ICO Analysis: AppCoins

Blockchain technology has ushered in the power of decentralization, which has the ability to disrupt most of the existing centralized business and industry structures. Next in line for disruption are the mobile app stores. Google Play Store and Apple Store are the most widely used mobile app stores across the globe. By introducing them as default applications on their powerful operating systems, Google and Apple have established a strong dominance over the industry. Only a monopoly makes it possible for Google to impose a 30% fee in such a straightforward service (almost a commodity) like distributing a file from a developer to a user.

The centralized app economy is also highly inefficient due to many intermediaries between the users and developers. For example,when app developers pay publishers for advertisements, it is very difficult for them to differentiate between actual user and fake user downloads. Another major inefficiency is that less than 5% of the smartphone users are making in-app purchases due to the higher costs!

AppCoin aims to solve these issues prevalent in the centralized app store economy by removing intermediaries and creating a blockchain based open protocol for App Stores.
Last week we had discussed Mobius which is a decentralized app store for dApps. However, Mobius app store is targeted only for decentralized applications. AppCoins on the other hand is working mainstream by creating a distributed protocol for the app economy targeted primarily for Android users.

AppCoins is a project developed by Aptoide, with the goal of creating a protocol applicable to all app stores, that will be the answer to most of the limitations the app economy currently faces.

The AppCoin protocol will improve 3 core processes of traditional app stores:

1. Application developers who wish to advertise their application on the app store, pay the store based on the number of downloads that the advertise generates. When a user downloads the advertised app, 85% of the advertising bid will be transferred to the user’s wallet in the form of AppCoin tokens. These tokens can only be used for making in-app purchases. This will create a robust app based economy where a large number of users make in app purchases rather than the present 5%. This system is beneficial for both the users as well as app developers. AppCoins has created a novel concept called Proof of Attention where the developer can be sure that the user has installed his application and used it.
2. AppCoins is creating an easy payments solution for application developers which will integrate with their applications without centralized interference. AppCoins will be using payment channels similar to Raiden Network for scalability.

3. Most of the app stores(other than Google’s and Apple’s) do not have proper vetting systems in place, which results in many applications with malware or inappropriate material being introduced in the store. App stores like Google Play are sometimes biased and even reject credible apps. Using AppCoins, app approvals are made universal and more transparent through a developer reputation system. The reputation is tied to the financial transactions on the public ledger and is auditable.

The Team

Let’s discuss Aptoid whose team is developing AppCoins. Aptoid Android App Store was developed in 2009 as a flexible, open and free alternative to Google Play Store which now has around 200 million users worldwide with billions of downloads! The store is very popular in Brazil and Mexico where one out of every three people in the age group of 16 to 25 use it.
Being a part of Aptoid brings in a lot of credibility to the project. Aptoid has a team of over 90 people who are working on the AppCoins project.
In a blog post, the cofounders of Aptoid, Alvaro Pinto and Paulo Trezentos were quoted:

The blockchain technology will provide the neutral common ground for the financial transactions to happen in the economy, unbalancing the market share to the side of the app stores committed with standards and decentralisation of transactions.

The Aptoid co-founders seem to have always favoured decentralization, and blockchain has presented a great opportunity to implement their vision of decentralization in the mobile economy.

The Token

AppCoin is an ERC-20 token that will be used as the primary medium of exchange in the AppCoin protocol. As mentioned above, 85% of the advertiser’s pay will be distributed to the app user in the form of AppCoin tokens. As compared to the present 5% in-app purchase rate, in-app purchases will increase substantially under AppCoins protocol creating significant demand for the token.

The presale begins on 6th November and will continue until 15th. The pre-sale and public sale will distribute 40% of the 700 million AppCoin tokens. The remaining tokens will be
distributed among the App Store Foundation (15%), bootstrap strategies for the key players in the apps economy (20%), Aptoide (15%) and the key contributors to AppCoins idea (10%).

12% of the tokens will be distributed in the presale while 28% in the ICO. The token is valued at $0.10 with a hardcap of $28 million.
Please note that you need to install the Aptoid App Store 24 hours before the presale to be eligible to participate. There is a 30% discount for presale participants.

Verdict

Data driven centralized giants like Google are being increasingly targeted by blockchain based companies with decentralized solutions. Just recently the review of Flixxo was posted which is targeting YouTube. The Play Store is an important part of the Google ecosystem with ~7Bn in revenue coming in 2016, which translates to around 8% of the total revenues. There will be some resistance coming in from Google once AppCoins starts to gain prominence. However, AppCoins is working on the app distribution part and not directly with the OS, hence Google does not hold much leverage here. ICOs which have a ready market available always get rated better. The AppCoins protocol will have an immediate market in the form of 200 million Aptoid users. Considering the benefits that the protocol brings in this will generate significant demand for the tokens in the medium term even if the protocol is not adopted by other App Stores.

Risks

  • AppCoins is building algorithms to bring in as much trust as they can, but there will always be some perception of risk when it comes to 3rd party app stores. You can see hundreds of articles popping up on Google search advising not to get apps from 3rd party stores. Google holds a significant influence over the masses. -3
  • Aptoid is popular only in the age group of 16-25 making its userbase quite narrow. Other age groups do not generally use app stores other than Google Play. -2
  • There is always a risk whether app stores other than Aptoid will adopt the AppCoin protocol. -1

Growth Potential

  • In a product like the Play Store where Google is simply an intermediary, there is a very strong potential for disruption. Yes even for Google! The protocol is bringing in efficiencies on many fronts by targeting intermediaries. +5
  • AppCoins has a ready market of around 200 million Aptoid users. This is very positive for AppCoins. The young Aptoid userbase will eagerly try out the new system. +3
  • We have to give extra pointers for the credible team that is working on AppCoins. +2
  • Based on the circulating supply, the maketcap at listing stands at $28 million. There is a lot of potential for price appreciation of the tokens. +3

Disposition

We arrive at a score of +7 out of 10 for AppCoins. The only reason why I have reduced some pointers is the fact that they are directly competing with Google and it is not wise to underestimate the power of such an influential conglomerate. There is a good potential for growth in the medium term due to the lower marketcap, and the ready userbase.

Investment Details

The presale opens on 6th of November. Please check out further details regarding the eligibility here.

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