A Latvian startup, Digipulse announced that it will entirely de-tokenize itself as its token, DGPT is not serving the purpose it was meant for. This came in the startup’s a blog post written by the co-founder of the startup, Normunds Kvilis. The company claims that by December 2018, all of its token will be either converted to shares of the company or be accounted for in terms of certain benefits.
Digipulse was created with an aim to enable the owners of digital assets to pass down their digital belongings to a rightful owner after death; it serves the purpose of allowing inheritance of digital assets. For the purpose, the starup uses a vault that works on the blockchain technology. Users can upload their data in this blockchain-vault. For as long as the user shows some online activity, the blockchain based vault stores the user’s data. When absolutely no online activity is observed over a period of time, a specified recipient receives the instructions to recover the vault’s contents, by Digipulse. It has been over a year now, that the startup has been functional with cryptocurrencies.
In attempts to ensure proper funding, the company’s team members decided to use the crypto technology to its fullest, and started to issue tokens (with the name of DGPT). However, in the beginning of this month, on 1st August, Normunds Kvilis, the co-founder of the startup announced that they will entirely eliminating this token.
Why get rid of the token?
In his long blog post, Kvilis elaborates the numerous challenges that the company faced to establish itself. Among other obstacles that the company faced, securing mass adoption stood as a major challenge. Digipulse was looking for ways to make itself available to the non-crypto users to expand their market. Hence the company offered the customers the option to pay for the service in fiat (not with crypto means). However, soon they realized the complications that decision brought. In Kvilis’ words:
Fiat payment introduction has indeed negatively affected the token price. However, there are two sides to every story, for example: out of the 320 sign-ups we’ve had until July 25th, only 2 people have actually allocated tokens to the service, meaning that only 2 people have actually used the DGPT token for its main purpose.
Later on, he claimed:
“This indicates that the token is generally used to pursue quick gains from a speculative standpoint, rather than being used for its main purpose of service use. It would naturally be hypocritical of me to claim that there aren’t day traders on Wall Street, but only accepting tokens would mean a slow death for the project.”
Put simply, the tokens were not being used to pay for the service, rather being bought in hope that the value of the token would rise. According to Kvilis, this means that the token is not being used for the purpose it was meant for; he even mentioned that only 2 out 320 people who signed up for the service, were actually using the tokens to pay for the service – its actual purpose.
Therefore, came the seemingly unusual decision of the company – to get rid of the token. Kvilis exclaims:
The bottom line is, if the token doesn’t fulfill its function, then we don’t really need it in order to scale our business and deliver what we set out to accomplish.
Additionally, the token is also bringing other set backs; Kvili mentioned that a leading European bank pulled out of potential collaboration talks due to their funding being raised in a token sale, and he further goes saying that Venture Capital firms are equally skeptical.
What happens to the tokens?
In the blog post of the company, Digipulse announced:
“Therefore, in what appears to be a rare case in crypto, we’ll be offering our investors several token exchange options before delisting Digipulse token from exchanges on December 15th, 2018.”
According to the Digipulse blog post, to accommodate the token owners, the following options are available to the users till December 15:
- 10,000 or more DGPT = Digipulse stakes. Individuals with over 10k DGPT will be eligible to exchange them for a share in the company. Those who hold over 10k DGPT and will choose this option will first need to be vetted by a KYC process.
- ‘Lifetime’ Premium. Based on the token amount, token holders who wish to continue using Digipulse will be offered a tier based Premium subscription in exchange for their tokens.
- No more storage space rewards. Same effect of distributed storage for users will be achieved by utilizing existing cloud storages that already have the regional based redundancy and backup options implemented.
After December 15th, all of the DGPT will be burnt. Kvilis says:
“DGPT tokens will still be trad-able on exchanges until December 15th. Afterwards, the token will be delisted and completely burned. Owner and company tokens are expected to be burned soon since the’ll be of no actual value (the burn will be announced publicly).”
Regardless of the news, Digipulse will still distribute tokens, however to those who will pass the social media based verification process. This is in the hope that receiving tokens would enable participants to try out the service and potentially trade/sell their tokens to those interested in company stakes.