Civil’s much-touted token sale is over—and it’s a flop. TokenFoundry shows that the saving-journalism-with-blockchain project has raised just $1.45 million, well short of the sale’s $8 million minimum target, and very, very short of the $24 million “hard cap” for the sale. And here’s the kicker—Civil has confirmed that $1.1 million of the tokens sold so far went to ConsenSys, already Civil’s main backer, meaning the real public raise was more like $350,000.
Huge “initial coin offerings” like Tezos and EOS grab headlines, but there have also been plenty of failed efforts along the way. Civil’s failure is particularly important, though, because it was at once so high profile, and so high concept. Civil is partly funded by Joe Lubin’s ConsenSys conglomerate, and where most ICOs might have to settle for a sponsored post on CoinTelegraph to get the word out, Civil’s launch was covered by the New York Times and the Wall Street Journal.
Civil’s mission, to provide new mechanisms to both fund journalism and make information more trustworthy, couldn’t be more timely. Its broad approach, building a decentralized platform regulated through users playing a sort of competitive fact-checking game, is fundamentally in line with a widely-shared vision of blockchain-based services.
So why, despite all this, was Civil’s sale such a disaster? Here are a few major reasons, with links to more in-depth explorations of each one.
Nobody Understands Civil
Civil has unquestionably failed, despite scads of media attention, to succinctly convey what it’s trying to do. That might be because it’s trying to do ALL OF THE THINGS—a micropayments system, a crowdsourced fact-checking mechanism, a system of independent “newsrooms” funded by a foundation—instead of keeping its operation simple. Or maybe it’s an actual failure of communication: “I don’t understand Civil” has been a meme for months, even among the crypto faithful, and the company has failed to stop that impression from spreading.
You Couldn’t Even Buy the Hopium They Were Selling
Even if you made the effort to (try to) understand Civil, the actual token-buying process was, at least initially, just as convoluted as their proposed operating model. Last month, a writer for Nieman Lab found that it took 44 separate steps to buy CVL tokens through the sale. Even Civil’s CEO has described joining the sale as “challenging.” The hosts of ZigZag, a podcast chronicling the Civil experiment (as well as a Civil newsroom itself), amplified many listener complaints about the process, helping push Civil to implement a simpler process. But that seems to have come only after a lot of would-be buyers had been scared off.
Legitimacy Is a Contrary Indicator in Crypto
Of course, the process of buying into any ICO is already complicated, usually requiring an Ether wallet and various exchange accounts. Very early adopters, including straight-up speculators, have those things set up, making the process simpler. But Civil was specifically targeting newcomers and would-be “retail users” of its token, and added a variety of quizzes and legal compliance measures to discourage speculators from piling on. In retrospect, that looks like a serious mistake, and the sale’s failure sends a bleak message: Blockchain funding is still almost entirely derived from get-rich-quick schemers, not by end users.
Crypto Economics Won’t Save Journalism
Russian hacking, the proliferation of fake news on social media, and the ongoing collapse of magazine and newspaper revenue have made it clear that there are serious problems with the news ecosystem. Civil’s ambitions to fix that are noble, and its tokenomic approach matches the broader ethos of blockchain development. But some feel it’s just a different flavor of misguided techno-utopianism.
The Wall Street Journal recently cited concerns about the CVL token’s specific usefulness within the Civil system. More fundamentally, as FT Alphaville put it, Civil is trying to “throw a set of rules at something that is inherently subjective.” Veteran crypto reporter Laura Shin commented on an episode of ZigZag that many Americans don’t seem to want their news to be the truth—they just want their own biases confirmed. That, she opined, could lead to highly politicized battles for control on the platform, instead of a community collaboration aimed at higher ideals.
The lessons here are hardly clear, especially as we try to separate where Civil specifically went wrong from larger issues in the crypto ecosystem in its current state. And the likely impacts are equally fuzzy: Will this high-profile failure be a big enough deal to scuttle upcoming token sales, or other pushes for mass adoption?
The good news is that the failed sale won’t stop Civil’s efforts. The money from the sale was intended to go to the Civil Foundation, an allied organization that would have made grants to newsrooms. But at least two participating media outlets, ZigZag and the Colorado Sun, have already stated that they’ll be able to continue to operate even if the token sale didn’t succeed. In a blog post on October 10th, Civil CEO Mathew Iles wrote that the company would “launch our token and our initial publishing and governance platform” within days, apparently regardless of the sale’s outcome.
Civil, in a statement to Breaker, described the results as “an incredibly disappointing — though unsurprising — outcome for us,” but also said they will be launching a new token sale, with “much simpler terms,” within a matter of weeks. Civil also confirms that existing funding for Newsrooms will not be affected by this stumbling block.
Support staff for Civil, meanwhile, are telling pledged purchasers to expect updates within 24 hours about how token contributions will be returned, and “how token buyers can continue to support Civil.”
Edit: Updated 2:20 pm, October 16, to reflect new information from Civil.