Privatix Rating Review
|Start ICO||17 Oct 2017|
|End ICO||14 Nov 2017|
We assign the Privatix project a "Stable +" rating.
Privatix offers an excellent idea, which is to make more efficient use of internet connections. The founders have considerable experience in the relevant field, confirmed by several successfully implemented projects. The documentation and company website are well put together, but they lack two important sections - a financial model, and a future marketing strategy - so we cannot assign a higher rating to the project.
In addition we identified several significant risks that could hinder the successful implementation of the idea. Nevertheless, the worldwide trend for cost reduction strategies when people interact with each other without intermediaries, gives us reason to believe that the Privatix project can be successful.
Project information and the ICO
Privatix is a project aiming to create a decentralized network, in which participants will be able to sell unused capacity of their internet connections. The company is registered in Cyprus, and is conducting their ICO in order to raise funds for system development and promotion. PRIX tokens will have an infrastructural function, and any increase in their value will be aided by limited token emissions and growing numbers of Privatix users.
White paper: https://dxw4crzwfgmzw.cloudfront.net/whitepaper/PRIVATIX-WHITEPAPER.pdf
ICO start date: October 19, 2017; 14:00 UTC
ICO duration: November 16, 2017; 14:00 UTC
Token: PRIX, ERC20
Min goal (soft cap): 3,350 ETH
Max goal (hard cap): 57,142 ETH
ICO price: 1 ETH = 100 PRIX
The minimum buying amount: 1 PRIX or 0.01 ETH.
The maximum amount is not limited.
• First 48 hours: 40% (1 PRIX = 1.4 PRIX)
• Week 1: 30% (1 PRIX = 1.3 PRIX)
• Week 2: 20% (1 PRIX = 1,2 PRIX)
• Week 3: 10% (1 PRIX = 1,1 PRIX)
• Week 4: 5% (1 PRIX = 1.05 PRIX)
Accepted currencies: ETH
Total emission: 10,000,000 PRIX (fixed, without dilution). The concept of mining is absent; the number of tokens will not change after the sale.
• 80% - ICO: 8,000,000
• 3% - Presale (pre-ICO): 300,000
• 3% - Bounty, advisors and cost covering: 300,000
• 7% - Team and future employees: 700,000
• 7% - Founders (locked for 12 months): 700,000
Minimum goal (soft cap) reached
Maximum goal (hard cap) reached
Privatix Network core development (R&D): 60%
Privatix Network core development (R&D): 50%
Network-based products development: 10%
Network-based products development: 30%
Marketing and promotion: 20%
Marketing and promotion: 18%
Operational expenses: 5%
Operational expenses: 1%
Legal and compliance: 5%
Legal and compliance: 1%
Token Issue Date: no data available
Vesting: no data available
Project services and their usage
Privatix is a project whose goal is the creation of a decentralized autonomous network using p2p blockchain technology for buying and selling communication channels, using its own crypto currency. In other words, Privatix will allow the selling of the bandwidth of your internet connection to other network members. Thus the project can eliminate intermediary services in the consumer VPN market and reduce user costs. In addition, the implementation of the idea will reveal opportunities for creating applications and services in such areas as CDN, data collection, business intelligence and anti-censorship SDK for applications and others.
Privatix cryptoeconomics implies the following main kinds of participant:
- Users wishing to sell their communication channels (agents);
- Users wishing to purchase communication channels of agents (customers).
Participants interact with each other via the blockchain node managed by Privatix. At the same time, customer access parameters to vendor channels and other important data are registered in Ethereum smart contracts, and settlements between users are made in PRIX tokens. After the official release of Whisper, the system will be re-adapted for this protocol.
An example of the potential use of the Privatix network is the following. User 1 resides in Germany and has a paid 100 Mb/s Internet channel, which he does not use 100%, especially at night. User 2 resides in China and does not have access to many websites due to strict censorship in his country. Installing Privatix software, both users will be able to earn by leasing the unoccupied bandwidth of their internet channel, or will have access to the blocked information for a small fee.
In addition to VPN services, Privatix intends to create a decentralized CDN based on this service. The main condition for implementing this plan is the presence of a large number of agents on the network. In this case, participants will interact in the following way. User A has an unloaded server, which he would like to lease. User B is forced to rent expensive servers from a centralized provider so that visitors to his website can watch HD video with instant streaming worlwide. Using Privatix CDN services, both participants will benefit - the first will use their capacities more efficiently, and the second will be able to save on costs by leasing the server from other network members.
The company is also planning to introduce the following products:
1. Privatix.BOX is a portable router that allows you to connect to a Privatix network without installing special software.
2. Proxy / Socks selling platform through API, via which companies engaged in the collection and analysis of business data, can parse the search engines or websites of competitors imperceptibly.
3. Infrastructure for VPN providers, which will reduce the cost of traffic and increase resistance to blocking attempts.
4. Privatix.FAAS is an anti-censorship tool for mobile applications and programs developers, through which it will be possible to send application traffic through the encrypted communication channels of Privatix network agents.
5. Privatix.Monetize - a tool for monetizing applications without advertising or paid subscriptions.
Engineering features of the project
The system’s technical development is in Open Source mode; the source codes are published on GitHub. All publications are by Vitaliy Gnidenko, who is Head of Development. Currently, the repositories contain the source code of the client applications of Privatix services.
The technology stack of the project is as follows:
- Windows application: C#
- Mobile apps
- Swift 4 for iOS
- Java for Android
- Smart contracts: Truffle
The basic architecture of Privatix is given below:
In the initial stages the project will work via the Ethereum blockchain; in the future, to reduce system requirements for agents the network will allow agents to connect through API. At the same time, transactions will still be registered on Ethereum, and settlements will occur in project tokens.
The procedure for connecting an agent to Privatix is as follows:
- The agent downloads specially developed software (gateway), installs it on a computer and creates the necessary settings.
- The program then requests the current public key from the blockchain, via which it encrypts its IP.
- After this the agent’s software generates private and public keys and sends a registration request to the smart contract.
- A smart contract puts the gateway in the queue for review.
After the service node has received a request for verification from the gateway, it either deletes it or adds it to the list of audited requests and reports to the smart contract.
A client wishing to use project services also needs to install project software. When the client fills his wallet with the required amount of tokens to pay for services ordered, his software also sends a request to the smart contract, transmitting the country code and public key. The service node sends the client the necessary data for connection and records the fact of the start of service provision for subsequent payment to the gateway.
It is important to understand that at this stage users of the Privatix network, in addition to PRIX tokens in their wallet, will also need ETH tokens to pay for transactions. However with the introduction of the Whisper subprotocol to the Ethereum blockchain, nodes registered on the Privatix network will be able to directly transmit messages to each other without commission.
The white paper provides a broad overview of where Privatix is going to operate in the market, which is a tribute to the competence of the founders in this matter. In spite of the fact that not all indicated figures are supported by links to sources of information, we conducted our own analysis and can confirm the accuracy of the data.
Therefore Market Research Future really claims that the global market for VPN services could reach $106 billion by 2022. However, these figures cannot be considered an affordable market size for Privatix, as the authors of the above-mentioned report believe that the key driving force of the industry is the scope of cybersecurity, while Privatix will be more focused on circumvention of blockages and CDN services. Among the stated potential Privatix services there is also a solution to protect against internet threats in the form of a Privatix.BOX router, but the problem this solves is not so common. Nevertheless, the fact of geographical segmentation of the internet and growing censorship in individual countries allow us to make the assumption that a realistic market volume for Privatix in the upcoming 3-4 years could range from several billion dollars to several dozen billion, also an excellent opportunity for increase in business volume.
CDN and BI can be seen in addition to other target markets. According to Marketsandmarkets, the volume of transactions in the field of Content Delivery Networks could reach $23.22 billion by 2021. The market for Business Intelligence is estimated at $26.88 billion in 4 years’ time, but here as well as in the case of VPN, Privatix will be able to claim only a small slice of this.
Summing up, we can say that the market in which Privatix will carry out its activities has significant size and, more importantly will expand at a healthy pace, which gives excellent prospects for company development.
Competitors and competitive features of the project
The main competitors for Privatix will be 2 types of company - centralized suppliers of the same services, and their decentralized counterparts. In the first category, hundreds of companies operate worldwide, according to information that can be easily found on the internet. One of the main advantages of the project will be lower costs due to the lack of the need for server maintenance and related costs. Users will interact with each other via Privatix software, and payment of transactions will be guaranteed by Ethereum blockchain software.
As for the VPN service, a decentralized project structure with specially developed opensource software will increase anonymity for users, and significantly complicate the procedure for blocking connections over IPs. Due to the fact that VPN providers use data centers behind which known IP addresses are assigned, websites and providers can easily add them to blacklists. Privatix allows switching between millions of output nodes, so users will be much harder to detect and block. In addition, Privatix software does not collect information about client connections, which significantly increases privacy.
It is necessary to include Tor in the discussion; Tor does not offer any incentives to owners of target nodes. In addition, similarly to other centralized solutions Tor is blocked by DPI. The founders of Privatix intend to develop and implement a VPN protocol simulating an HTTPS connection, the successful implementation of which will make it very difficult to block the Privatix DPI.
If we compare Privatix to similar services that use blockchain technology, we can single out the Mysterium Network, which already hosted an ICO on May 30, 2017 and collected 68,629 ETH over 45 minutes, almost $14 million at the time. The goal of Mysterium is also to build a decentralized VPN node network, but the mechanism of the system seems to be different from that of Privatix. The Mysterium founders describe the future model of their network in their white paper as follows: "our vision is to build a Mysterium protocol capable of “dissolving” user data and sending it deep into the network of Mysterium Nodes without possibility of tracking or censorship."
Users of Bitcointalk forum and other social media have repeatedly noted the similarities between the two projects; CEO Privatix Dima Rusakov even published a blog post explaining the difference between them. The key difference in his opinion is the following fact: «The huge difference between the two of us is that we at Privatix do not believe that a consumer VPN alone can create enough demand for an agent’s bandwidth and therefore ensure good prices." Thus, Dima says that Privatix, unlike Mysterium, will have a more powerful functionality, so that the demand for agent services will be much higher than of the designated competitor.
Despite these stated advantages Privatix also carries some risks. The key danger, in our view, is the issue of legal protection for agents who may be harmed in the event of unlawful actions by customers of the service. Chapter 10 of the white paper is devoted to this issue, and states that the team intends to develop a legal scheme the result of which responsibility for illegal actions on the network will be borne not by agents, but by Privatix itself. In our opinion, such a scheme is unlikely to be effective, as the final decision on the provision of its internet channel is taken by agents, as a result of which law enforcement agencies are more likely to accuse them of aiding and abetting people who commit unlawful acts. Evidence for this conclusion includes the arrest of Dmitry Bogatov, a mathematician from Russia, who was holding a Tor exit node; he was accused of several criminal offenses because of "extremist comments" published via his IP address.
In addition, there are questions regarding the security of Privatix customers, whose data can be intercepted by unscrupulous network agents when visiting sites that do not support the advanced HTTPS protocol. Centralized VPN services are not interested in stealing or hacking personal data of their customers, because their reputation would suffer and demand for their services would suffer. In the case of Privatix, attackers can perform a so-called man-in-the-middle attack if traffic is not encrypted using SSL and TLS mechanisms. The founders are aware of this risk and suggest not letting traffic other than HTTPS pass, with the possibility of removing this restriction if the client takes the risk.
Privatix has gathered an experienced team well aware of the specifics of VPN development. Dmitry Rusakov (CEO), Nikita Kuznetsov (SRT) and Dmitry Rubtsov (Operations Management and Business Development) are the founders.
Dmitry Rusakov and Dmitry Rubtsov, as well as Vitaliy Gnidenko (Head of Development), Viktor Lakhman (R & D / full-stack) and Timur Appaev (front-end) have already implemented joint internet projects that are operating successfully. According to them, 5vpn.net has 15,000 paid clients; Privatix.com serves more than 50,000 customers a day, and TempMail.org is visited by more than 250,000 people a day.
In addition to IT professionals, the team also has PPC & Media Buyer Alexander Shishkin, Traffic Analyst Jaroslav Krimets and Quality Control Specialist Mykola Lysy. In total, Privatix consists of 12 members, 2 of whom are project consultants:
Michael Bereslavsky – is a specialist in sales of websites with high incomes and brokerage services. Has considerable experience in SEO, domain and internet marketing. Michael is an experienced internet entrepreneur and investor and owns Domain Magnate.
Andrey Tseitlin - Computer science engineer and system architect based in Israel. Has a scientific degree from the HIT Academy (Israel). CTO and a leading developer in successful Israeli companies.
Almost all participants have LinkedIn profiles. No negative information about the project team was discovered during our analysis. Thus, according to public sources, all members of Privatix have extensive experience in their professional fields. This allows confidence in the successful implementation of the project and, in the future, maintenance and development of the platform.
Development strategy and the Roadmap
After the ICO, the priority tasks for the team will be the listing of the PRIX token on at least three popular exchanges, opening offices in Ukraine, Israel and Russia, hiring administrative personnel and transferring to management, and canning or selling existing businesses.
During the fourth quarter of 2017, as well as the first and second quarters of 2018, the project co-owners are planning to develop a prototype of the Privatix network, and release an alpha version along with cross-platform agent software. At the initial stage some elements of the system will be centralized, and by the end of 2018, managers promise to open the project code to receive feedback from the community.
By the end of 2018, launch of a beta-release of the system is planned, which will be a fully working version. In parallel there will be development of other products based on the network, the release of which is scheduled for early 2019.
The final version of the Privatix network using elements of blockchain technology will be released by the middle of 2019. By this time, two more products will be created - Privatix.FAAS and Privatix.Monetize.
In 2020, subject to the achievement of the hard cap at the ICO, the decentralized CDN - the most complex product from the technical point of view - will be put into operation.
The description of the marketing strategy of the project after the ICO and the launch of the first working version is unfortunately missing. It will likely be added in the next version of the white paper, because according to the founders the document is still being processed. Nevertheless, it remains unclear who the target audience of the project is and what its characteristics and approximate numbers are.
As for the current advertising campaign, the number of project followers on various social networks is small. This is not surprising, since a large-scale advertising campaign has not yet been carried out - its launch is planned using funds raised during the pre-ICO. 90% of collected funds are allocated for this aspect.
The Pre-ICO for the project took place on September 14, 2017, which resulted in the attraction of about 1610 ETH. On the Bitcointalk Forum, the founders say that it lasted only 3 minutes, which suggests a high interest in Privatix from the community:
However, such a statement looks out of place, given that at the time of the start of the pre-ICO, tokens remained unutilized for a total of 13 ETH :
As a result, currently we cannot draw any conclusions about the popularity of the project among the community, as a full-fledged advertising campaign has not yet been conducted, and the pre-ICO was sold out, possibly because of the high proposed bonus of 86%.
The only source of project revenue after the ICO will be a commission of up to 1% of the transaction amount in PRIX in transactions for the purchase/sale of communication channels between network participants. Operations that do not relate to the purchase of Internet resources, for example, trade on exchanges and free exchange, will not be subject to a commission. Thus, revenues for the system will depend directly on the number of transactions, which in turn will strongly correlate with the number of Privatix participants.
In addition to this the white paper does not provide any information on the number of users the founders are counting on, what the potential price of services provided within the network is, and what funds are needed to maintain and develop the network after funds raised during the ICO run out.
The white paper claims the following: "We will revolutionize the VPN market and let people use VPN either for free because they will share their internet channel with other users, or for less than 5-10 dollars a year, 20 times cheaper than VPN services are now.” However, our question regarding the reasoning behind such figures remained unanswered.
In our opinion, the financial model of the company is not elaborated; therefore there is a possibility that either the 1% commission will be revised upwards, or that additional payments will be introduced.
Investment attractiveness of the token
PRIX tokens will only perform an infrastructural function – as the means of payment for the services provided within the network - so the only scenario in which their price would grow, would be a gradual increase in number of project users or the transactions they conduct.
Regarding long-term increases, Privatix has a moderate market potential, and in the event of competent project management and compliance with the terms of the roadmap, the value of the PRIX token may increase several times in coming years.
Regarding speculative operations, we believe that investors should not count on high bonuses, and the rationale for buying Privatix tokens is only if demand exceeds supply during the ICO.
Traditionally, investors buy the majority of tokens on the first day. Since a 40% discount on PRIX tokens will be available during the first 48 hours of the ICO, after the decrease in hype around the project most investors will be ready to part with them at that price. Therefore, if potential investors are not ready to invest more than 50,000 - 60,000 ETH in Privatix, the entire demand for PRIX tokens will be satisfied during the ICO, and there will be no-one to buy them on the secondary market.