Block.one is aiming to unseat current blockchain fund raising champs, Bancor, who raised $150 million with the largest initial offering of a blockchain based currency since Bitcoin’s inception almost ten years ago.
Block.one is set to release 1 billion of it’s EOS coins, in 23 hour blocks, starting with 20% of the coins tomorrow. Following that, 350 blocks of 2 million coins each, will be released every 23 hours, in an attempt to democratize the coin, giving anyone the chance to buy in early. Of course, this won’t prevent those with greater resources from having an advantage in collecting the new coin.
To my way of thinking, the most democratized distribution scheme yet invented, is steemit’s , which requires actually contributing to the blockchain, to earn newly produced coins. Nevertheless, EOS will get a lot of attention, come Monday morning, as investors around the world watch this new crypto’s release and subsequent move onto the exchanges.
Brendan Blumer, Block.one head, declined to state an opening price for the coin, saying instead, that the market will set the price. That’s not the only mysterious detail involved in the coin’s launch, as the first block, representing 20% of the first billion coins, will not hold value and cannot even be moved into the block chain environment, when and if the EOS blockchain becomes a reality.
For now, the coin will be traded on the Ethereum blockchain, the second largest traded crypto coin in existence today. The last blockchain coin launch, in March, from Qtum, garnered a healthy $15.6 million in up front financing. Is crypto, the new funding vehicle for startups?
The EOS blockchain is designed to provide a robust platform for large businesses, while other coins have been more egalitarian, aiming at indie users that build small apps and platforms, creating a patchwork of programming. It will be interesting to see how this works out. With nothing to show as far as the actual structure, and no stated intention on their part to develop it, Block.one has left the playing field wide open.
So, could crypto coin just be the latest method for startups to get their initial round of investment? I think so. There are at least three big reasons I think EOS may be marking the entrance of the crypto-funding age of tech startup.
First, it’s still completely unregulated. While stock issues are one of the most legislated and watched modes of fund raising, crypto is the wild, wild west. Since the coin, and not the block chain, is the investment, there are no promises as to what will be produced to live up to. In fact, the initial money is free and clear, with no need to ever pay it back at all. You are buying the coin, unlike more traditional investment instruments that represent a piece of something “real world.”
Second, they are currently trending like crazy. In the past ten years, a more than 60 billion dollar industry has sprung up in the wake of bitcoin, literally from nothing. As amazing as that sounds, it’s also a little scary, in that, nothing guarantees the value of any of these instruments, and government regulation could effectively end the growing trend over night. But, while it’s hot, anyone can launch a coin and earn a big payoff with very little effort. Think of it, they don’t even have to issue a prospectus!
Finally, the nature of crypto means that most trades are made by the investors themselves.
This inherently builds interest in the platforms behind the coins. While news is sketchy, many traders watch for it religiously and will share what they find with all of the zealousness of a true believer. After all, if they bought in, and can convince others to follow, the coin rises dramatically, making HUGE short term returns very possible. They happen every day.
The benefit to the developers is this, while they make no promises, they profit from the free viral publicity being generated by coin news, and through sites like Steemit, where crypto news is one of the best paid topics in the reward pool.
Advice? Not much really. If you get a chance, buy some EOS. Buy early while the price is low and see where it goes. Me? I’ll be sitting this one out, but I wish you luck. As crypto becomes a more widely traded commodity, platforms like Steemit will grow and flourish and for me, that’s where it’s at. A high tide raises all ships.