The Big Airdrop via Facebook

It's been just over 4 days since POW (POWToken.com) started allocating tokens to anyone who logs in and claims a share with a Facebook account. Since then, over 18,000 users have claimed a share, meaning that the next couple thousand users who sign up will get over 500,000 POW each. How much value does this translate to? Let's look at some numbers.

How much is POW worth?

According to the website right now:

Next claimant will receive 550,358 POW 'lite', with a current value of $127.70.

This number is based on a few early, very low volume trades on Etherdelta, where the most recent trade as of this writing was made at a price of 0.000000750 ETH/POW. From this, we can derive an estimated projected market cap of around $50 million, including the total supply of the tokens that have not yet been claimed. If we include only what has has been claimed so far, it comes out to roughly half this. (i.e. Somewhere in the neighborhood of $25 million worth of POW has been claimed and allocated so far, assuming this market price doesn't change much, which is unlikely.)

Where are the tokens currently on the market coming from?

The tokens being allocated to Facebook users right now are called POW 'lite'. These tokens exist only as entries in the database on the POWToken.com website, associated with the Facebook accounts that claimed them. The interface that will allow users to convert their POW 'lite' into the POW ERC20 token on the Ethereum blockchain is scheduled for December 2017, according to the FAQ.

During the hours leading up to the opening on Oct 2-3, they also promised 10,000 POW each to users on Twitter who retweeted announcements promoting the launch. As of yet, very few of these users have been paid. A list of addresses with promised rewards was posted. So far, payments have been sent to only a tiny fraction of the users on that list. Also, the addresses of many of people who retweeted were missing from the list. (See this Twitter thread.)

Therefore, it's reasonable to conclude that virtually all the early POW sell offers that have been put on the market so far come from insiders involved with the project. Only when more POW starts to enter circulation will we see a real market begin to develop. If and when the retweeters get paid (somewhere near 15 million POW total for retweets, if my math in adding up the list entries is correct), they will likely play a big role in determining POW market value during the next couple months, until the billions of POW 'lite' tokens claimed via facebook are allowed to be redeemed for POW ERC20, and can then enter the crypto exchanges.

Can this operation be trusted?

Particularly during the early phases of the project, its success depends heavily on the degree to which the dev team can be trusted to follow through, as well as their basic honesty. During the first few hours of the launch, when the really big money was at stake, the website was virtually unreachable to most people trying to make claims. At best, this means that either (a) they didn't plan very well in allocating web servers and bandwidth capable of handling a surge of heavy traffic, and/or (b) DDOS attacks from hostile third parties prevented many users from reaching the site.

A third possibility, in the worst case, is that the devs could have throttled capacity to the rest of the world, while another private router could have let buddies of theirs jump in with ease to claim billions of tokens during the first hour. Do I believe this took place? Being somebody who wants to give people the benefit of the doubt, I certainly hope not. But often, especially when large amounts of money are at stake, people throughout history have been known to resort to far more unethical means. It would be difficult for anybody who wasn't privy to network activity where their website is hosted to prove or disprove. I don't want to make any unfounded accusations when a web server freezing up just as likely a result of massive traffic. All I'm saying is that there's no way for the rest of us to know for sure.

Will they keep their promises to the twitter users? I am among the ones who retweeted for the promised reward, yet the Ethereum wallet address I sent them has still not even been added to their published list of addresses for payouts, most of whom have still not been paid either. I am not the only one. See all the replies here? So far, it appears these users are just being ignored. The 10,000 POW for a retweet is a paltry amount compared to the millions of potential tokens people are being awarded via the Facebook claim. Even so, whether they keep their word promptly in little stuff like this can serve as an indicator of likelihood to keep other promises. I hope they're just slow to get payouts straightened out because staff are busy, and will make things right in the coming days. Until then, it leads me to suspect that they may be trying keep the market price artificially high by delaying release of tokens, effectively allowing a single party to control the prices of sell orders on the exchange.

So what's POW really worth, and why?

Assuming that all the aforementioned issues are just hiccups, typical of a project being developed by a small team in the early stages, and the devs ultimately make good on their promises, how much can a token that is just being given away for free in massive quantities to users on facebook really be worth?

The concept certainly has the potential to go viral. Who wouldn't be able to resist claiming a pile of free money, when all you have to do is login and click a couple of buttons, with no real risk except that it may or may not actually be worth the stated value by the time you are able to exchange it?

Here's how I see it playing out: According to the development plan, starting next week, friends on facebook will be able to transfer the tokens to one another. During this phase, there will probably be a lot of people tossing tokens around for trivial rewards, or even nothing at all, as a form of play, similar to the way Bitcoin was considered a curiosity when very early miners started to play with them, before they could be exchanged for fiat. Maybe someone will send a big pile of POW to a fb friend in exchange for ordering a pizza, someone in need of a ride might offer POW in lieu of gas money, that sort of thing.

When the gates open to convert POW 'lite' into POW ERC20, a decent percentage of users will probably rush to turn their POW into cash, so we could see quite a bit of dumping, pushing the market price down for a while. How far down? Well, anyone able to predict such things is probably already quite wealthy. How many investors will buy in, how much will they acquire, and will it be enough to offset the dumping? I would venture to guess that assuming the user base and mind share continues to grow, there will always be some investors willing to swoop in and grab a bargain, keeping the value of the token from going all the way to 0.

If and when the value stabilizes, optimistically, this could become a way for anyone on facebook to send their friends money without needing to mess with fiat or credit cards. There's a potentially huge market there. If it does catch on, as the devs hope, market cap could easily go into the billions, as we've see with other widely adopted cryptos. OTOH, if the user pool remains small, or most people who claim just try to cash out, not trading any with their facebook friends, then it could end up among the growing milieu of obscure blockchain tokens with a tiny market cap, and a small, cultish following of whale holders.

At this point, I am cautiously optimistic, and being one of the early claimers, I certainly hope it does live up to the hype! Even if this thing ends up a dud, I and other claimers will have lost nothing, except perhaps a little time and hope. As always, do your own research, come to your own conclusions, and enjoy the ride as this crypto roller coaster charges onward into.... whatever happens next!