On a recent episode of The Crypto Show, Dmitry “Rassah” Murashchik, who now describes himself as a volunteer for bitcoin wallet provider Mycelium after his contract ended on April 1, updated participants in the Mycelium token crowdsale about the financial status of their investment.
In an interview with co-hosts Chris Neandrathal and Danny Somthin, Murashchik addressed investor disappointment with Mycelium, explained how the wallet can generate revenue, and reiterated his belief that Mycelium can succeed.
Disappointment from Mycelium ICO Investors
Reports have surfaced about dissatisfaction among investors who took part in Mycelium’s token sale last year, and Murashchik responded to those concerns during the interview.
Murashchik suggested that some token purchasers expected to be able to trade their Mycelium tokens on exchanges shortly after the crowdsale. “I’m sure some of them were expecting that these tokens were like altcoins that you can just trade on the market,” he said.
He explained why exchanges were reluctant to list the token. First, Mycelium issued the token using the Colu colored coins protocol, which many exchanges do not support. Exchanges were hesitant to implement that protocol because they anticipated low trading volume for the token. Second, many exchanges avoid listing tokens that represent legal stakes in a company because that can introduce regulatory complications.
Murashchik admitted he, too, was disappointed by elements of how the token sale and its aftermath were handled. “There were, honestly, some things I was told would happen, which I told people would happen, which did not happen,” he said. “I’m pretty pissed about that.”
As an example, he said quarterly financial reports that investors were promised never appeared. It later emerged that a significant portion of funds raised during the crowdsale was directed toward legal costs associated with the sale.
Murashchik also pointed out that some investors misunderstood what they were buying during the crowdsale. “There was some [confusion],” he said. “They were hoping they would be buying the whole company, and thought it was unfair they were only buying the wallet.”
He explained that Mycelium offered only the wallet in the crowdsale because the company’s other projects were still experimental and not ready to reliably generate revenue. “We sold only the thing that we were fairly certain was actually going to start making money, which it’s actually starting to do now,” Murashchik said.
Murashchik also discussed development delays that have frustrated some investors. He had expected to hire more developers and move faster, with features ready by December or January, but funding fell short and coding encountered unexpected obstacles. “It’s not that we’re quitting or disappearing; it’s that, unfortunately, it’s taking a very long time,” he added.
Focusing on Generating Revenue from the Wallet
On monetization, Murashchik said Mycelium plans to integrate third-party plugins, a model similar wallet providers like Breadwallet have discussed. He described Mycelium as an “App Store of cryptocurrency,” where the wallet handles private key storage and third parties can plug in to offer services and products.
“If you’ve been using Mycelium, you’ve probably seen — there’s an exchange, we added support for buying [bitcoin] through credit cards, we just partnered with Purse.io, and we get funds from Trezor every time you buy a Trezor through our [wallet],” Murashchik explained.
These plugin partnerships are already generating revenue that nearly covers the salary for one developer; Mycelium currently has three or four developers. Regarding how token investors might benefit, Murashchik said the company must first become profitable. If the company later chose to become a public security and distribute dividends, investors could potentially receive returns. “But the idea is that as the company grows, the value of your stake would actually grow as well,” he said.
For now, Mycelium’s priorities are transitioning the wallet to an SPV (Simplified Payment Verification) model and continuing to monetize the product to fund development.
Rassah Still Believes in Mycelium
Despite the controversy surrounding the token sale, Murashchik said revenue and user numbers are growing and expressed continued confidence in the company.
“I don’t think there’s malicious stuff going on with the company,” he said. “At worst, it’s differences in priorities [between the CEO and the backend developers].”
Murashchik noted that the CEO is currently injecting personal funds to keep the company operating. If that funding were to stop, he believes developers would likely continue supporting the wallet on a part-time, open-source basis similar to projects like Electrum.
“I don’t know how much money [the CEO] has, but he’s still pumping it in,” Murashchik said, reaffirming his belief that Mycelium can continue to move forward as it builds revenue streams and develops its product.