articleStartImage

As Blockchain’s implementation continues to be the hot topic among Fintech enthusiasts, others are finding it to be just as useful in industries beyond finance. This includes healthcare, where the Blockchain technology can work wonders in improving patient care.

Patientory is among the first startups to recognize how to bring Blockchain together with healthcare. To fund its efforts to build a platform for the venture, it held an ICO in early 2017.

It seemed to be a success, in that about $7 million was raised over the course of three days. However, less than a month after the sale, a security issue arose that should serve as a warning to others putting together these popular means to raise money.

We’ve reviewed Patientory’s initials coin offering (ICO) to find out what went wrong, and what went right for the deal. We honed in on the security issue to understand the details of the happening that could happen to any company planning an ICO.

On top of that, the company responded horribly to criticism it received, which many investors said was off putting and gave them enough reason to steer clear of it as an investment.

Read on to learn the gist of our findings.

Patientory’s beginnings

Before we get into the details of Patientory’s ICO, let’s discuss how the company came to be.

Like most startups, Patientory’s beginnings stem from the concern from someone about a particular issue. Patientory’s founder set out to develop a platform that can help facilitate the use of Blockchain in some of the most crucial operations of the healthcare industry – the handling of patient information.  It is working on a platform to securely store and manage health information in real time.

Patientory’s founder and CEO Chrissa McFarlane saw the challenges of managing patient data while she worked at a telemedicine company that handled such matters.

"They would fax it and it would take weeks to send it to us. In starting Patientory, I was focused on creating a more patient-centric solution that would empower patients to use their information in their benefit in order to live a more quality lifestyle. McFarlane said.

Billing and insurance related costs are expected to reach $315 billion in 2018. To meet the demand, medical offices spend almost four hours a week interacting with payers. Patientory wants to address this by reducing costs and improve efficiencies.

It sees the offerings of Blockchain causing it to play an increasingly significant role in healthcare, especially when it comes to information technology.

In its white paper for its ICO, Patientory said:

“It is vitally important that healthcare organizations understand the core of blockchain technology to ensure they are ready for the changes the technology entails.”

Seeing the need for a system to facilitate the handling of healthcare data, McFarlane began laying the foundation for Patientory. Her efforts came around the same time as the advantages of Blockchain became increasingly more prevalent.

Patients and cryptos

In structuring its ICO, Patientory chose to name the coin it offered PTOY.

Buyers can acquire it through the company’s native app, cryptocurrency market, and most interesting of all – other patients, physicians or insurers. The tokens can be bought with Ether. The platform is being built so that users can buy the tokens with Ether.

For those who do not have Ether, Patientory has established an interface that is integrated with third party trading solutions, such as Shapeshift and Coinbase.

Patientory’s founding team received 10% of the coins, and they can’t sell them for 12 months. An additional 20% of the coins was allocated to the Patientory Foundation fund to be used for research and development regarding blockchain technology for healthcare use cases.

Security breach?

Before investors in Patientory’s ICO had even had a chance to warm to the idea of owning coins of a company in such a relevant space, they received a worrisome note from the company. Less than a month after its ICO, Patientory notified coin holders of some issues that were found following a security review.

When Patientory’s token review audit was held, it was found that the company needed to implement an attack mitigation code on the token contract. The company stressed that the mitigation code was “preventative in nature.” Also, no issues were found with the token itself, according to the company.

Unfortunately, this resulted in a bug that rendered tokens contained in multi-sig wallets non-transferable, according to Patientory.

“Our crowdsale partner has begun work with the audit team on a fix (creating an upgraded token). Token holders will need to complete a simple upgrade process, and we will send out instructions at a future date. All token holders will be asked to complete the upgrade, and multi-sig users will be able to transfer PTOY to/from their wallet.” - Patientory

Patientory downplayed any notion that the situation would significantly affect its token holders. It did acknowledge that there would be a token delay, and that investors would have to complete an upgrade process. The tokens were available by the end of June. If you participated in the crowdsale bounty campaign, you will not receive your PTOY until June 26.

Social media beat down

Observers took to Reddit to point out concerns about Patientory’s ICOs. In response, Patientory responded on its website in a manner that was more alarming than the red flags raised about it and the ICO.

I won’t get into all the concerns raised, but I will point out some that were disconcerting to most users. One of them related to the company’s team, and the members not having expertise in healthcare.

Then there is the matter of how the company will turn its ambitious idea into a viable product.

A questioner asked: “Do you have ANY kind of plan for how you will actually get healthcare providers to use your platform?”

When Patientory responded to the allegations being lobbed against it on Reddit, it left a lot to be desired. Manners, couth and professionalism don’t seem to be strong suits for Patientory, nor are PR or investor relations skills.

Each response seeped with anger, and were quite snarky. Consider this one:

Poster: “Vague ideas, seemingly stolen IP”

Patientory: “There you go again. Another thoroughly baseless accusation without merit and without an iota of truth. You state that you’re “an expert in the field,” yet admit you can’t understand the white paper (which has been downloaded hundreds of times in the last few weeks alone). This is another classic tactic from “How to be a Troll 101” – throw out accusations of plagiarism to discredit work you can’t understand.”

The snarky, empty responses elicited sharp criticism from readers, and what’s worse, potential investors. Those who had reservations about the legitimacy of the company, or whether it was worth their investment dollars, were put off by the tone and lack of quality responses to questions.

Conclusion

Patientory’s ICO may have went well, with it raising $7 million in three days. That subsequent security hiccup may not be a red flag, but it is something to keep in mind. Startups are bound to have problems as they handle the responsibilities of bringing their products on line. Many are not well-versed in the business skills needed in dealing with people, customers, and investors.

Patientory made it crystal clear in its Reddit responses that it needs not only an experienced public relations team, but also a strong investor relations team. Being criticized by investors comes with the turf. Patientory should know that. Here are responses to how it handled the criticism:

“Lol, funnily enough their response is what made me decide to stay away from this ICO, not OPs comments.

They decided to not respond on Reddit, and instead posted this reply on their own website with no context... What? Now anyone who visits their site is going to see a rant that was directed at one person. And the community is deprived of an open, constructive, conversation.

This whole thing reads as some hastily written angry reply. It's basically a trolling attempt on [OP]: they made ad homenim attacks and avoided answering the questions. Their response to "teams" especially irks me. Certainly not a response I would expect from a legitimate Healthcare company.”

And then there is this one:

"Bottom line: we’ve bent over backward to try and be fair to everyone. Shame on us, I guess, for trying to please everyone"

Is not a professional response. I'm not saying this to knock you down, I'm just saying that you need to work on your PR. This is coming from literally a nobody, but a nobody that see's that this little feud you have is scaring away potential investors. Yes, its clear someone may be trying to talk trash, but by responding to his comments in this way you bring yourself down.

Just friendly advice. I have a hard time imagining the real leaders of government and industry responding to criticism this way.