New kids boom on the blockchain
Funds are eager to flood into new tech ventures, but the stakes are very high
The future of a little-known South African-born startup got infinitely brighter last week when, in just 20 seconds, investors reportedly poured a collective $10.8-million into the business.
This far exceeded the expectations of the team behind the project, Faceter, which had initially hoped its pre-sale, the first part of a so-called initial coin offering (ICO), would bring in about $800 000.
On Thursday this week, the next part of the sale commenced, with the project hoping to raise a cumulative $40-million. The sale window closes at the end of March.
This rush to invest in Faceter comes at a time when leading cryptocurrencies such as bitcoin have come off record high prices.
An ICO is a kind of crowdfunding for tech business ventures and participants buy a token based on the strength of the offering contained in a document known as a white paper. The token is not necessarily a share in the venture but could instead be used to access products and services in future.
ICOs have become a buzzword among crypto traders fervently seeking to get in on the ground floor of what might be the next bitcoin. If trading in cryptocurrency is a highrisk business — and it is — then investing is ICOs is even more so.
About $4-billion has been raised through ICOs in the past two years but 10% of this has gone to scammers, says Nerushka Bowan, an expert in emerging technology law and a trainer at the Blockchain Academy.
She warns that people who take part in an ICO must be aware that they may also lose a lot of money, even if contributing to a legitimate ICO.
“It’s a high-risk game. A lot of people have made a lot of money in a short space of time, and some have also lost a lot in a short space of time,” Bowan says.
Port Elizabeth’s Robert Pothier, the brainchild behind the Faceter project and the token, dubbed FACE, is supported by his cofounder, Vladimir Tchernitski, and his development team based in Russia.
Faceter aims to make face detection and video-stream analysis available to mass users. It will run on blockchain technology (See “The blockchain for dummies”), the underlying decentralised computing platform used by bitcoin and other cryptocurrencies.
Facester says in its white paper that it plans to use decentralised distributed computing technologies, also known as fog computing, to significantly reduce infrastructure and costs, making its product available to small businesses and mass consumers.
Pothier and the development team’s previous project, Pay.Cards, enables a mobile app to scan and recognise data such as that on a credit card with the use of a smartphone camera.
When Pothier was mugged on a Johannesburg street monitored by CCTV cameras and the police were unable to put the footage to any use, he prompted his team to move the card-reading tech to facial recognition of CCTV footage.
“Imagine if an unfamiliar face enters your property and a notification goes straight to your phone, or you can be told if your child has left school,” says Pothier, explaining what Faceter aims to one day achieve.
To run this kind of facial recognition software would normally require a big server, a costly exercise. But, if built on the blockchain, which uses decentralised processing power, the service becomes economically viable for ordinary users and can be moved around the world.
Miners — the computers that validate