Cryptyk Rating Review
|Start ICO||26 Sep 2018|
|End ICO||31 Oct 2018|
We assign Cryptyk a “Stable+” rating.
The main idea of the decentralized technology developed by Cryptyk Inc. is to store data that cannot be corrupted and hacked. The Cryptyk project is entering the dynamically developing cloud storage market and the growing worldwide demand for data storage from end users and services should contribute to the efficient operation of the platform.
The product offered by the company is necessary for users, for whom the preservation of confidentiality of cloud stored data is of paramount importance. The main goal of the Cryptyk platform is to prevent both external and internal threats for stored data.
Among the project’s strengths we note that Cryptyk Inc. is IBM's partner for Embedded Solution. This cooperation, in our opinion, will contribute to the further development of the project and will become a competitive advantage for Cryptyk in this segment of the cybersecurity market.
We also note that token is necessary to the platform, since it serves as a fundraising tool for the development of the product. In addition, the tokens manage the Blockchain Sentry platform, which acts as a security audit mechanism.
Among the project’s weaknesses we note that according to the results of the Pre-Sale and the Public Sale, the distribution structure of the token allows for the circulation of tokens in the secondary market at the end of the lock-up period in a size two times more than the size of the primary placement.
All of the above facts, as well as the conducted analysis of the market, the competitive environment, and the risks of both the scope and the project itself give us reason to assign this rating to the project.
General Information about the Project and ICO
The Cryptyk platform is a hybrid decentralized data processing platform designed for secure and scalable online storage management, as well as file sharing, document editing, messaging and other cloud applications.
Smart contract platform: Ethereum Blockchain
Contract type: ERC20
Token: Cryptyk (CTK)
Accepted currencies: ETH, BTC, fiat currency (USD)
The total number of tokens produced is 750,000,000 CTK. 33.3% (250,000,000 CTK) of these are available for placement on the ICO. There is no additional emission.
All unsold Tokens will be burned.
The distribution structure of the issued tokens is as follows:
Start date: 08.02.2018, (5pm UTC / 12pm EST / 9am PST)
End date: 06.07.2018, (11pm UTC / 6pm EST / 3am PST)
Soft cap: $8m.
Token price: $0.1
Minimum transaction amount: $5000
Maximum transaction amount: no limitation
The bonus program on the Pre-Sale Round is as follows:
$50,000 Min purchase = 10% bonus
$100,000 Min purchase = 15% bonus
$250,000 Min purchase = 20% bonus
$500,000 Min purchase = 25% bonus
$750,000 Min purchase = 30% bonus
$1,000,000 Min purchase = 35% bonus
$1,500,000 Min purchase = 40% bonus
Public Sale Round
Start date: 18.07.2018, (9am UTC / 7pm AEST)
End date: 31.08.2018, (11pm UTC / 9am Australian EST next day)
Hard cap: $25m.
Token price: $0.125
Minimum transaction amount: $250
Maximum transaction amount: no limitation
The bonus program for the Public Sale Round provides a 10% bonus for the first week.
At the time of the review, according to information from the website, the project attracted investments of the following sizes:
The Business Whitepaper includes a scenario for the distribution of funds raised during the ICO upon reaching Hard cap (which is $25,000,000)
Description of the Project Services
The Cryptyk platform includes 5 interconnected components:
VAULT – A decentralized platform that includes several cloud storage providers (such as Google Drive, Amazon S3, Rackspace, etc.). Its purpose is storage, as well as providing for the editing and sharing of files and other types of data (such as e-mail, chat, payments) in an encrypted decentralized form.
PASSPORT – A blockchain ledger, which records all user access sessions and file transactions. It is designed for use by corporate clients. Each enterprise, its employees and user files receive a unique identifier stored on this blockchain. Every access session of each user, as well as information on creating, editing, deleting and sharing files is recorded in the blockchain, which provides the ability to verify all user actions with data.
CODEBOOK – A database map for storing audit logs, transaction data and file encryption keys. According to the Technology Whitepaper, in order to implement the CODEBOOK, the team plans to use one of the following decentralized platforms - BigchainDB, Cockroach DB or Hashgraph.
SENTRY – A backend platform and security engine for the platform in which all other components of Cryptyk are integrated. It provides encryption management, data validation and analysis, tracking of all user actions, application of policies, auditing, prevention of data leakage and threat analysis.
Sentry consists of three components:
- Exchange Panel – Management of transactions of CTK tokens and digital and fiat currencies. It converts currency to CTK automatically.
- Private Exchange – Payment management, invoicing, the activation of Cryptyk products, payment for cloud storage services and the transfer of CTK tokens, fiat and digital currencies among members of the ecosystem, payment for cloud storage services (Amazon, Google, etc.).
- Incentives Engine – Profit distribution for CTK between Cryptyk Inc. and Cryptyk Miners, making payments to developers for creating APIs that interact with third-party software.
COMMAND – A cloud or local user interface designed to purchase platform products, manage storage, file sharing, security policies and user access rights and file permissions. The interface will have different functions depending on the type of user account (public user, corporate user or enterprise administrator).
5-10 storage nodes will be used to implement cloud storage. According to the presented documentation, this approach will provide high speed access, as well as a high degree of data security.
When a user uploads a file to the VAULT, it is encrypted, divided into "slices", which are also encrypted before they are downloaded to the cloud servers.
If access to a file is granted for another user, this user receives a free "Lite" version of the VAULT with the encryption keys for the shared file.
To store CTK tokens, platform users are provided with a CTK Web Wallet (developed by Ambisafe). However, users can use any wallet that supports the ERC-20 standard.
At the time of writing, the MVP was fully developed but still undergoing some minor modifications to allow for scaling so that thousands of users can use it simultaneously. According to the founders, its release will take place before the Public Sale begins. The video of Cryptyk Prototype Platform Demo can be watched on YouTube.
In our opinion, the proposed product could be in high demand among users, for whom the preservation of confidentiality of cloud stored data is of great importance. The main goal of the Cryptyk platform is to prevent both external and internal threats for stored data which is relevant for enterprises in order to protect against data corruption. The Cryptyk platform protects against all 5 threats to the cloud.
The cloud storage market has been actively developing since 2006, when Amazon Web Services introduced its cloud-based storage service AWS S3, which later received widespread recognition as a basic solution for building services. Amazon AWS S3 is still a leader in the market.
According to Statista, approximately 3.6bn cloud service users are projected for 2018.
A key factor that stimulates the market is the growing demand for data storage from end users and service providers from the IoT field. For consumers, cloud services provide unlimited access to content and services. Data centers can relate to almost every aspect of enterprise management, whether internal or employee-related data, communications or processes, and information or services targeted at partners and customers. It’s not only individuals and companies who are expressing an interest in cloud technologies, but also government organizations, who are trying to use cloud technologies. The UK government spent more than £500m on cloud technologies in 2015.
According to the report by Cisco Systems Inc., companies are very eager to implement cloud technology. The share of cloud traffic is predicted to account for 95% of the total data center traffic in the world by 2021. The research predicts that the global traffic of cloud data centers will reach 19.5 ZB per year by 2021, compared to 6.0 ZB per year in 2016 (a 3.3-fold increase or a 27% average annual growth rate [CAGR] from 2016 till 2021). At the same time, 73% of cloud computing will be public cloud (hyperscale data centers), which consists of 24 companies at the end of 2017, and 27% are private and hybrid clouds.
Depending on the region, the average download speed and wait time is between 18.8-22.1 Mbps and 21-27 msec respectively.
According to Statista, the volume of public cloud will be about $ 160bn by the end of 2020, the amount of private and hybrid clouds should be about $43bn.
Cloud services are divided into:
SaaS – The platform and infrastructure are fully managed by the cloud provider, which means that if the underlying operating system or service is not properly configured, the data may be compromised.
PaaS – The provider manages the hardware and the underlying operating system, limiting the risk management capabilities for enterprises on these components.
IaaS - Clients can monitor virtual servers, managing the risks of the environment and data, while the servers themselves are distributed across several data centers.
On May 25th, 2018, the GDPR regulation came into force, with the purpose to increase the level of protection of personal data of citizens within the countries of the European Union. All companies that use and store personal data of users will have to store the data in an encrypted form ensuring their security. Currently, the basic public cloud services have too much information about their customers and they will need to adapt to the new rules, investing time and money in the local infrastructure to provide the necessary conditions for the GDPR. Cryptyk will have opt-in zero knowledge.
The last few years have been the most intense period in terms of security of centralized cloud data. All crashes and attacks show that the model of centralized storage of cloud computing is not as secure as it might seem. If any company stores information in the cloud, it expresses great confidence to third parties. Cloud storage can use blockchain technology to avoid security problems. Even if data processing is physically distributed, workloads remain logically centralized. This is different from hybrid clouds, when companies maintain data on both public and private clouds. Blockchain creates a decentralized and distributed storage market.
While centralized cloud stores distribute files between their data centers, blockchain technology allows for the complete decentralization of data, as they are stored and encrypted in different nodes worldwide. This gives users more protection in the event of an error when storing or transferring data and it also provides more privacy, since their data and files are not accessible and are not controlled by a third party. Instead, the encrypted fragments are distributed over several nodes secured by keys owned by users.
The public cloud is likely to dominate the market over the next decade but security problems and limitations on the existing infrastructure make it difficult for companies to adopt the public cloud right now. This means that hybrid clouds, in which several cloud technologies are connected, will also remain a popular solution until these limitations are eliminated. Technology giants that dominate the IaaS market, like Amazon, Microsoft, Google and IBM, are constantly expanding their solutions, as they compete for the market share.
Currently, there are quite a few decentralized cloud platforms, including Filecoin, MaidSafe, Sia and Storj. Their websites claim that they are better than centralized cloud storage since they are safer and data storage requires lower costs. Each of these platforms divides the files into several parts, encrypts and sends them to different hard drives. Private individuals can lease the unused space on their hard drive and make money.
Filecoin - The project was launched in 2014 by a company from California's Protocol Labs to create a data storage solution based on the IPFS (InterPlanetary File System) protocol. IPFS was developed by Protocol Labs. The idea of Filecoin is that users install special software that allows data to be stored on computer hard drives. As a reward, users receive Filecoins, which can be exchanged for bitcoin, other cryptocurrencies or fiat. The ICO was completed in September 2017 and the team managed to raise $252m.
MaidSafe - The company was founded in 2006. This is a decentralized application development platform based on Bitcoin blockchain with the use of the Proof of Resources protocol. The MaidSafe network is formed on individual personal computers located worldwide that provide space for storing network files and processing power for the operation of the MaidSafe network. In 2014, the company raised $6m during the ICO.
Sia - A decentralized platform with an open source for cloud storage. User data is divided into many small parts, encrypted and stored on a variety of different servers. The team raised $1.25m in total financing from investors such as Fenbushi Capital, Raptor Group, Procyon, Ventures and Xiaolai Li.
Storj - The company was launched in 2014. In 2017, the company raised $30m during its ICO. Storj is a decentralized open source platform for cloud storage where user data is divided into many small parts, encrypted and stored on hard disks worldwide. In October 2017, Storj Labs entered into a partnership agreement with CapLinked.
Cryptyk is much more secure than all other blockchain platforms, as Cryptyk has 6 separate encryption keys to correspond to the 5 shards and the private key. There is a market trend that market leaders such as Amazon Web Services and Google Drive unite with smaller companies, purchase their software as additional tools, thereby increasing the productivity of their services and gaining an additional competitive advantage over other companies. Cryptyk Inc. is IBM's partner for Embedded Solution and IBM Bluemix’s partner, which can give an impetus to the development of the service in the future, since IBM has expertise in almost all areas of IT, has its own servers and operating system, works with big data and artificial intelligence and such cooperation will be a huge advantage to Cryptyk Inc.
The development and creation of the project on a permanent basis are conducted by 8 people and there are 19 people involved as advisors and investors. Information about key members is provided below:
Adam Weigold - CEO, Chairman, Founder
Macquarie University (1988-1992), Doctor of Philosophy (Ph.D.), Atomic and Laser Physics.
Flinders University (1987-1988), BSc Hons., Atomic and Solid-State Physics.
Adelaide University (1983-1987), BSc, Physics.
Adam has worked at Cryptyk since 2015. He has work experience in key positions in the fields of health, defense, financial services and the production and sale of laser equipment. He has participated in an IPO. Adam is a blockchain advisor to the PlayUp project, which at the time of writing holds a public seed.
Raghu Kotha, CTO & Founder
Birla Institute of Technology and Science, Master’s degree (MS), Computer Software Engineering.
Other Current Projects:
Red Ventures (2017 - present), Director of Security Engineering.
Stalwart (2013 - present), Senior Enterprise Security Architect.
He has worked at Cryptyk since 2015. Raghu has extensive experience in software development and Cyber Security at various companies in management positions. He has worked in large companies such as Silicon Valley Bank and Bell Labs. He states that he has created several projects based on Proof-of-Concept as a blockchain architect, has worked with Ethereum, HL Fabric and smart contracts.
He is also an advisor to Alpharadian.
Indra Singhal, COO & Director
Penn State University, Master of Science.
Indian Institute of Technology, Bachelor of Technology.
Other Current Projects:
Emergent Ventures (2017 - present), Venture Partner. A company investing in IT projects in Silicon Valley and India.
Everwise (2016 - present), Mentor. The company specializes in HRM optimizing.
Indra has worked at Cryptyk since 2014. He has experience in launching start-ups, and optimizing business processes. He is also the financial director of the non-profit organization IIT Bay Area Alumni, and teaches yoga.
Dennis McMasters - Chief Architect
West Virginia University (1979-1983), Bachelor of Science, Petroleum Engineering.
Other Current Projects:
Clarity Consulting Group, LLC (2015 - present), Consultant.
Dennis has worked at Cryptyk since 2015. He has extensive experience in the IT field. He specializes in the automation of business processes, software development, Database (Oracle), personnel and project management.
The core team also has specialists:
CMO, Luke Lombe. Luke is the director of Echelon One, which provides consulting services for organization development, entering the Chinese market, reorganizing business processes, planning marketing and communications.
Software developer, Mihkel Trink. At the time of writing, Mihkel was a senior engineer at Ericsson.
Lawyer, Jen Peng. Jen has worked as an Executive Director at Morgan Stanley and has also been involved in filing documents for various companies with the SEC under rule 144A / Regulation S. Currently, she focuses on advising and investing in private companies.
Community Development, Daniel Floreani. He has experience working at Cisco, as the Director of CyberOps Pty Ltd, and specializes in cybersecurity.
Among Advisors we note:
Ian Scarffe, Blockchain & Crypto Expert
Ian is investor, entrepreneur and consultant. Ian advised a number of projects staging the ICO such as Patron-ICO ($40m), CanYa ($12m), MoxyOne, Pundi X ($40m), ELPIS ($1.3m), Naviaddress ($16.9m), Votem, ContractNet ($2.6m), CUBE ($1.9m), VeriME ($21.7m), PokerSports ($500,000), RxEAL ($279,000), Bulltoken ($1.5m, CEEK ($17.3m), MeetnGreetMe ($250,000), Shivom ($35m), ELPIS ($1.3m), ContractNet ($2.6m).
In the near future, the projects Ian advises will stage their ICOs and among them we note names such as Casper API, BuzzShow, BolttCoin, Nauticus, Dataeum, Enkidu, TrustedCars Flex, Loyakk, baanx.com, MEvU, Vibeo, Dermavir, Worldopoly, Open Source University ICO, CyClean, Dataeum, Wizebit, FlipNpik, Triwer, BizShake, Discovery IoT, TrustedCars Flex, Goldma, The 4th Pillar, Loyakk, Ligercoin, Decentralized News Network, Fox Trading, P2P Solutions Foundation, Acorn Collective, SuchApp, Triwer, Bitlumens, Pool of Stake, and Ligercoin.
Jae Kim, ICO Strategic Marketing Advisor, Promoter, Korean ICO Investor
Jae is an investor and ICO consultant. He has participated in the ICOs of projects such as Paycent ($15.5m), CUBE ($1.9m), CEDEX ($14m), Fidelium ($10 m), GIFTO ($30m), Experty ($1.5m), CEEK ($17.3m).
Dr. Sead Muftic, Blockchain Technologist
Dr. Sead Muftic specializes in security of computer networks and blockchain transactions. He is the founder of LedLoc, CTO QYKBAR and EIPlatform, as well as security expert of SuchApp and Giftz.io ($1.6m).
It should be noted that all the members of the Cryptyk team have been working together for several years. The project has gathered a team that has extensive experience in IT, management and consulting. The team has a blockchain and smart contracts specialist, Raghu Kotha. The project attracted a large number of advisors specializing in blockchain technologies, cyber security and finance. One of the project’s strengths is, undoubtedly, the team.
At the time of writing the review, there is no page on GitHub. According to the information from the founders, the code will not be published. SDKs and APIs will be created for third-party developers, which will allow the product to be integrated with third-party software.
CTK is an ERC20-compatible token available for storage in wallets compatible with this standard.
CTK is a utility token and has the following uses inside the Cryptyk ecosystem:
To purchase products and services. In the event that the user makes a payment in fiat currency, it is converted to CTK automatically.
Payment to developers for API and plug-in products.
Payment to miners for checking user IDs, data integrity, secure user access sessions.
Token name – Cryptyk Token
Symbol – CTK
Decimals – 8
The total number of CTK released can also be seen on Etherscan. At the time of writing, their quantity was distributed among 34 addresses:
The website stated that the amount of raised funds was $3,134,265. According to information from the founders, the bulk of these funds was collected in the fiat. We also requested crypto addresses to check information on the number of ETH and BTC collected, but they were not provided to us.
The token serves as a fundraising tool for the development and distribution of the product. The prices for the platform services are set in fiat currency, the purchase of CTK can be a profitable investment for long-term token holders provided the token price increases. Compatibility with the ERC20 standard allows the tokens to be stored in Ethereum wallets, which is also a plus for holders due to the prevalence of wallets of this standard. It is worth noting that from the point of view of the speed of transactions, transactions are limited by the speed of the Ethereum network, so the project could use ETH as its local currency.
Analysis of Factors Affecting the Future Value of the Token
The growth of the CTK token exchange rate will always be determined mainly by the amount of demand and supply, taking into account market liquidity. 33.3% of CTK tokens are reserved in the Cryptyk Foundation to encourage customers to test the product and for partners to develop open source plug-ins. These tokens have a 1-year lock-up period and they will not be able to enter the market earlier. This volume of CTK tokens will be placed gradually in accordance with the rules approved by the Cryptyk Foundation only after the launch of the product. Thus, the founders create a mechanism for managing the price volatility of CTK token, protecting its exchange rate value from sharp and unstable increases. According to the plan of the founders, such a slow release of CTK tokens from the Cryptyk Foundation should eventually ensure a smooth and steady growth of the token price on the crypto exchanges.
From 33.3% of CTK tokens reserved for members of the Cryptyk team and business angels, 70% is allocated to the current team and these funds have a 4-year lock-up period. According to the terms individually agreed with each member of the team, these CTK tokens will be issued during the entire four-year period but in the amount of no more than 25% per year of the total amount of the reserve. This, in turn, will also give an additional opportunity to the founders to regulate the size of the CTK token supply on the market, in order to stabilize the current level of their exchange value.
Based on the above factors, we think that during the first year (short-term) of the operation of the project, the CTK token price has every chance to increase as the number of users increases and particularly if there are favorable market conditions.
Investment Risk Analysis
We note the following risks for the Cryptyk project:
Only one third of the CTK tokens are placed on the ICO. Another third is reserved at the Cryptyk Foundation to encourage partners and the same volume is also blocked for the team and business angels. Such a distribution structure is essentially a hidden additional emission twice the size of the primary placement, and it can create the effect of "leveling" any positive impact on the exchange value of the CTK token. We note this risk as the main one in the medium term.
We also note that the token price volatility regulation mechanism built by the founders has one important feature. All additional placements of CTK tokens at the end of their lock-up periods should be made in times of success from the point of view of market conditions. It remains unclear how the crypto market will function in the long-term and whether the founders will have the opportunity to implement their plans without declining the exchange value of the CTK token in a few years.
According to the information provided on the website, funds raised during the Pre-Sale and the Public Sale will be stored in a diversified portfolio of BTC, ETH and USD which, against the background of high volatility, keeps the exchange rate risk of such a portfolio at a sufficiently high level regardless of the ratio of the shares of BTC, ETH and USD.
It is possible for the launch of the MVP and a fully-functional product to be delayed or postponed. This can lead to a delay in the operation of the project in its first year, when tokens have a better chance of growth according to their distribution structure and unlocking schedule.
We have not identified any other significant risks that could adversely affect the attractiveness of the Cryptyk project.