We are now seeing disruption to fiat currency through the advent of digital currency. It's not digital currency alone that is creating disruption. Financial technology - FinTech - is revolutionising payments and credits. The reach of FinTech goes beyond that and impacts banking, lending, personal finance, insurance and wealth and asset management.
Crunchbase is a database that "was founded to be the master record of data on the world’s most innovative companies." If you're looking for trends and information on FinTech investment across the globe it's a great place to go. The United States lead the way with investment of US$ 29 billion. As you might expect the China come next however it isn't India that follow. In terms of investment it goes China, the UK and then India. The EU come in fifth with US$ 3.6 billion. That EU figure excludes the UK.
The number of FinTech providers is increasing, the use adoption rate is increasing and global investment is there. Is there something positive that your business can harness from all this? Where do Initial Coin Offerings come in?
Through the creation of Bitcoin we now have Blockchain, a form of Distributive Ledger Technology (DLT). This technology is efficient and low cost. When you apply it to funding the results are fascinating. Under an Initial Public Offering fiat currency is exchanged for security. With an Initial Coin Offering, Bitcoin or Ether is exchanged for tokens. These tokens could take the form of asset tokens, more similar to security, or utility tokens. Personally I think utility tokens are where things could get really interesting. You are essentially pre-buying access to a service. Depending on your business and your needs this is where value could really lie. When it comes to utility tokens people are moving away from term ICO and talking about Token Distribution Events (TDE) or Token Generation Events (TGE).
According to the stats on Coin Schedule US$ 3.88 billion was raised by ICOs in 2017. By June 2018, US$ 12.7 billion had been raised by ICOs with US$ 4.13 billion in May alone. Of the ICOs in 2018, the top 3 categories are Communications (17%), Finance (15.7%) and Trading and Investing (10.7%).
Whilst Bitcoin resulted in blockchain and inevitably Ethereum, it is Ether that appears to be setting the tone when it comes to ICOs. Ethereum is a programming platform that uses blockchain. The currency itself is called Ether. When you use Ethereum you get access to Solidity, it’s a decentralised application of blockchain. People are turning to Ethereum for digital crowdfunding. Bitcoin does not offer utility in the way that Ether does. If utility starts to become of more importance we could see people moving away from Bitcoin.
The advantages of blockchain don't sit in Bitcoin and Ether alone. Once you understand blockchain you can apply it to a number of different scenarios. Blockchain could solve existing and future problems your business faces. Blockchain is already being used in number of ways today. For example:
- smart contracts which self-price, self-execute and self-verify
- supply chain and trade finance, IBM and Maersk have come together in a joint venture to improve cross border shipping through blockchain.
- tracking ownership of digital assets and physical assets, be that proving ownership of digital art or tracking the ownership of diamonds. Everledger enables tractability which is reducing the risk of fraud in the diamond industry.
- verification of land ownership, Honduras and Georgia are now using blockchain for their land registry records. Sweden is now looking to go this way. In case of Honduras blockchain could reduce corruption, eviction, violence and land grabs.
Whether you want to use it, provide it, gain investment or invest in it, there are advantages to blockchain. Why not take advantage of the global investment in blockchain?