Many Token Crowdsales No Longer That Open to the Crowds
The ICO was hailed as the new IPO, offering a more egalitarian way of raising funds. The fact that crowdsales bring in millions of extra dollars and create an active community from day one doesn’t hurt either. In 2017, the initial coin offering was the fundraising model that had venture capitalists looking on enviously. 2018 began in the same vein, with the public piling into ICOs with gusto. On paper, January’s results look highly impressive, with millions of dollars raised in record time, but the process has now changed. In many cases, the public sale feels more like an afterthought than the main event as ICOs revert back to IPOs in all but name.
Also read: ICOs Raise Over $1 Billion in a Month for the First Time
From IPO to ICO and Back Again
From Legolas to Blockport and Storecoin to Celsius, many of this year’s most notable token projects are either skipping or skimping on their crowdsale. Initial coin offerings were seen as an ideal way of bootstrapping startups and onboarding a sizeable community from the get-go. These benefits have had to be tempered, though, with the disadvantages of a less tech-savvy and more impatient group of investors to contend with. From crowdsale participants spamming Telegram groups with “When exchange?” memes to newbs falling prey to blatant phishing attempts and then crying for more regulation, opening your project to the public is not without its pitfalls.
Even when the general public are on their best behavior, there is the ever watchful eye of the regulators to appease. In 2017, it was widely assumed that labeling your token as a utility would be enough avoid the clutches of the SEC and their international counterparts. In 2018, that’s no longer the case. Given the hazards associated with offering potential security tokens to non-accredited investors, a number of prominent crypto startups have decided to eschew public investors altogether. These include securities token platform Polymath, whose product, by its nature, all but necessitates a private-only sale.
Public Offerings Held Behind Closed Doors
Essentia.one founder Matteo Zago believes the transition from public to private sales is inevitable, telling news.Bitcoin.com: “Startups are looking to build long-term partnerships with investors who can supply something beyond merely capital. That could be expertise, by lending their experience to the project, or simply connections to exchanges, platforms, and incubators in the crypto space. As a result of this trend, we’re seeing more tokens sold in private or pre-sales, which means there’s less available to the general public.”
This tallies with the investment policy being lined up by startups like Metahash, a high speed blockchain set to launch later this year. Its private sale seeks “experts who are ready to participate in the discussion of the project before its public launch and, possibly, join the #MetaHashTeam”. It continues “We are not interested in the amount [of ETH], but rather in your expertise. We want experts from different fields to participate in the Private Round.”
As one Twitter trader moaned: “Right now it’s a landgrab for allocations to the best ICOs with increasingly higher percentages going to pre/private sales…This means smaller caps for most investors, especially when they are limited to public sale rounds”. The public may have fueled the ICO phenomenon, but if current trends continue, the next wave of crowdsales will be conducted minus the crowd.
Do you think a shift to fully regulated and accredited private sales is inevitable? Let us know in the comments section below.
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Crowdfire Founders Plan to Launch Indian Bitcoin Exchange
Cryptocurrencies have grown popular in India, and digital asset markets in the region have seen exponential growth despite uncertainty from the Indian government. Now, this week the founders of the popular application Crowdfire have announced the team is launching an Indian-based bitcoin exchange this March.
Also read: Russian Cryptocurrency Bill Is Ready – Regulators Share Details
Crowdfire Founders Plan to Launch a Cryptocurrency Exchange This March
Nischal Shetty: ‘Current Exchange Standards In India Is a Frustrating Experience’
Shetty says he’s not pleased with the current exchange standards in the country and wants to build a more transparent product. “If the frustrating experience of substandard product wasn’t enough, I was surprised to see how opaque most of the exchanges were in terms of communicating with their users — When dealing with other people’s money, transparency is the best way forward,” explains the Crowdfire founder.
People trust us with their money, we need to provide them with clear information on what’s happening behind the scenes, why something’s not working right, what features we’re building, what fees we charge them, etc. It’s also our responsibility to inform users prior to making changes that affect them.
Despite Government Uncertainty the Crowdfire Co-Founder Says His Team Plans to Be Very Vocal About Blockchain In India
Wazirx is also creating an ‘exchange-backed token’ called WRX that will be similar to other trading platform tokens that Binance and Cobinhood offer. Every Indian resident will be given a certain amount of WRX for free if they register and verify the identity of their accounts. Shetty details they will buy back the WRX equivalent to “10% of our quarterly profit as and when profitability is achieved.” The exchange launch will begin in March and start by listing ethereum (ETH), bitcoin core (BTC), ripple (XRP), and litecoin (LTC) with more coins to follow, Shetty explains.
Wazirx says it has “top of the line identity verification systems that process KYC within a few hours of signing up” and the firm will have regular security audits. The exchange will also have Android and iOS mobile apps, the website reveals. Even though the country’s central bank and politicians have been leery about cryptocurrencies, Shetty says his team will be very vocal about the technology and believes India will be a crypto-frontrunner.
“Once in a lifetime does a generation get to be part of something that brings about a paradigm shift in the world — While India has been a follower of trends, I believe we can be the frontrunners in the crypto adoption,” Shetty emphasizes.
Expect us to be very vocal about what’s happening in the blockchain space in India.
What do you think about the founders of Crowdfire launching an exchange in India? Let us know what you think in the comments below.
Images via Shutterstock, Wazirx, and Crowdfire.
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Bitcoin.com’s This Week in Bitcoin Podcast is Mandatory Listening
Veteran podcaster Matt Aaron lends his curation and vocal talent to a smooth few minutes each week in summation of the Bitcoin world’s most important news, This Week in Bitcoin (TWiB). Every Friday, listeners get breakdowns and commentary in bite-size format, leaving them informed and with plenty of time to go about their day.
Also read: The Bitcoin.com Podcast Network Presents: This Week In Bitcoin
Each Friday, the Bitcoin World’s Most Important News
The Bitcoin.com Podcast Network is growing with the launch last month of This Week in Bitcoin, a weekly ten to fifteen minute summary of all things Bitcoin ecosystem. Mr. Aaron is the show’s host by way of Bogotá, Colombia, where he began podcasting for his Food Startups Podcast to promote exporting exotic South American fruit to the United States.
He sheepishly admits to earning his first slice of bitcoin wagering on Donald Trump’s eventual victory in the 2016 presidential election, though he’s careful to explain it wasn’t an endorsement … just cold, cool speculation.
“For those that want to keep up with the Bitcoin world but don’t have tons of time,” he explained to News.Bitcoin.com, “this is a 10 minute weekly show people can listen to on their commute, at the gym, etc. We want to build the #1 podcast network in the cryptosphere, and focus on shows that can be enjoyed by everyone,” he stressed.
Mr. Aaron already has five TWiB episodes in the can, the latest dropped this Friday. Every Friday, in fact, listeners can expect to be greeted by a sultry British rose announcing a fresh broadcast while interspersed with electronica. Mr. Aaron then takes over, presenting the most relevant stories of the week between synth breaks for punctuation.
With weekly help from News.Bitcoin.com‘s Kai Sedgwick, the current round of news he labeled good, bad, and bizzare, noting Facebook’s crypto ad ban and whether that’s a positive; Square’s continued love for bitcoin; more South Korea news; the entrance of Samsung into the ecosystem; Tether’s troubles; initial coin offering scams; El Petro’s white paper from Venezuela’s executive; and the Japanese app Line’s launching of crypto trading. These are market-moving pieces, ones savvy bitcoiners need to be apprised in order to stay informed.
In addition to TWiB, February 13th the Bitcoin.com Podcast Network will publish a new show, Humans of Bitcoin with host Katie, a journalist covering the real lives of bitcoiners which will include some higher profile guests. Keep up with TWiB at its landing page, subscribe on iTunes or Stitcher, and be sure to leave a comment and rating to help others learn about the show.
What kinds of bitcoin-related podcasts would you like to hear? Let us know in the comments section below.
Images courtesy of Pixabay, TWiB.
Not up to date on the news? Listen to This Week in Bitcoin, a podcast updated each Friday.
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China Censors Cryptocurrency Ads on Search Engines and Social Media
Hong Kong-based media have reported that the country’s major search engines and social media networks do not appear to be presenting paid adverts for products or companies associated with bitcoin and other cryptocurrencies. Reports have alleged that the censorship of cryptocurrency ads may date back to the announcement that The People’s Bank of China (PBOC) would ban initial coin offerings (ICOs) during September 2017.
Also Read: South Korea Discusses Cryptocurrency Policies With China’s Central Bank
Chinese Online Media Platforms Ban Crypto Ads
The report states that keywords such as ‘bitcoin’, ‘cryptocurrency’, and ‘ICO’ appear to predominantly elicit journalistic content when searched on popular Chinese platforms Baidu and Weibo, whilst yielding an apparent absence of sponsored content. Weibo has confirmed that it does not presently allow advertising relating to cryptocurrencies, whilst Baidu is yet to comment on the matter.
Analysts are speculating that the censorship of crypto ads may have begun following the introduction of the PBOC’s crackdown on ICOs in September 2017.
Facebook Follows China’s Lead
The crypto community appears to have largely welcomed Facebook’s new policy, with many bitcoin veterans viewing social media as an advertising medium embraced by Ponzi schemes and opportunists seeking to cash in on the speculative boom surrounding virtual currencies will little intention of delivering robust services or platforms.
What is your reaction to the Chinese censorship of ads for products and services relating to cryptocurrencies? Share your thoughts in the comments section below!
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Large European Power Company Will Not Sell Electricity to Crypto-Miners
This week one of Europe’s largest power companies, Enel, has announced the firm has absolutely “no interest whatsoever in selling power” to cryptocurrency miners.
Also read: Dead again? In Reality Bitcoin Is Up 729% Since Last February
One of Europe’s Largest Power Companies Allegedly Evaluated Cryptocurrency Mining Operations
“Enel is particularly interested in understanding how the energy business can benefit from the blockchain technology,” the head of the firm’s front trading office, Leonardo Zannella said at the time.
Cryptocurrency miners who can move their facilities to places where electricity is cheap might have advantages.
Enel Changes Its Tune “No Interest Whatsoever In Selling Power” to Cryptocurrency Miners
However, subsequently after the alleged discussions, the power company changed its tune. Enel says it takes pride in providing “green power” deriving from biomass and incineration practices, geothermal resources, hydroelectricity, wind, and solar power. Moreover, the company believes that cryptocurrency mining cannot be maintained in an environmentally friendly way.
“Enel has undertaken a clear path toward decarbonization and sustainable development,” explains a spokesperson this past Thursday.
The intensive use of energy dedicated to cryptocurrency mining as an unsustainable practice that does not fit with the business model it is pursuing.
The news follows the swathes of Chinese miners looking for new residency in other areas around the world. Just recently Bitmain Technologies said it was looking for properties in Canada and also launched a subsidiary in Zug, Switzerland. Enel’s decision may be seen as a small obstacle as miners can utilize more friendlier power companies willing to sell cryptocurrency miners power. Although the firm has operations in sixteen countries across Europe, North America and South America. The company controls a majority of power operations in Spain as well.
What do you think about Enel saying they won’t sell power to cryptocurrency miners? Let us know in the comments below.
Images via Shutterstock, Enel Green Power, and Blockbase.
Not up to date on the news? Listen to This Week in Bitcoin, a podcast updated each Friday.
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Bank of America Becomes the Latest Credit Card-Issuer to Ban Bitcoin
U.S. banks really aren’t big on bitcoin. That’s the inference to be drawn from a widespread crypto crackdown led by major financial institutions. Bank of America, the country’s second largest bank, is the latest player to give bitcoin the thumbs down, joining JP Morgan Chase and Citigroup in seeking to distance itself from cryptocurrency purchases made with credit card.
Also read: Tether Printed One-Third of All USDT After Receiving Subpoena
Banks and Bitcoin Don’t Mix
For all the progress bitcoin has made in gaining mainstream recognition over the past 12 months, there’s a growing sense that the world of traditional finance is pushing back against cryptocurrency. That’s not to say that major banks feel directly threatened per se. Nevertheless, the climate is very much one of mistrust, caution and self-preservation, in keeping with the conservative nature of these age-old institutions. If bitcoin is to prosper, it will need to do so without the support of many of the financial organizations that are capable of providing an onramp to the world of decentralized currencies.
As of Friday February 2, Bank of America has stopped accepting credit card transactions from cryptocurrency exchanges. While debit cards are believed to be unaffected, customers of exchanges such as Coinbase will no longer be able to purchase crypto with credit card. As news.Bitcoin.com has previously reported, the growing number of people purchasing bitcoin on credit, a trend which peaked amidst December’s price rally, is a high-risk move that’s been widely criticized.
Bittrex Gains a Bank as Cryptopia Loses One
In a podcast on Friday, Bittrex CEO Bill Shihara confirmed that the U.S. exchange will soon be enabling fiat currency deposits in U.S dollars. The move has been interpreted as a desire on behalf of Bittrex to free itself from the increasingly tainted brand of Tether. At present Bittrex, together with fellow U.S. exchange Kraken, is reliant on tethers as a form of pseudo-fiat currency. In light of the news that U.S. officials subpoenaed Tether last month, it’s logical that Bittrex should want to free itself from being solely reliant on tethers.
Other exchanges haven’t been faring so well in the banking stakes however. Last week, New Zealand’s Cryptopia exchange announced that its domestic banking services had been withdrawn at short notice, writing: “Unfortunately, our current bank has notified us that they intend to close our NZDT account on 9 February. Due to this, we are announcing an immediate halt to NZDT deposits from COB today.”
Despite growing interest in cryptocurrencies, getting money in and out of exchanges remains as hard as it’s ever been. It was that way in 2013, when banks scarcely knew what bitcoin was, and it’s still that way in 2018. Banks know all about bitcoin now but the vast majority want nothing to do with it.
Do you think Bank of America and Citigroup are opposed to bitcoin or are they simply trying to protect their customers from getting into debt? Let us know in the comments section below.
Images courtesy of Shutterstock, Citigroup and Bank of America.
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