Estonia-based startup blockhive brought the concept of an Initial Loan Procurement (ILP) to the fore earlier this year. In doing so, it created quite a stir, which should come as a surprise to no one.
The opportunity to raise funding from an Initial Coin Offering (ICO) is driving many in the direction of blockchain projects. Forbes has estimated that well over USD 3 billion was amassed from ICOs in 2017. The ICO method has provided many startup founders with capital beyond their wildest dreams.
However, an ICO isn’t for everyone, and this is where an ILP really comes into its own.
An ILP is essentially a crypto loan, a fundraising method that allows blockhive to develop its ecosystem by acquiring loans and provides creditors with interest based on the funds they lend to the company.
Creditors will lend their funds in Ethereum (ETH), and interest gained is paid back in the same currency. There are a number of factors why companies may choose to pursue an ILP option rather than an ICO.
The truth is that the concept of issuing a new token for every blockchain-based project just isn’t sustainable long-term. We’d see overcrowding and substandard functionality for cryptocurrencies in general. So a new method was required, which is where the ILP model from blockhive comes in.
Investing in a company, not a currency
This factor should appeal to those who view cryptocurrency as a volatile investment.
With an ILP, your investment is intrinsically tied to the performance of the company rather than any currency.
So long as a company is operating at a profit, you will see a return on an annual basis.
The future of the ILP model from blockhive
It’s impossible to discuss the ILP framework without looking at where it could go in future, and there will very likely be others looking to adopt the ILP model outside of the blockhive ecosystem.
Co-Founder of blockhive, Kazuteru Arimura, commented, “That’s why we established Tokenote, which I think is launching in December, or next year. It’s 50% owned by blockhive and 50% owned by Agrello, who developed it with us. With Tokenote, we get to sell our system. Once our ILP ends, we have lots of potential clients who want to do an ILP, and Tokenote will help make that happen.”
So, while the future of ICOs is far from bleak, it’s exciting to see new options being presented. Charting the progress of blockhive, and the ILP concept will be interesting, to say the least.
Lover of all things crypto, blockchain and AI, professional tech scribe & part of the editorial team at Crypto Disrupt.