Report: ICOs Raised $118 Million in Q1 2019, Over 58 Times Less Than in Q1 2018

            

About $118 million has been raised via initial coin offerings (ICOs)

in Q1 of 2019, over 58 times less than $6.9 billion, the amount raised during the same period in 2018, the Wall Street Journal (WSJ) reports on March 31. The report cites data provided by ICO analytics website TokenData. The WSJ argues that investors have been scared off by regulators’ actions against non-compliant ICOs, as well as by the general bear market over the past year. One of the latest cases happened in February, when the United States Securities and Exchange Commission (SEC) charged crypto firm Gladius Network with selling unregistered securities after the company self-reported to the commission.

Last month, founding partner of Future Perfect Ventures, Jalak Jobanputra, claimed that venture capital valuations have also been deeply affected by the cryptocurrency bear market. The recent report also reveals that of the 2,500 projects that TokenData tracked since 2017, purportedly only 45 percent successfully raised money. Furthermore, WSJ also cites TokenData as saying that only 15 percent of tokens issued in successful ICOs are trading at or above their original price. The article cited attorney and consultant Joshua Ashley Klayman as stating that ICOs themselves may disappear, but the market for digital securities won’t. Recently, so-called security token offerings (STOs) have received increased attention from both the private sector and government regulators globally.

In the U.S. context, investors are faced with a patchwork regulatory landscape when it comes to tokens sales. In February, the state of Wyoming passed a blockchain tokenization-related bill, while a similar law was passed in Delaware in September 2017. This week, Cointelegraph reported that the owner of a startup that ended up canceling its ICO was trying to sell the company on eBay for $60,000. The startup, named “Sponsy,” is described as a blockchain project that is fully prepared to launch both an ICO and an STO.

Article Produced By
Adrian Zmudzinski

Adrian is a newswriter based out of Pisa, Italy. He's passionate about cryptocurrency, digital rights, IT, tech and futurology and likes to think about the future in a positive way.

https://cointelegraph.com/news/report-icos-raised-118-million-in-q1-2019-over-58-times-less-than-in-q1-2018

David https://markethive.com/david-ogden

Initial Country Offering as Next Big Thing For ICOs: Expert Blog

             

One week ago Belarus President Alexander Lukashenko

signed the Decree "On Digital Economy Development" that legalizes ICO, cryptocurrencies and smart contracts. Two months ago the Republic of Abkhazia announced its plans to raise $1 bln in an ICO. Abkhazia followed Venezuela, the first country to consider crypto as a funding mechanism, with its well-publicized plan to roll out an oil-backed token called “Petro.” Puerto Rico has had an awful decade and its government is more than $70 bln in debt. Recently cryptocurrencies’ capitalization was around $400 bln, now – more than $500 bln. What about ICO for $70 bln to make “crypto valley” in the US there?

Government-in-the-cloud

In 1996, one of the founders of the Electronic Frontier Foundation, John Perry Barlow, wrote "A Declaration of the Independence of Cyberspace." A seminal text for its time,

it says:

"Cyberspace consists of transactions, relationships, and thought itself, arrayed like a standing wave in the web of our communications. Ours is a world that is both everywhere and nowhere, but it is not where bodies live."

Estonian e-government services can be run from anywhere. In the old days, a government in exile would quickly lose legitimacy. Sheltering in another country, it would lack the infrastructure to do its work. But today an Estonian government in exile could just carry on. It helps to clarify the differences between a nation, a state and a geographical country.

In general, a nation is a group of people within an area who perceive themselves as a unique entity, a country is that geographical area itself, and a state is a set of political organizations that those people agree to adhere to. By disconnecting the Silicon-based functions of the state from the actual soil-based country, Estonians are protecting their nation. But it's more than that. Estonians are successful in their efforts and they can build a digital state infrastructure that can be hosted anywhere. It doesn't have to be an officially recognized state – if we can deterritorialize a state, could we perhaps “state-ify” a nation? It could be backed up and turned off, reduced to a suitcase full of hard drives, only to boot back up again when the time is right.

Country-as-a-service – CaaS

You are probably familiar with SaaS – “software as a service.” It’s basically paying for software/hardware as you use them, rather than buying them. These services used to cost you a lot, but are now free or near enough. That’s where governance is going. Government services could become plug and play apps you stitch together to suit your business or lifestyle. There’s no logical reason why governance shouldn’t be delivered as SaaS (CaaS).

The most interesting (and promising) Blockchain-related industries are strictly outside of the cryptorealm – they include solutions for healthcare and logistics, land sale support, governmental and corporate workflow solutions. Estonia, a global leader in e-government, has recently launched a unified medical record database, accessible to hospitals and insurance companies, in partnership with the Blockchain startup Guardtime. Prescrypt works along the same lines in partnership with SNS Bank and Deloitte in the Netherlands, BitHealth – in the United States.

Swedish government together with ChromaWay and a partner bank is going to test Blockchain smart contracts for the land registry, to simplify life of buyers, sellers, and banks, using land as collateral on a regular basis. BitFury launches a similar initiative in Georgia, whereas BitLand enters Ghana and Honduras (and have plans to expand to Nigeria and Kenya). UAE launches Blockchain strategy to become paperless by 2020.

The state of Delaware, hosting numerous companies from other states and countries, is to introduce a Blockchain-based system of company registration, an issue of shares, recording of Board Resolutions, redistribution of shares as a result of purchase and sales transactions. British Everledger assists banks, insurers and open marketplaces in a reduction of risk and fraud by digitally certifying diamonds, art objects and high-end bottles of wine.

In comparison with the current focus on ICO-backed startups investments into Blockchain-based GovTech startups (to support their growth and building of the ecosystem of such services) looks very promising: Governance is the next big thing for ICOs and Blockchain world. This new ecosystem, such “borderless country in the cloud” could be like creation of Israel 2.0. Anyway, it seems short-sided to talk about geographical borders in the modern online-world, especially in terms of decentralized economy and Blockchain-community.

Article Produced By
Vladislav Solodkiy

Vladislav Solodkiy is a managing partner at Life.SREDA, Singapore-based fintech-VC, author of The First Fintech Bank’s Arrival book.

https://cointelegraph.com/news/initial-country-offering-as-next-big-thing-for-icos-expert-blog

David https://markethive.com/david-ogden

FBI Outline Key Features of Scam ICOs, Warns Investors to Be Vigilant

                

The United States Federal Bureau of Investigation (FBI)

has outlined what it believes to be the consistent threads running through fraudulent initial coin offering (ICO) schemes. The Bureau’s perspective was shared in an interview with Netherlands-based financial news site the Paypers on Feb. 19. According to the FBI, the key strategies of scam offerings include misrepresentations of their directors’ professional experience, an engineered false impression of how much traction the ICO has garnered in the industry, and unrealistic promises of prospective

returns on tokens:

“Like any investment product, rates of return can never be guaranteed and if it sounds too good to be true, it probably is.”

The FBI warned investors to conduct due diligence on any scheme and the individuals behind it, and to be on the lookout for entities that appear to be exclusively internet-based, where a physical address or contact is hard or impossible to come by. The Bureau also suggested investors should be aware of which jurisdiction the offering is registered in — if at all — and to which laws and regulations it therefore falls subject to.   

The public can avail itself of the Financial Industry Regulatory Authority’s BrokerCheck system to verify the identities and registration status of entities, the FBI advised. Given that even well-known cryptocurrencies and products may carry heightened risks of volatility due to the nascent stature of the industry, the FBI advised prospective investors to only invest what they can afford to lose.

In regard to legitimate business operators of platforms such as virtual currency exchanges or cryptocurrency ATMs, the FBI noted that both the Financial Crimes Enforcement Network and multiple Federal District Courts have deemed such entities as subject to registration requirements. Failure to duly register is thus reportedly deemed to be in violation of federal money transmitting laws.

Looking ahead to the future, the FBI echoed the U.S. Securities and Exchange Commission (SEC)’s stance that a vast swathe of token offerings should be classified as securities and that, given the increasing proliferation of such assets — with many industry members anticipating a security token offering trend — investors should be wary of the heightened risks of fraud. As previously reported, the FBI accounted for the highest number of law enforcement information requests sent to Erik Voorhees’ Switzerland-based cryptocurrency exchange ShapeShift last year.

In June 2018, the Bureau revealed it had 130 ongoing crypto-related cases, with dark web drug sales a particular concern. It nonetheless characterized the sector as accounting for merely “a small sliver” of the FBI’s activities overall. Last year, the SEC attempted to educate investors by creating a mock ICO website that lured visitors with a “too good to be true investment opportunity.” The site employed the red flags the agency claimed to have identified in the majority of fraudulent ICOs, and redirected those who attempted to purchase the ersatz tokens to an educationally-oriented page on the SEC’s site.

Article Produced By
Marie Huillet

Marie Huillet is an independent filmmaker, with a background in journalism and publishing. Nomadic by nature, she’s lived in five different countries this decade. She’s fascinated by Blockchain technologies’ potential to reshape all aspects of our lives.

https://cointelegraph.com/news/ethereums-vitalik-buterin-discloses-non-eth-crypto-holdings-and-other-revenue-sources

David https://markethive.com/david-ogden

Beyond the ICO: Evolution Versus Revolution

               

The ICO model will soon be rendered redundant

by a series of new token offering models focusing on security, transparency, and regulatory compliance. An explosion of token offering innovation is underway, with several new models emerging as prime contenders for the title of the “ICO of the future.” In this three-part series, we’ll assess the current state of the ICO ecosystem, analyze the regulatory shift making the “traditional” ICO model untenable, and take a look beyond the ICO at the future of decentralized capital generation.

In our previous Beyond the ICO article, we examined the ICO market and regulatory response to the ongoing issue of ICO fraud. Regulators are playing a critical role in the creation of a new token offering model that allows innovative startups to access capital in a decentralized manner, but what shape will the future ICO take?

The Future of the ICO

The immunological regulatory response to the threat presented by the traditional ICO model will inevitably result in change, but regulation isn’t the only environmental factor shaping the evolution of ICOs. Community self-regulation will heavily influence the morphology of future ICOs as the crypto market adapts to fraud within the ICO market and eliminates less efficient models in a Darwinian manner. The ICO model will fracture into separate models that fill different niches within the blockchain ecosystem; security token offerings and DAICOs.

Security token offerings address the core issue presented by bringing capital markets onto the blockchain. Instead of working against existing securities laws, a security token offering, or STO, works with them — the most obvious solution to the looming threat of regulatory action. Instead of attempting to camouflage what is arguably a securities offering as a utility token, STOs deliver regulatory certainty as well as investor confidence

While STOs aim to adapt to the impending fallout of an extinction-level threat, the DAICO model — proposed by Vitalik Buterin — is less concerned with regulation, and more focused on minimizing the inherent risk and complexity of ICOs. By fusing the concept of a decentralized autonomous organization and an ICO, the DAICO model allows development teams to publish a smart contract that launches in “contribution mode.” A DAICO establishes the funding process as a smart contract that governs the contribution of ether to a project and the specifics of a sale, as well as allowing token holders to vote on the rate of funding delivered to the development team, or even put a contract into “withdraw mode” as

outlined by Buterin:

“Voters start off by giving the development team a reasonable and not-too-high monthly budget, and raise it over time as the team demonstrates its ability to competently execute with its existing budget. If the voters are very unhappy with the development team’s progress, they can always vote to shut the DAICO down entirely and get their money back.”

The ICO Model is Here to Stay — But Not as We Know it

Both the DAICO and STO models address the major obstacles that ICOs face in the near future, but the evolving crypto industry may eliminate the ICO as a launchpad for new blockchain-based platforms altogether. UK-based technology advisory and investment firm GP Bullhound predicts the end of the ICO model as the go-to capital generation method for blockchain entrepreneurs, stating that 2018 will see airdrops become new normal for token distribution. With venture capital stepping in at a pre-ICO stage, airdrops will function as a preferable option to traditional ICO models in order to maximize network effects.

While the ICO as it exists today may be gone tomorrow, the blockchain brings evolution, not revolution. Regardless of regulatory posturing, decentralized growth capital generation will exist as long as decentralized currencies exist and are used to exchange value. Ultimately, the ICO is identical to the underlying technology that drives it — regardless of the shape it takes in future, it’s here to stay.

Article Produced By
Sam Town

Blockchain Writer at CryptoSlate

Samuel is a freelance journalist, digital nomad, and crypto enthusiast based out of Bangkok, Thailand. As an avid observer of the rapidly evolving blockchain ecosystem he specializes in the FinTech sector, and when not writing explores the technological landscape of Southeast Asia.

https://cryptoslate.com/beyond-the-ico-part-3-evolution-versus-revolution/

David https://markethive.com/david-ogden

ICOs Produce Slow Start to 2019

   

During the first two weeks of 2019,

initial coin offerings (ICOs) raised roughly $90 million, according to data published by Icobench. Of the total funds raised this year so far, $80.2 million can be attributed to the Chelle Coin ICO.

Slow Start to 2019 for Initial Coin Offerings

47 ICOs launched during the first week of January, bringing the total number of ongoing initial coin offerings to 424. Despite the large number of ongoing ICOs, only $6 million was collectively raised between Jan. 1 and Jan. 7, comprising the smallest combined weekly total raised by ICOs since 2017. During the second week of January, the total raised by initial coin offerings jumped substantially after Chelle Coin, an ICO for an “investment platform backed by performing North American True Estate,” generated $80.2 million from Canadian investors. Excluding Chelle Coin, the combined total raised by ICOs between Jan. 7 and Jan. 15 was $3 million.

ICOs Post Steep Decline in Fundraising During Second Half of 2018

The slow start to 2019 follows a significant decline in the average performance of initial coin offerings during the final six months of 2018. After averaging a monthly total of $1.45 billion collectively during the first half of 2018, the combined monthly average raise by ICOs fell by 65 percent to just $500 million in the second half of the year. Additionally, the combined total raised by initial coin offerings fell short of 2017’s monthly average of roughly $850 million for the entire second half of last year.

The average sum raised by each individual ICO also fell by more than 50 percent year-over-year, dropping from $24.4 million in 2017 to nearly $11 million in 2018. Despite the decline in the average performance of ICOs, the collective total raised by ICOs increased last year, with 413 offerings raising $10.06 billion in 2017 versus 1,012 offerings raising $11.59 billion in 2018.

Singapore Comprises Leading Nation for ICO Fundraising During 2018

Nearly $1.54 billion was raised by Singapore-based ICOs during last year, equating to 13 percent of the fundraising total. The total was raised from 275 offerings, making Singapore the second most popular destination for ICO issuers. While the United States hosted the largest number of ICOs during 2018, the 288 U.S.-based offerings accounted for $1.22 billion in raised funds last year, or 11 percent of the global total. The United Kingdom ranked third by collective total raised and number of ICOs, with 222 offerings generating $945 million.

The Cayman Islands hosted the fourth largest total raised by the ninth largest number of offerings, with $917 million raised by just 56 offerings. Switzerland ranked fifth by combined fundraising and number of ICOs, hosting 136 offerings that generated $845 million. These five countries accounted for 47 percent of the combined global sum raised by ICOs in 2018.

Article Produced By
Samuel Haig

Samuel Haig is a journalist who has been completely obsessed with bitcoin and cryptocurrency since 2012. Samuel lives in Tasmania, Australia, where he attended the University of Tasmania and majored in Political Science, and Journalism, Media & Communications. Samuel has written about the dialectics of decentralization, and is also a musician and kangaroo riding enthusiast.

https://news.bitcoin.com/icos-slow-start-2019/

David https://markethive.com/david-ogden

MIT Professor: Blockchain Can Allow for More Inclusive, Borderless Economy

  

Blockchain can allow for the creation of a borderless economy,

Massachusetts Institute of Technology (MIT) professor Silvio Micali claimed in a interview on Bloomberg’s Daybreak Asia, Jan. 21. Speaking on the show, Micali outlined three major properties of blockchain systems that must function simultaneously to enable a more inclusive and borderless economy — security, decentralization and scalability. According to MIT’s Ford Professor of Engineering, until recently, only two of those three basic properties could have been achieved simultaneously at any time.

When asked about scalability in particular, Micali stressed that a decentralized system really needs superior technology to provide the same level of participation and confidence that is enjoyed by centralized systems. When asked about security breaches in blockchain systems, Micali stated that centralized systems are far more vulnerable to hacking attempts, pointing to the frequency of security and privacy breaches that repeatedly take place among centralized institution of various sorts. The professor expressed optimism about blockchain in terms of security, noting the level of security built into the concept of

a trustless system:

“Only a true decentralized system, where the power is really so spread that is going to be essentially practically impossible to attack them all and when you don’t need to trust this or that particular node, is going to bring actually the security we really need and deserve.”

Recently, a group of major United States universities, including MIT, Stanford University and the University of California, Berkeley, announced the launch of Unit-e, a cryptocurrency project touted as a “globally scalable decentralized payments network.” Earlier in January, MIT Technology Review issued an article claiming that 2019 will become the year when blockchain technology finally becomes normalized.

Article Produced By
Helen Partz

Helen is passionate about learning languages, cultures and the Internet. She has years of experience working at international online advertising projects. Growing interested in Bitcoin and cryptocurrencies in late 2017, she joined Cointelegraph as a writer.

https://cointelegraph.com/news/71-million-user-volunteer-platform-to-launch-blockchain-based-dapp

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ICOs Raised $160 Million in First Half of January, Report Says

  

Initial coin offerings (ICOs) completed

in the first half of January have raised around $160 million. The figure was provided in a report by ICO rating service ICObench shared with Cointelegraph on Jan. 18. ICOs completed by Jan. 15 have managed to raise about 33 percent of the combined amount raised in the previous month of December. Half of that sum was secured by just one project, the report notes. According to ICObench, the number of fundraisers that are set to take place in January is more than 150, a figure similar to the past seven months, excluding December.

In January, the combined hard cap — the maximum amount of money that a project can secure from investors during an ICO — amounts to more than $4 billion. As per the report, three fundraisers out of the five largest this month have reached or almost reached their hard caps. ICObench also reported that the number of ICO listings has continued to decline in January, suggesting that the phenomenon is losing its popularity. In terms of amount of funds raised, Canada has been leading during the first half of the month, with a combined figure of $80 million. However, when it comes to the actual number of projects, the United States ranked first.

ICO statistics by country in the first half of January 2019.

On Jan. 16, major crypto exchange BitMEX released a report claiming that ICO teams have lost 54 percent of value of the initial $24 billion worth of tokens allocated to themselves due to the decline in coin prices.

Article Produced By
Helen Partz

Helen is passionate about learning languages, cultures and the Internet. She has years of experience working at international online advertising projects. Growing interested in Bitcoin and cryptocurrencies in late 2017, she joined Cointelegraph as a writer.

https://cointelegraph.com/news/icos-raised-160-million-in-first-half-of-january-report-says

David https://markethive.com/david-ogden

What’s Difference Between ICO Tokens and Cryptocurrency Coins?

Cryptocurrencies such as Bitcoin are becoming

increasingly more mainstream every day, but the terminology that surrounds them can be confusing even to seasoned crypto veterans, let alone newcomers.Interested in investing in Bitcoins or other Altcoins? Here’s how we buy Bitcoin and Ethers. You will receive $10 of FREE BITCOIN when you buy or sell over $100 worth of any digital currency.

A lot has changed since an unknown person or group of people under the name Satoshi Nakamoto released Bitcoin, the first decentralized cryptocurrency in the world, in 2009. According to CoinMarketCap, there are now almost 1,500 cryptocurrencies, the total market capitalization of the entire crypto market is over $700 billion, and the daily trading volume exceeds $30 billion on a regular basis. To understand how we got to where we are today, and what the difference between ICO tokens and cryptocurrency coins is, we need to start with the basics.

What Is a Cryptocurrency?

The term “cryptocurrency” consists of two words: crypto and currency. Even though you may not be able to define it, you already know what a currency is because you use it almost every day as a medium of exchange for goods and services. Investopedia defines a currency as “a generally accepted form of money, including coins and paper notes, which is issued by a government and circulated within an economy.”

The word “crypto” is short for “cryptography,” which is the practice of using various protocols to secure communication in the presence of third parties. Modern cryptography is synonymous with encryption, the process of encoding information in such a way that only authorized parties can access it. Put together, a cryptocurrency can be defined as a medium of exchange that uses cryptography to secure its transactions.

Cryptocurrency Coins and Tokens

While there were other media of exchange that used cryptography to secure transactions before 2009, Bitcoin was the first one to also be decentralized, meaning that it’s not controlled by any single central authority. The decentralized nature of Bitcoin comes from its use of the blockchain technology, which is a distributed public ledger that records bitcoin transactions in a growing list of records, called blocks. Each block of transactions is cryptographically linked to the previous block, making blockchains resistant to data modification.

Because the blockchain technology was such a novel concept when Satoshi Nakamoto implemented it as a core Bitcoin component in 2009, many other cryptocurrencies were soon derived from Bitcoin, including Litecoin, Darkcoin, Quark, Yacoin, Novacoin, or BitBlock, just to name a few. Collectively, these Bitcoin derivatives are sometimes called Bitcoin clones. What they have in common is the fact that they are all derived from Bitcoin and are meant to be used as media of exchange. Apart from cryptocurrency coins that have been derived directly from Bitcoin, there are also so-called altcoins. An altcoin is an alternative blockchain project that exists in addition to Bitcoin and its blockchain.

By far the best-known altcoin is Ethereum, which is an open-source, public, blockchain-based distributed computing platform featuring smart contract functionality. Because Ethereum’s purpose isn’t to serve as a means of exchange, it doesn’t issue any cryptocurrency coins. Instead, Ethereum issues value tokens called “ether.” Compared to cryptocurrency coins, tokens offer wider functionality, often being used to access various features of the platform that provides them. In the case of Ethereum, ether is used to pay for transaction fees and computational services on the Ethereum network. But because tokens hold value, they can also be used the same way as single-purpose cryptocurrency coins can: to purchase goods and services.

ICO Tokens

An ICO is “an unregulated means by which funds are raised for a new cryptocurrency venture. An Initial Coin Offering (ICO) is used by startups to bypass the rigorous and regulated capital-raising process required by venture capitalists or banks,” as explained by Investopedia. During an ICO, tokens are sold to early backers of the project in exchange for legal tender or other cryptocurrencies, usually Ethereum or Bitcoin.

For example, during its September 2017 token offering, the Filecoin ICO raised over $257 million by selling its FIL tokens in exchange for ether to fund the development of its decentralized network for digital storage through which users can effectively rent out their spare capacity. Most ICO tokens don’t exist on a separate blockchain. Instead, startups take advantage of the blockchain technology to build their own projects and DAPPS (decentralized applications) through smart contracts on Ethereum’s blockchain.

“Think of Ethereum like the Internet and all the DAPPS as websites that run in it. There is something really interesting about these DAPPS, they are all decentralized and not owned by an individual, they are owned by people. The way that happens is usually by a crowd-sale called the ‘ICO.’ Basically, you buy certain tokens of that DAPP in exchange for your ether,” explains Ameer Rosic. The main difference between cryptocurrency coins/tokens and ICO tokens is that disruption on the network that hosts ICO tokens doesn’t affect just the network itself, but also the ICO tokens hosted on it. Bitcoin clones and all other altcoins, on the other hand, are completely independent.

Summary

Cryptocurrency coins are media of exchange that use cryptography to secure transactions. Value tokens are used by blockchain-based projects that don’t strive to serve as digital currency for a multitude of different purposes. For example, the blockchain-based distributed computing platform Ethereum uses its value token, called ether, to compensate participant nodes for computations performed. ICO tokens are issued during a crowd-sale, and they depend on another platform, such as Ethereum. In practice, the terms described in this article are often used haphazardly and interchangeably. So, even if you don’t use the most appropriate term, the chances are that you will be understood without any problems.

Article Produced By
David

https://thedroidguy.com/2018/05/whats-difference-ico-tokens-cryptocurrency-coins-1079421

David https://markethive.com/david-ogden

All About Security Tokens Landscape, With The Founder Of Polymath

David https://markethive.com/david-ogden

Crypto Winter Isn't Fatal For All ‘Picks and Shovels’ Makers

Executives say key infrastrucute is continuing to be built
Dropping equity valuations also attractive buying opportunity

The crypto winter that’s seen major digital assets crash by as much as 90 percent hasn’t been bad for all of the firms building infrastructure or investors looking to pick up equity in projects that dropped appreciably. "This is the most productive phase we’ve ever been in," said Konstantin Richter, chief executive officer of Blockdaemon, a firm that creates and hosts the computer nodes that make up blockchain networks. That’s because various efforts in the space need to deliver on their ambitions and are turning to firms like Blockdaemon for help. "Projects now need to show their colors. The time is up of raising a lot of money and talking a lot of talk," Richter said at a panel discussion hosted at the Los Angeles bureau of Bloomberg News.

After seeing cryptocurrency prices soar to records in late 2017 and early 2018 — Bitcoin peaked near $20,000 and Ether traded over $1,300 — the market had a disastrous time last year. Bitcoin is down about 80 percent with Ether having dropped about 90 percent. Investors and the public appear to have major concerns about what blockchain technology can actually deliver in the real world after hearing promises of its transformational potential.

"The skepticism is warranted in many ways because this technology is nascent and untested at an industrial scale," said Adam Jiwan, CEO of Spring Labs, which is using blockchain technology to build a decentralized credit-reporting system. He said the shakeout has been good for picking up employees who have seen their funding dry up or been cut loose from development firms. "Our hope is this presents us with a great opportunity to recruit talent," he said during the discussion.

The rise and fall of digital currencies validated the approach at Maco.la, a Los Angeles based investment, advisory and recruiting firm, said co-founder and principal advisor Sheri Kaiserman. That’s because the firm decided at inception last year to make equity investments rather than buying initial coin offerings, she said.

"We felt like the best way to make money is to buy the infrastructure companies — the picks and shovels — that are helping build the foundation," she said. "They are coming down in valuation, which is the best part of the crypto winter for us," Kaiserman said. Maco.la is looking to invest in projects that avoid the repetitious work being done in the space at the moment as well as ones that have a high likelihood of being acquired, she said. "That’s why we focus on ones where we think Microsoft might be interested or that Google might be interested."

Blockchain, originally developed as the ledger technology that powers Bitcoin, is promising for corporations, if they can figure out how to use it. Proponents predict billions of dollars in savings by handling data and transactions more efficiently and rapidly. Yet most corporate efforts are still in early development or testing. Still, depending on when a blockchain startup raised funding, it could still have plenty of money to spend on development, Richter said. "There are projects that are so well funded they’ll last for years," he said. Any ICO that went before the summer of 2017, for example, may have been able to buy Bitcoin at $600 compared to its current value of about $3,600, he said.

Health Care

Kaiserman said blockchain has the potential to radically change how global payments are made, specifically remittance payments when you factor in that Western Union charges 8 percent to 10 percent to send money compared with "a nominal cost" of Bitcoin transactions. There is also the chance to use it to give 1.1 billion people a digital identity around the world who currently lack a documented existence. Her favorite use is in health care, she said.

"I would love to be able to go to a doctor and the knowledge of my insurance is on the blockchain" so that "the insurance company knows that’s a covered diagnosis and there’s no need for reconciliation because we’re all sharing this one ledger," she said. Spring Labs is advised by former Federal Deposit Insurance Corp. Chair Shelia Bair and former Goldman Sachs president and Trump administration chief economic advisor Gary Cohn. The firm avoided an ICO because they thought it would hurt adoption and risked regulatory scrutiny, Jiwan said. It’s working closely with regulators like the Securities and Exchange Commission to understand how to transition from a firm backed by equity to issuing a token that would be used on its network, he said.

In November, the SEC announced its first civil penalties against two crypto companies for allegedly violating securities offering registration rules with their ICOs. Both Airfox and Paragon Coin Inc. will need to pay $250,000 in penalties and register the digital tokens they sold through their ICOs as securities to resolve the matters against them, the SEC said Nov. 16. A few weeks later, commission Chairman Jay Clayton said cryptocurrency entrepreneurs should get their “act together” and register their initial coin offerings with the SEC if they want to avoid problems down the road. "There’s some important issues in terms of straddling the transition from security tokens to utility tokens," Jiwan said. "The SEC’s primary concern is speculation ahead of actually delivering a functional technology, which, by the way, is reasonable," he said.

Article Produced By
Matthew Leising

https://www.bloomberg.com/news/articles/2019-01-16/crypto-winter-isn-t-fatal-for-all-picks-and-shovels-makers

David https://markethive.com/david-ogden