'Colored Twist' Startup Coinprism Is Shutting Down This Weekend
Colored coins can function as digitized stand-ins for real world resources, for example, or signify things such as loyalty points.
Coinprism was arguably ahead of its time. By utilizing the bitcoin blockchain to make tokens representing other resources, its colored coins presaged the growth of ethereum and other networks built explicitly for these use cases.
However, as founder and chief executive Flavien Charlon pointed out in an email to CoinDesk, much has changed since 2014, both on the technology and regulatory fronts.
Beyond that, Charlon reported another reason Coinprism was calling it stops is since the constraints of blockchain have become evident.
The chief in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of qualitative policies. CoinDesk has been an independent operating subsidiary of Digital Currency Group, which excels in cryptocurrencies and blockchain startups.
Stepping back, Coinprism is among a number of organizations that sought to concentrate on colored coins, or bitcoins bearing extra parts of data that give them a larger degree of uniqueness by way of the protocol’s scripting language.
As he put it:
“While We’ve been among the first in the area of blockchain tokens, long before ethereum was even published, the ecosystem has changed towards ERC-20, which is significantly more flexible and more powerful than bitcoin-based systems,” he wrote, including:
“In the end it was about intellectual honesty. I used ton’t like having to support endeavors that were trying to utilize blockchain for the sake of utilizing blockchain, once I knew a centered, more dull architecture would really do a better job.”
The startup mentioned in a message on its website that it would shut down on Saturday and advised users to “withdraw your funds and then export your private keys prior to this date.”
“We did not find a business model that would have been viable long term. Regulators have started to pay attention to the distance, and actions around blockchain resources (Assets exchanges, ICO tools and solutions, etc.) are most likely to become heavily regulated in the next five decades. That usually means a number of these services will need to shut down or restrict their actions, some might go to jail, and just a few of well capitalized business successfully adapt to the regulator’s demands.”
“The unpredictability of transactions fees and verification times in the last couple of years have also made it tough to argue bitcoin is a fantastic platform for it.”
Charlon also said the long-term business version of Coinprism was problematic, given the growing regulatory scrutiny of the ecosystem and around crypto assets in particular that have been sold through initial coin offerings (ICOs).
Nevertheless as Charlon pointed out, work in this field has shifted to other and ethereum platforms. Many these tokens in circulation these days are predicated on ethereum’s ERC20 normal.
The blockchain’s vaunted transparency, privacy and cryptographic security may all be achieved “very easily” using a traditional system, Charlon proceeded to argue, concluding:
Abacus image via Shutterstock
CoinDesk was told by him:
“In 99% of use cases we are visiting, blockchain is regrettably a sub-optimal choice as a technology. Blockchains have numerous disadvantages concerning speed, scalability, prices and consumer expertise. Unless censorship immunity is a vital requirement (which it seldom is, particularly in the enterprise blockchain space where participants all know each other), blockchain is seldom the ideal technological option.”