A report from Cryptofinancing 2017.
A few years stand out in recent memory. In 1999 it was the dot-com bubble, in 2007 the financial crash. I have no doubt that 2017 will stand out as the year of the initial coin offering. But there’s something different this time. There’s an underlying ideology, driven by millennials who no longer take the world at face value.
Initial coin offering is the name given to the issuance of tokens as part of a new blockchain-based project. Typically, the token will represent value in this new project, for instance a way to reward people using the idea, or a way to access the project and gain value. In some ways it is similar to an IPO – the offering of shares on a regulated exchange – but the blockchain community is at pains to tell you it’s completely different.
And different it is. For starters, an ICO is entirely unregulated. Caveat emptor is the name of the game. Investors could quite easily lose all their money – some have. However, there are other important differences, a worthy ICO wants the participants to be part of a new community and to have input into the project. The best ICOs want their decentralised autonomous ideas to change the world for the better.
Bitcoin is gold
When people think of cryptocurrency and blockchain, if indeed they have heard about it at all, many think of Bitcoin. But as I was told by a young CEO undertaking his own ICO, “Bitcoin is gold.” What he means is that compared to other cryptocurrencies, Bitcoin is stable and safe. Of course. all things are relative, Bitcoin’s price doubled in the first six months of 2017.
It’s the ICOs that have fuelled this boom in 2017. It’s difficult to say who is fuelling it exactly, Jane Zhang of Shellpay, a company that aims to open up the Chinese market to blockchain start-ups, said it was “Chinese grandmothers”, matriarchs of the family who through rumours and gossip have invested in the currency. Indeed, it is said that the Chinese speculators along with South Koreans and Japanese are one of the main reasons for the rise in price. While the currency is rising in price, these investors will be happy, and quite reasonably wish to diversify into other cryptocurrency-based investments such as ICOs. After all, if you cash out into so-called fiat currencies (pounds, Euros and dollars to the man on the street) you’ll miss the next boom, right?
So, Asian speculators may have their part in the boom, but it is millennials spread across the world that have the vision. At Cryptofinancing 2017, a conference focussing on initial coin offerings in London, you were hard-pressed to find a Brit in the audience. Attendees hailed from across the globe – South Korea to Russia to the United States. Most were on a journey with nothing more than a fantastic idea and a whitepaper, which after all is supposedly all you need to start an ICO (I would argue it takes a little more than that..). Some had dollar signs in their eyes, others were looking for something more.. ethereal. There is reason behind the naming of the second biggest cryptocurrency, Ethereum.
What next for ICOs?
It was telling that some of the speakers at Cryptofinancing were at pains to say the ICO boom is not a bubble. A sure sign of being in a bubble is the number of people who says it’s definitely not a bubble. Whether the bubble burst or solidifies, it is a fascinating new world where empowered millennials and blockchain enthusiasts can raise serious money to develop their idea. It is crowdsourcing turbo-charged, and time will tell what impact these ideas will have on the wider world.
At Bright Bee we experts in fintech, get in touch if you have a blockchain idea you want to tell the world about.