You may have heard of the controversy surrounding Credits, the company that raised $2o million from an ICO promising that it would launch a distributed ledger that would effectively dwarf the accomplishments of blockchain networks such as Ethereum.
A deeper research into the activities of Credits shows that the project is creating a buzz that does not reflect on its accomplishment, which pales to insignificance when compared to its promises.
Interestingly, most ICO review sites have given Credits pass mark raising questions on the criteria by which these sites grade initial coin offering project knowing that these ratings sometimes influence investor decisions.
A Cryptoinfowatch review shows that most of the popular review sites rated Credits 3-star or higher even though our investigation shows that this is one project that has promised much but delivered nothing.
The Credits Promises
Credits like many new dApp-building platforms consider Ethereum bashing the channel through which they get needed attention for their project.
Ethereum, the main dApp-building platform has scalability issues even though the network’s developers are working on improving this setback.
The Ethereum network which processes 15 to 20 transaction per second is grossly inadequate for massive use and adoption considering that during high traffic the network clog could limit transaction confirmation to hours or even days. The need for higher transaction and confirmation speed can be seen by the fact that VISA has capacity of 24,000 transactions per second.
Credits launched its ICO and raised $20 million which was its hardcap based on the promise that it was building a platform that would dwarf Etherem. The Credits distributed ledger according to the project platform would have the capacity to process one million transactions per second, an ambitious plan that not even Ripple, the more centralized cross-border platform has not been able to accomplish.
Low Transaction Fees
The dream of every user of financial services is to conduct fast transaction while paying low fees. Credit knew this and promised investors and the crypto community that its transaction fees would be low in the $0.001 range. Talk about being as low as they come.
With a claimed confirmation time of 0.01 second to less than 3 seconds, all eyes were on the project comparing it to other dApp platforms that were launched to challenge Ethereum such as Cardano, EOS and Tron.
The Credits Reality
Credits promised it would launch its mainnet by Q3 of 2018 but in reality if the mainnet would be assessed based on its beta version, it leaves a lot to be desired.
The Credits code which was supposed to be open source was not developed on GitHub as is the practice of most blockchain projects, however the version of the code seen by a developer was nothing to write home about. The analysis of the code audits said:
“This from a company that touts one million transactions per second, is worrying, because if you cannot make an alpha that conforms to the security standard of every app that uses encryption, then how can we expect you to pull through with your even bigger promise?”
When the criticism of the project code became deafening, the team claimed that the alpha version was developed in a hurry. The security flaws in the code is such that did not pass some rudimentary security measures that programmers believe that funds place in the Credits wallet could be stolen if hacker have information such as the time of creation of the account.
Other Red Flags
Credits operates from out of Singapore, but most of the team are Russians who seem to be mainly marketers. In other words, the Credits team comprises little of actual developers and more of members that are keen at spreading news about the project.
There are allegations on Bitcointalk that the Credits project is hyped with bots bumping the announcement thread to create impression that it is a popular project.
This may have been instrumental to the success of the ICO since many investors are motivated by fear of missing out even if they do not take time to investigate on the authenticity of what they are investing in.
A look at some of the partnerships that Credits claimed it entered into shows that the team is not reputable. For instance, it announced partnership with Messenger Bank claiming:
“Messenger Bank, one of the biggest players in mobile blockchain banking, with an advantage of unprecedented transaction speed, offers currency conversion, transfers and a full range of traditional banking services with appropriate licensing. They have a proven track record of being a reliable and stable online bank. By 2020, their customer base is expected to grow by more than 200 million new users.”
But an investigation of the ‘bank’ shows that the site is an unsecure one lacking basic SSL. It is a privacy coin marketing site that doesn’t seem to have any reputation to protect. Other partnerships are mainly with other blockchain projects that have little relevance with the financial industry.
Even though Credits is leveraging every possible PR to hang onto reputable companies these days, it is yet to prove that it is a worthwhile project by living up to its promises. The latest claim to reliability is the IBM statement on its site that made reference to the project.
However, the reference is with respect to Credits hosting its project server on the IBM cloud which the project interprets as a partnership. Nevertheless, the onus rests on the Credits team to prove that they have the capability to launch a network that can process a million transactions per second.
Presently, their atrocious code rather points to the suspicion that they are amateur coders or even a team of scammers and not a revolutionary team that could make the Lightning Network unnecessary.
I advise investors to be wary of unproven ICO teams. Better still, invest in reliable sites such as this.