Is Centrality really worth $110 million?

Earlier this month a New Zealand blockchain company, Centrality, announced that it raised US$80 million (NZ$110m) in cryptocurrency via a “Token Generation Event.”

That’s a staggering amount and would rank among the top ten biggest ICOs (Initial Coin Offering) of all time, according to the Coinist website. Although as yet, Centrality does not even appear in Coinist’s directory. I couldn’t find Centrality on ICO Drops either, a well known ICO tracker.

I first came across Auckland-based Centrality last October, when the company was positioning itself as a “central hub for apps.” At that point it hadn’t actually launched any apps, let alone become a hub for them. But it was promising twelve new apps by the end of the year.

It’s now several months later, so I checked on iTunes to see what apps Centrality had released. I found three: Skoot Companion App (a travel app), UShare (a taxi hailing app, currently only operating in the Hawkes Bay), and Belong Employee Rewards (self-explanatory). All three are new and show little evidence of usage; although the main app for Skoot is an in-vehicle app, which isn’t in iTunes.

I asked the company if it had any other apps and they pointed me to the Centrality marketplace. “We have 9 live apps and five in beta,” a spokesperson told me. I scrolled through the marketplace and clicked on all the links, but it was difficult to know which products were live and which (if any) had significant usage.

When I asked about that, I was told that Centrality’s apps have generated “millions in revenue” and have “hundreds of thousands of users across the world.”

So which apps in particular? “Skoot, Belong, CentraPay, Blockeeper, Paycheck and SingularX have generated the most,” said the spokesperson, adding that “Skoot makes close to $100k a month just by itself.”

Okay, so let’s take a look at Skoot then. It’s a travel app which, according to its white paper, Centrality owns 50% of. On the product’s Facebook page, Skoot is described as an app that “combines GPS, Wi-Fi, audio guides, road safety alerts and travel information.” It sounds useful for tourists, and is in fact available for hire at JUCY car rentals.

But how exactly does Skoot use blockchain technology?

In a 49-page white paper on its website, Centrality states vaguely that “the Skoot marketplace allows traditional tourism operators to streamline their supply chains and enables a peer to peer market place for individuals to offer experiences in their spare time.” That sounds nice, but there is no technical detail about how this functionality was developed or how it works.

To be fair to Centrality, it isn’t unusual for ICO companies to have immature products – or even no product at all. However, to compensate, many of these blockchain startups open source their software. So that at least external developers can kick the tires.

Augur, for example, is a relatively well known ICO startup building a prediction market tool on top of the Ethereum blockchain. At time of writing, its token REP is ranked 34th in market capitalization on CoinMarketCap. Augur hasn’t yet released its final product, but its code is available on GitHub and it regularly documents progress on forums like StackExchange and Reddit.

Centrality hasn’t open sourced its codebase, although in the white paper it promises to do that. “We have a running test net,” said the spokesperson, “which we’ll start [to] release externally soon.”

So if the product details are vague and there is no code to check, how do we know Centrality is currently worth US$80 million?

At this point, we just have to take Centrality’s word on it. The company says it is developing a world-changing technology, in the form of a “peer to peer marketplace” built on “scalable blockchain infrastructure.”

Seemingly on that basis alone, 8,000 people snapped up their token – in less than six minutes!

Although it turns out not a single one of those 8,000 people was a New Zealander. “We have decided to take a conservative position on the New Zealand regulatory landscape,” the spokesperson told me, “and as a result we were unable to approve any New Zealand-based retail investors during the accreditation process.”

So okay, 8,000 overseas people bought Centrality’s token. Given the question mark over the products and lack of any open source code to check, I can only assume they bought the token as speculation.

Finally, let’s look at the token itself, which is called CENNZ. In order to speculate on the market value of a cryptocurrency token like CENNZ, it needs to be listed on an exchange. Ideally one of the popular “altcoin” exchanges, like Binance or New Zealand’s own Cryptopia.

Centrality has so far only committed to listing CENNZ on one exchange, SingularX. I’d never heard of it, but the name looked familiar…turns out SingularX is listed in the Centrality marketplace.

Ultimately I wish Centrality and its investors all the best, but I’ll leave it up to you to decide whether it’s worth over $100 million.