ICO Review: Lightstreams ($PHT) [Neutral Outlook]

Lightstreams is a peer-to-peer network enabling commerce and content distribution via a blockchain. It aims to provide confidentiality to all network participants via permissions controls set by content creators, sellers, and buyers. Established companies such as Amazon, Spotify, and Netflix are their target centralized competitors. Talk about aiming high. Buying and selling goods and services will be a first use case for the Lightstreams platform. Businesses today are evaluating how blockchain will disrupt their operations or how it can harness the power of this new technology to further its agenda. Private blockchains have become the tool of choice over public blockchains for a variety of reasons including: privacy laws, permissions capabilities, and scalability.

The Lightstreams Test Network is already up and running. Developers and entrepreneurs can download the application and download a local copy of the blockchain today. Lightstreams is just starting to make the rounds in the influencer and marketing communities, but the team has been hard at work having a product semi-ready to ship. Rather than raising money with just a whitepaper - blood, sweat, and tears went into building the project prior to raising their public profile.

Token Metrics

• Ticker: PHT (Photon) - do not confuse this with the Photon token in the Cosmos Network
• Hard Cap: $20,000,000 USD
• Total Supply: 300,000,000 PHT
• Standard: ERC20
• Available for sale: 165,000,000 PHT (55%)
• Token price: $0.15 USD
• Previous capital raised: $300K USD in a seed round of angel investors

The team

• Michael Smolensky, CEO, experience at Goldman Sachs, Credit Suisse, and London Stock Exchange. Previous blockchain design experience: Open Mobility System for the Share & Charge, awards at the Citibank Mobile Challenge and the Consensus 2017 Hackathon.
• Lukas Lukac, Blockchain Engineer, fours year experience in software development at Trivago. Currently still works there while concurrently working on Lightstreams.
• Aleix Suau, Frontend Developer, less than 1.5 years as a frontend developer

Advisors

• John Bettiol , Head of Organizational Solutions at Trivago.
• George Samman,  Co-authored “Advances in Blockchain Privacy & Confidentiality”
• Andrew Mesanto, Entrepreneur, Board member of Cornerstone Capital Group
• Dimitri De Jonghe, Previously a Director at BlockchainDB and Co-founder of Ocean Protocol

Decentralized Authorization Protocol

Lightstreams plans to enable smart contract owners to have the flexibility in granting or revoking permissions to end users or other contracts. Their approach differs from other permission controlled blockchain architectures in that it will be peer-to-peer. Today, other solutions use a centralized database to record what permissions on what smart contracts to which users have access. By removing state information from the smart contract and storing it with in a distributed and secure fashion, Lightstreams removes the potential for a centralized database to serve as a point of failure.

File Storage and Permissions

IPFS will serve as the underlying distributed storage solution for Lightstreams. Other protocols that use IPFS are Steem (for photos and videos), Filecoin, and EOS. Lightstreams plans to modify IPFS with an additional layer on top of it. This new layer will focus on permission to the requested data. Combining IPFS and permissions is an attempt to replicate what web and mobile applications use today. Live applications over mobile and web require backend systems with access control, mutable data, and the ability to make certain data confidential. If successful, Lightstream would put together an infrastructure stack somewhat similar to what developers are comfortable with today.

Verdict

I agree the use case of distributed storage with privacy/permissions, low latency, and regulatory compliance is in need. But I keep going back to the question of whether the Lightstreams team is able to take on early movers such as Filecoin. As an incumbent, Filecoin is well funded and positioned to add features such as permissions into their core offering. For Lightstreams to succeed, I foresee the need to focus on niche use cases. Essentially they should double down on particular areas along several axes: privacy and low latency (fast!). In addition to Filecoin, there are other early movers such as Siacoin, SAFE, and Swarm.

On a macro level, IPFS and the entire distributed storage space is contingent upon recruiting storage capacity from unused hardware. Idle servers and computers are finite, thus presenting a likely non-scalable supply. Decentralized storage projects (Storj, Siacoin, Filecoin) that are first to solve the incentive problem or any of the other featured prized attributes (privacy, low-latency) may capture a slight to super majority of market share. The remaining protocols would be fighting for a smaller share of the overall market. Lightstream is banking on privacy and permissions as a key identifiable feature for developers of decntralized applications (dApps).

In situations of excess demand for storage, prices across these networks may rapidly increase. Arbitrage opportunists may find, for a short time, price differences between these networks and indirectly serve to equalize prices along these networks. While good for token investors, it presents a potentially expensive solution for application developers.

The Lightstreams team looks and feels light on the relevant experience. I see three talented developers early in their careers. When I compare them side by side with the other players in the space I would have loved to see a team member with deep experience already working with IPFS or distributed storage. With the likely capital from their ICO I am sure they will staff their bench.

Overall, Lightstreams does a nice job of laying where they differentiate against their peers (Filecoin, Swarm). Knowing where you stand on the battlefield will help see where you can take on your rivals. With the experienced and well advised teams behind Filecoin and Swarm, I see Lightstreams competing against well funded peers in the distributed storage and blockchain space. For investors who do not have access to Filecoin and Swarm, Lightstreams might be a nice hedge alongside Siacoin.

Disclaimer: I do not own any Siacoin, Lightstreams, Filecoin, or Swarm. These opinions are my own.

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