messaging by default, using a peer-to-peer protocol that doesn’t rely on centralized servers.

The value of the Status token will have a few important factors that we must address in this article:

  • Chances of adoption.
  • User enthusiasm.
  • Lasting novelty/other plays in the same space.

These factors all play into the value of the token because, as with many open source projects, there’s a chance it is not the most popular option moving forward. It could just be one of the nameless many who led up to the ultimate successor.

One problem that jumps out is the need for Ethereum and Ethereum awareness in order to make use of the product. This limits the market size to, actually, advanced Ethereum users who have some need for decentralized applications in their day to day life. It can be safely assumed that most people are not looking for alternatives to their existing secure messaging applications, and the trouble with such things is that they truly rely on a network effect. People have to have a need to use a given platform before they will switch from another. There is the thought that everyone can use multiple platforms simultaneously, but this is not typically the way people operate. Can it really be argued that MySpace and Friendster still have a valid place in the social media marketplace? They certainly don’t, and Status’ IM could easily have zero traction.

Luckily, that won’t stop them, necessarily, from succeeding. The ability for other decentralized applications to be added onto the platform is a definite plus, and that so many applications are coming online gives them a valid place in the market – for a time. There is always a first, and first mover advantage is useful, but it is not all there is. It would seem that if the Status project itself really wants to succeed, they will want to have more offerings, themselves, than their “more than just a messenger.”

As such, they also have a browser they are offering. This would be useful for such things as accessing Mist-based websites that allow people to gamble or shop using their Ethereum wallet in a seamlessly-integrated fashion. Such a browser will have some usefulness to anyone using Ethereum, and so is a definite improvement of this offering.

Creating an easier way for decentralized application developers to get into the mobile world will provide some utility that goes beyond the formative purpose of Status, but how will they earn from so doing?

Profit Model

We see all these ICOs offering awesome new technologies, and often enough we don’t take a step back to ask the question: sure, but how will it make any money?

In the case of Status, the SNT (Status Network Token) will be required for certain aspects of the platform. The economy itself will include a few important markets, including the interesting decentralized push notification market. In their whitepaper is an interesting bit:

We believe that cryptoeconomic systems will have even stronger pull than the social ones. Our survival instincts, which heavily influence our economic interests, are stronger than purely social ones, thus leading to faster adoption of Ethereum and tokens as technologies.

This is an interesting theory they have, but may not prove out in the launch of Status. Their whitepaper does, however, make note of an important problem facing the web today: false identities in social media, influencing conversations and polluting the media. A platform where users must verify themselves with some sort of financial stake is sure to have less bots, but it’s also sure to have less users, at least at first, given that money is involved, and with online technology, the free version will always have quicker adoption.

The token’s value will be based on its usage in various markets within the Status economy, and so we have to look over them at least briefly.

  • Decentralized Push Notification Market

It should be noted that Status is completely decentralized, and as such it is the first mobile Ethereum application to fully commit. Push notifications traditionally require a central point of failure, a place for the notifications to occupy before getting properly routed to a node on the centralized network. Solving this problem by default eases the path to solutions in other aspects of mobile technology versus decentralization, and it appears that Status have managed to do this and create a financial incentive for it.

With the new Whisper V5 protocol, we can now delegate nodes to do offline inboxing (storing messages while clients are offline) and we will extend this ability to support push notifications. […] This allows us to establish a market for push notification providers. For service, stakeholders will deposit SNT with a provider, who may charge microtransactions for notification and storage.

This lends some value to the SNT token, because it will be required to get the full experience with the Status messenger. Again, this value is inherently dependent on the wider adoption of the platform, which is not guaranteed. In fact, it’s not even guaranteed that all regular Ethereum users will even come over, or won’t go with some other later option.

The whitepaper notes that this market could be used to build a business, allowing people to store their push notifications for various methods of payment, including ad-powered.

  • Governance

At present, the other major use of the SNT is that it can be used to influence improvement and future expansion of the Status platform. A clever investor might pick up significant influence and commission the development of a bot-free mobile dating application, but that’s none of this author’s business.

Part of the mission of Status is to obsolete the model where the user is actually the product, being sold to advertisers in exchange for access to their own real-world friends and the like. A million user petitions couldn’t influence one decision at Facebook, but a majority of stakeholders pushing for a certain direction of development in Status would certainly move the project.

The Verdict

Betting on SNT is not necessarily a bet on mobile Ethereum. Mobile Ethereum, and mobile cryptocurrency in general, is going to happen regardless of the fate of Status. The question we must ask ourselves with this project is exactly how much user adoption it will see, and if that is sufficient, then it should be safe to invest at least a little bit, because the network effect and subsequent value increase should offset any interim losses.

A truly novel messenger at this point would be one that can relay encrypted messages between all existing encrypted messengering apps without any compromise, a sort of universal hub between the various options (Telegram, Signal, WhatsApp, and so forth). Someone could build such a thing on Status, but the overall goal is not to be a Signal killer, but rather a newly carved path forward for the Etherum ecosystem.

The chances of a wide swath of the Ethereum community making use of Status are high. At a rate of 10,000 SNT per Ethereum invested, the author feels comfortable offering a rating of 6.85 out of 10.

Investment Details

The SNT ICO begins on Tuesday, the 20th of June, at 2PM GMT. 10,000 SNT tokens will be created for every ETH sent to the fund, with a maximum amount of 12 million Swiss francs being the ceiling. Contributions will have to be made using one of a few desktop Ethereum clients, and copious instructions are available at the Status website.


Website: http://phm.link

P. H. Madore has covered the cryptocurrency beat over the course of hundreds of articles for Hacked's sister site, CryptoCoinsNews, as well as some of her competitors. He is a major contributing developer to the Woodcoin project, and has made technical contributions on a number of other cryptocurrency projects. In spare time, he recently began a more personalized, weekly newsletter at http://ico.phm.link