Skeptics flay Kodak’s cryptocurrency
Posted on Monday, 12 February 2018. Posted in Industry News . Written by Naresh Khanna
Kodak announced an initial cryptocurrency coin offering (ICO) on 9 January 2108, in an effort to apply blockchain technology to solve copyright issues faced by photographers. The news was followed by a considerable jump in the company’s stock, and keen interest from Kodak fans and industry insiders. Some even went out of their way to say that the move was a breakthrough for photographers' copyrights and could lead to a blockchain solution for other forms of content, including text.
The kodakone site describes KodakOne as “a revolutionary new image rights management and protection platform secured in the blockchain that seamlessly registers, manages and monetizes creative assets for the photographic community. . . . Our mission is to create a sustainable, token-based community of the world’s photographic supply chain.”
However, the initial offering for the new cryptocurrency called KodakCoin, which was planned for 31 January 2018, has been delayed. The KodakCoin site implies that the delay is because of the verification process of more than 40,000 investors, who expressed interest in the initial coin offering announced in the first week of January that was expected to raise as much as US$ 20 million.
Considerable flak has been building up with both the media and financial experts questioning the entire premise of the KodakCoin. The New York Times in an article headlined ‘Kodak’s Dubious Cryptocurrency Gamble,’ published on 30 January 2018, described Kodak’s partners in the cryptocurrency project as “a paparazzi photo agency, a penny-stock promoter and a company offering what has been called a ‘magic money making machine.’”
A statement on the site dated 5 February 2018 says, “In light of the increased worldwide interest in ICOs, we are taking necessary measures to ensure that the KodakCoin ICO complies with all application securities and other laws. As a result, the first step in the process is to ensure that all investors satisfy the investor qualification requirements of the applicable jurisdictions in which offers and sales will be made. This phase will last for a few weeks, after which we intend to sell KodakCoins to eligible investors.”
Hedge fund manager Kerrisdale Capital, which holds a short position on Kodak stock, issued a report on 7 February 2108 which critically questions KodakCoin and called it, “a last-ditch stock promotion gambit for a company hurtling towards bankruptcy.” The report says, “Kodak's cryptocurrency ploy hits all the major buzzwords – blockchain, smart contracts, distributed ledger, ICO, etc. But look through the PR spin, examine the true merits of using blockchain for the proposed service, and it’s obvious the project is poorly thought out and will never work as promoted.”
Kerrisdale, which is itself also planning to enter the blockchain market, questioned the return on investment in KodakCoin. “Kodak lacks the technological capacity and the funding to realize its claimed KodakCoin technology and thus transact and store images over a blockchain,” it said adding that Kodak won’t be able to compete with other blockchain startups, because “it’s staring at the possibility of default and a debt restructuring in the next 12 to 18 months.”