The ICO market is still red hot. Despite the drop in Bitcoin’s price this year, EOS’ parent company has raised over $4 Billion USD. To be sure, a $4 billion USD capital raise is nothing to scoff at, but what is even more interesting is the nature of the instrument being sold to investors.
Until Blockchain came around, investors bought into two main categories of long-term investments; debt or equity. Bonds are debts that represent the future promise of payment, and equity is direct ownership in a company, and the value it generates.
But now, investors are willing to pay for something very different. Instead of buying obligations to pay, or a slice of the company, people are buying access. Regardless of the kind of ICO, investors are buying some kind of access to a Blockchain, or something that relies on a unique platform that operates on an existing Blockchain.
This seems very natural for ICO investors, but from the perspective of traditional finance, it is radical.
In some ways, EOS’ capital raise is an outlier. The next largest token sale was Telegram, though to be fair they didn’t ever use a public ICO after raising more than $1.5 billion USD during their presale.
Regardless of how the proceeds and Blockchain-based products are viewed, the simple fact that in 2017 ICOs raised more than $6 billion USD, and so far this year at least 1.5x that will be raised, should be pause for thought. Huge amounts of money are being pledged to an asset class that is less than a decade old and has only been known to most investors for a few years.
While this would normally point to some sort of speculative mania, the fact that numerous investment banks are now looking at how these new assets can be traded profitably for interested institutional clients would suggest that there is substantial support for cryptocurrency.
A point that is less well reported in mainstream media is the fact that Blockchain has the ability to completely destroy the financial ecosystem as we know it. The idea that financial transactions could be handled over global distances in near real time, with no intermediaries is a radical concept.
With little doubt, the technology isn’t there yet. But bear in mind we are only a few years into developing an idea that creates huge advantages of efficiency and can’t be competed with using existing technology. That may be why EOS had so much luck with its fundraising, and why the established financial economy is looking for their own ways to harness DLT.
Nicholas Say was born in Ann Arbor, Michigan. He has traveled extensively, lived in Uruguay for many years, and currently resides in the Far East. His writing can be found all over the web, with special emphasis placed on realistic development, and the next generation of human technology.