These are the show notes for the Unchained podcast, available on Google Play, iTunes, iHeartRadio, Stitcher or TuneIn Radio, and sponsored by OnRamp. Also, listeners, please help me make the podcast better by taking my survey.
You’ve probably heard that term “initial coin offering” but don’t quite fully understand it. Even the people holding ICOs or buying tokens in them may not fully grasp what’s going on either.
A few things we can establish: An ICO is what you get if bitcoin and Kickstarter had a baby — a crowdsale of a new crypto asset (with a cryptocurrency like bitcoin being one type of crypto asset) that powers some kind of peer-to-peer blockchain network. They enable new business models. They are making a lot of money for the developers and entrepreneurs who are launching them. And we’re not really sure how legal they are. But there is a lot of speculative activity, irrational exuberance and activity we would call illegal if this were something that was regulated by the SEC — and so far they’ve kept mum about the subject.
But clearly, something is afoot, and that’s what prompted William Mougayar, general partner at early stage fund Virtual Capital Ventures and author of The Business Blockchain, to launch Token Summit, a conference next week where the leaders of this cutting-edge industry will discuss the trend.
These are the show notes for the Unchained podcast, available on Google Play, iTunes, iHeartRadio, Stitcher or TuneIn Radio, and sponsored by OnRamp. Also, listeners, please help me make the podcast better by taking my survey.
You’ve probably heard that term “initial coin offering” but don’t quite fully understand it. Even the people holding ICOs or buying tokens in them may not fully grasp what’s going on either.
A few things we can establish: An ICO is what you get if bitcoin and Kickstarter had a baby — a crowdsale of a new crypto asset (with a cryptocurrency like bitcoin being one type of crypto asset) that powers some kind of peer-to-peer blockchain network. They enable new business models. They are making a lot of money for the developers and entrepreneurs who are launching them. And we’re not really sure how legal they are. But there is a lot of speculative activity, irrational exuberance and activity we would call illegal if this were something that was regulated by the SEC — and so far they’ve kept mum about the subject.
But clearly, something is afoot, and that’s what prompted William Mougayar, general partner at early stage fund Virtual Capital Ventures and author of The Business Blockchain, to launch Token Summit, a conference next week where the leaders of this cutting-edge industry will discuss the trend.
“I’m not excited by new tokens per se but I’m excited when I hear of a new business model that is enabled by the token or cryptocurrency,” says Mougayar in the latest episode of my podcast, Unchained (Google Play, iTunes, iHeartRadio, Stitcher or TuneIn Radio). “I’m more excited by how a given token, which is a kind of currency, is going to enable us users — society, government, whoever — to do things we could not do before, and that’s the frontier I think we’re barely scratching the surface of now.”
That’s why investors are trying to get in on these crowdsales. So far, $380 million has been poured into ICOs, despite the fact that it’s so early, it’s nearly impossible to know which ones will survive, let alone actually take off.
One aspect that’s especially interesting, Mougayar says, is, “If you have your own currency, you have your own governance, so each currency becomes their own mini-government. Mini-government a big word, but it’s a body that is governed in a decentralized manner where users have a say, where there’s oversight and transparency.”
As organized as that sounds, cohost of the Token Summit, Nick Tomaino, principal at Runa Capital and author of the blog and email newsletter The Control about the token economy, joined Mougayar for the episode and explains, “People call them companies, and the analog in the traditional world is a company, but they’re really not companies. I think it’s best to think of them as decentralized autonomous organizations where there’s an entrepreneur and founding team but no legal entity … I really think of these structures as internet tribes. … They’re collections of people from all over the world that own a token and have ownership in a product and want to bring a token to the world.”
While the technology holds a lot of possibility, the ease with which developers can now raise millions of dollars — a white paper and a blockchain-based crowd sale seem sufficient — is causing some alarm. More than $350 million having been raised in ICOs — and the vast majority had no actual product. Tomaino said, “If you look at the past 10 years in startups broadly outside of the blockchain world, pretty much every company that has raise money pre-product has failed.” A famous example is Clinkle, a mobile payments company that raised $25 million for its product in seed funding and disappeared in two years. “The token sales are being used as funding first, and I think this model over time will change,” says Tomaino, who is already seeing some groups raising a small round from traditional investors and then launching a product with a crowdsale.
However, it looks like investors don’t care anyway. So how does one decide which ones to invest in? Tomaino says because of the similarity between the terms ICO and IPO, people think of these as IPOs, but they’re not — this is more like early stage investing. “In a startup, the most important thing is the people, and the reality is most people don’t have the time to meet the founders of all these projects,” says Tomaino.
Tune in to the episode (Google Play, iTunes, iHeartRadio, Stitcher or TuneIn Radio) to find out why a project with a good business model may not be a good investment, how an investor’s vision of a decentralized web could inform their picks, and what best practices they believe the community should adopt to stem some of the bubble-like activity we’re seeing.
These are the show notes for the Unchained podcast, available on Google Play, iTunes, iHeartRadio, Stitcher or TuneIn Radio, and sponsored by OnRamp. Also, listeners, please help me make the podcast better by taking my survey.
I host the Unchained podcast (Google Play, iHeartRadio, iTunes, Stitcher, TuneIn) & wrote The Millennial Game Plan. Disclosure: I own some bitcoin & ether.
[“Source-forbes”]
