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If you follow the cryptocurrency industry, you’ve probably heard of a project called Filecoin. In 2017, Filecoin’s parent company raised $205 million to build a new type of digital storage network. The network would use tokens and blockchain technology to store data on millions of computers around the world.

Three years later, Filecoin does not have a product, but it does have a legal headache. Its venture capital investors are accusing the project’s leaders of selling off digital tokens—the blockchain version of shares—that should belong to them. The dispute is reportedly in mediation, while a spokesperson for Filecoin tells Fortune that “we do not comment on our private discussions with specific shareholders.”

Filecoin is hardly the only blockchain project having problems. In the go-go days of 2017 and early 2018, dozens of crypto firms raised absurd amounts of money in “initial coin offerings” that sold digital tokens to all comers via the Internet. In theory, consumers would one day use the tokens to purchase services on the blockchain projects—while the promise of future value made the tokens a hot target for speculators.

In reality, it’s been almost all speculation. Blockchain companies like Bancor and Paragon raised hundreds of millions to transform industries like market-making and cannabis, but have yet to produce anything of value, and the prices of their tokens have collapsed. If these projects had been traditional Silicon Valley startups, their crackups would have produced howls of outrage from investors and blaring headlines in the business press.

The case of Filecoin is especially troubling since, unlike many of the fly-by-night token projects, it is led by a respected team and has the support of A-list venture capitalists. It’s too soon to count the company out—Filecoin could still surprise us and disrupt Microsoft and Amazon Web Services—but the more time elapses without a viable product, the less likely it is that Filecoin will become anything more than a cautionary tale.

All of this raises the question of what went wrong with these blockchain companies. After all, it was just three years ago that a viral essay predicted that the sale of tokens would democratize finance and disrupt the venture capital firms of Silicon Valley. Today, VC firms are still firmly in control, while most people see token investments as akin to Venezuelan bonds or Florida swamp land.

One reason for this is that new technologies like blockchain are hard, and that—like driverless cars or virtual reality—there will be a lot of failures along the way. It took years for the Internet economy to take off, and it’s not realistic to expect projects like Filecoin, which involve an immense amount of work and novel infrastructure, to succeed overnight.

But there is another reason to be skeptical, and that is the lack of incentive that blockchain companies have to succeed. In the case of a traditional startup, founders receive a small pot of money and scramble ferociously to build a product and raise more cash to keep going. Meanwhile, a board of experienced investors guides their progress—and can pull the plug if that progress is too slow.

Contrast that with founders who conduct an initial coin offering. Suddenly, these founders are awash in gobs of money with few strings attached, leaving them under no particular pressure to follow through on their plans. Even those who launch blockchain companies with the best intentions (they are likely in the minority) will struggle to stay motivated. Why toil over blockchain code all day when you can travel the world enjoying your millions?

This does not mean that every blockchain company that sold tokens is doomed. There are bright spots in the token economy, including Tezos, which raised over $200 million in 2017 and, despite early controversies, has built a popular network for smart contracts. Meanwhile, it’s not too late for Filecoin to turn it around and dazzle the world with a product—but it had better get going soon.

Jeff John Roberts

@jeffjohnroberts

jeff.roberts@fortune.com

DECENTRALIZED NEWS

Credits

American Express acquires fintech lender Kabbage ... China is expanding its digital yuan testing ... One million Koreans now have blockchain-backed driver's licenses ... Crypto exchange Binance helped police take down criminal money launderers ... Blockchain investor Pantera Capital raises an additional $165m ... The US Postal Service files a patent for voting by phone (and blockchain) ... Wirecutter recommends Apple or Google payment apps for security.

Debits

Apple pulled Fortnite from the App Store over payment rules ... U.S. sanctions make it hard for Hong Kong's leader to use her credit card ... Vitalik Buterin says Ethereum's upgrade "much harder than we expected" ... Small-cap tech stocks are beating gold soundly ... $1 million in crypto seized from ISIS-backed scam sites ... Experimental YAMS DeFi system unwinds (but most aren't too upset) ... PopID launches facial-recognition based payments ... Revenue growth at Revolut comes with bigger losses.

FOMO NO MO'

Imagine being Justin Sun and suddenly finding out that your 63 million [Steem] tokens, worth $13 million at the time, had been frozen.

That’s what happened on February 23. The Steem community had quietly passed an “upgrade” that not only stopped Sun from voting with his coins, it prevented him from accessing them at all.

Just one high-drama moment from a convoluted crypto tale full of them: the early 2020 takeover of the Steem blockchain by Tron CEO and notorious huckster Justin Sun, as recounted in all its glory by Decrypt's Tim Copeland. Sun's lockout came after Steem users questioned the terms of a Tron buyout of the platform, and triggered a cascade of conflict that played out through Steem's on-chain governance system. Along the way, Sun cut deals with exchanges to use their Steem holdings as his own voting stake, and Steem's grassroots pulled together to (try to) vote him out of power.

The drama ended in a way unique to blockchain, too: the faction of founders and users that Sun had attempted to usurp simply cloned the Steem blockchain and moved to the new infrastructure, called Hive. Sun subsequently blocked mentions of Hive on the Steem social network, where the Steem token acts as a user incentive. Then he went farther, backing a blockchain upgrade that took tokens away from holders who opposed him. But the defectors seem to have successfully taken back the most valuable part of Steem: the community. Hive's market value remains higher than Steem's today.

BUBBLE-O-METER

$100 billion for every person on Earth

The amount of value NASA estimates could be created by mining the asteroids between Mars and Jupiter. The Winklevoss Twins this week transmuted that notion into a warning for Dave Portnoy (a.k.a. Davey Day Trader): Elon Musk is plotting to debase gold through space-mining, making Bitcoin a better inflation hedge.

Remember, folks: Gemini is the crypto exchange for grown-ups.