Now the new generation believes in a world without borders and control by a state. In a world where you can quickly become successful and secure. Become the first in the new space that you read about yesterday in fantasy novels.
These waves are not like a devastating tsunami, rather a small storm in fine weather. Some managed to catch these waves quickly and even surf on them. And some drowned in them, figuratively speaking.
If in 2016 there was held only 74 ICOs, which raised the total amount of $ 96 million, in 2017 there were more than 1,400, with the funds raised more than $ 5 billion. According to the Wall Street Journal, 18.6% were openly fraudulent and used technologies that mislead the investors.
According to the Tokendata portal, 142 projects out of 900 failed at the fund-raising stage, and 276 projects were not completed – the developers either just ran off with all the money, or they simply could not create a working product. In one way or another, almost half of the ICO projects of 2017 proved to be failures. And this is nothing more than the result of the emergence of decentralization, in its ultimate and most unpleasant form. When there is no responsibility, there is no security.
Now that things have calmed down a little, and the regulators are looking for a way to confront anonymity and irresponsibility, let’s try to figure out why it became possible and how to avoid problems in the future without state intervention.
After all, if the blockchain is a distributed environment, then centralized regulation is not appropriate here. A network has been created that saves time and costs when interacting without intermediaries. But we continue to spend resources on maintaining regulatory bodies outside this network in order to protect ourselves. This is nonsense.
Today, more than ever, we need a new practice of regulating relations by the forces of the system itself. This will give a new impetus to the development of technology. But is it possible at all?
All the ‘problems’ related to cryptocurrencies appeared and developed around the same scenario. To finance a project with a certain idea, potentially profitable, a large number of coins (tokens) are issued. Then these coins are offered for purchase at a discount of 50% or 70% to large investors, they are paid for participation in bounty programs, they are scattered through airdrops.
All in order to show how quickly the capitalization of the project is growing and attracting light on their feet and greedy investors. And here there is a problem. Most investors on the cryptocurrency market (90%) work exclusively for the sake of speculative interest. These are the data of our research, which were confirmed by other consulting companies.
The initiators of the project who have understood this, are betting on the multiple growth of the asset. In the very idea of the project delve very rarely, because very few people are interested in it. The main purpose of such investments is to dump profit after the coin has been released to the exchange. Unfortunately, in the vast majority of cases, this is so.
We all know what happens next. The coin rate after such “dumps” falls without a prospect ever to rise from the bottom. Naturally, because there is no reinforcement of the token value, except for the expectations of its growth. Investors, who did not manage to liquidate their assets on time, remain at a loss and write a complaint to the SEC.
And what should we do about this? Where do we find the key to solving problems with SCAM projects and deceived investors? Let’s take a look at the extraordinary approach of one of the soon-starting blockchain projects – Ventureon. A good example of an elegant solution to the problem of depreciation of the cryptocurrency.
It can be seen that the people behind this have addressed this problem and found a way out. Unlike most ICOs, they offered reinforced VNN emission and created their own blockchain for this. No emission occurs before the start of the blockchain. After the launch (scheduled for August 20, 2018), the coin will be issued by a limited number of emission (mining) pools.
On the first day of work, no more than 10% of the estimated number of mining pools will be launched. There is no uncontrolled emission and there is no growing complexity of calculations! In turnover, the coins will come from their immediate owners – from those who will obtain them. Miners can sell them to any user at any time. Or they will be redeemed by a system smart contract when placing a sell order.
And only after the minimum required number of coins with backed-up value appears in the turnover, the first listing will take place. This approach eliminates the dispersal of inflation and excludes massive panic flight to Fiat currencies or other assets. In circulation, as much money as the market demands. The coin is secured both by market demand and by the monetary cover of its value.
Expert comment by Nikolay Shkilev (Blockchain expert, TOP 5 ICObench expert):
“Now in the market, there is such a situation when the project’s founders ask me every day” How to keep the value of the tokens? “, Investors, in turn, ask me” When to dump? “. Therefore, after listing 98% of projects are catastrophically losing in price. Before Ventureon, I did not see such elegant solutions for emissions. Yes, for speculators and trades – this is bad and they will be opponents of this system, but for investors, founders and, in general, for the ICO market – this is a real and timely exit, which dictates the market “
Here, it is quite expected, there may be objections from readers: since this is a controlled issue – this is against the spirit and philosophy of the blockchain!
But let us take a closer look. What advantages does the technology give us? What do we want from the blockchain? We want to transfer funds quickly and without intermediaries. We want to do it safely, without the risk of becoming a victim of scammers and leakage of personal data.
And it would also be good to earn on financing startups without excessive risk of losing the asset. And all this is given by Ventureon Blockchain! The register itself, transaction history, wallet addresses, data – all this is in a distributed space, as it should be. Only coin issue is regulated, in order to keep the rate in a safe range. This coin will not be subject to strong volatility. VNN is definitely not a speculative tool.
The co-founder of the project Anton Sobor says:
“On the one hand, our coin will probably not be of interest to traders conducting aggressive trading. But, on the other hand, it is quite suitable for investors, venture funds and start-ups. And any business operating in several countries will also be pleased. By the way, emission control is a measure more likely, designed to save users from excessive risks. But this will continue only until the issue of 50% of coins + 1 coin from the planned amount. It is assumed that by this time the platform will acquire the necessary stability and stability. As soon as this happens, the owners will transfer the regulation to the hands of the community. The mechanism for transfer of control has already been designed and is waiting for its time. So it turns out that our holder is always confident in the value of his assets and is protected from market volatility. Perhaps this is the blockchain solution for the next several decades? “
Expert comment by Alexandr Chevtaev (Startups Advisor):
“In fact, it could be a good solution on a downtrend market like now, where demands are higher and the market is more sensitive. if you have no big progress between the end of ICO and product development, your token sucks and this instrument can be a solution to regulate it and save investor’s money in case they want to invest on a midterm and longer.
When the market goes up, often you don’t need a product right after ICO and partnerships, listings and PR can help to keep the price and investors might be interested to sell after the ICO.
So, it depends on the market and vision of founders as a tool to manage price falling risks it can be a good solution if executed well”
So, nevertheless, regulation or full distribution, without obvious points of responsibility? What will the market prefer in the near future? It seems to me that ten years is enough to stop rushing from an extreme to an extreme and start creating solutions at the juncture of interests.
A compromise is possible and moreover, it promises more opportunities for both the development of the technology and its users. New projects, such as Ventureon, are created on the mistakes made by pioneers. The new blockchain platform takes into account the interests of investors and start-ups in the first place.
This will open new opportunities for financing projects and will give green light to venture capital. After all, regulation does not start where the crypto asset changes to fiat currency, but where the cryptocurrency issue starts!
In the following publications, I will talk about how Blockchain Ventureon implemented a financing mechanism for start-ups and when Blockchain-notary will launch, giving rise to the history of supranational regulation of subjects’ relationships in the blockchain environment.
Vitaly Serbulenko, a financial consultant of the Hypercube Ventures.