As the frenzy continues around Bitcoin and other cryptocurrencies, it is essential to remember that the Blockchain technology underpinning these currencies is solid, strong, and largely autonomous.
The reason businesses of all sizes and types are trying to leverage Blockchain is because it provides a new way to reduce costs, to move information more efficiently and securely, and then, to launch new products quickly. There’s another compelling reason, one less talked about – those who missed out on other radical, game- changing innovations such as digital, cloud, mobile – don’t want to be left behind again.
While the Bitcoin hype would make you believe that only highly speculative investor types are diving into these uncharted waters, make no mistake: big money players are also swimming in this pool – from mainstream banks to venture capital firms. The reality is this is the internet’s next frontier – creating businesses and services that deliver more value to customers or users while getting away from advertising models and reducing friction caused by traditional middlemen.
Two key things to remember on why ICOs are not tied to Bitcoin
The first one is a repeat of my earlier comment: Blockchain technology that provides the foundation for any cryptocurrency (currently) is NOT dependent on those cryptocurrencies – they exist independent of one another. That is a basic point that frequently gets lost in all of the media and internet hype. Bitcoin operates on top of Blockchain; it uses Blockchain, not the other way around.
The second big thing to remember is that any long term, successful cryptocurrency is going to be based on solid economic fundamentals, such as, supply and demand.
Many of the businesses starting today, quite a few of the startups launching Initial Coin Offerings, are not established, profitable businesses (yet). So, the most logical due diligence requires the sophisticated investor and business mind to ask: Is there a real business opportunity here? Any cryptocurrency that is not based on serving a customer need is going to be far more volatile than one that does solve an actual customer’s pain point.
Just like Apple and Amazon share the Internet, our coins and bitcoins will share the Blockchain platform but in effect they are totally independent. Each and every “crypto coin” will have its own supply and demand economics. The value of your coin lives and dies by its own supply and demand profile. The same thing happens to traditional currencies like the US or Canadian dollars – they go up and down impacted by many factors.
An initial coin offering, cryptocurrency model gives us non-diluted financing for the company, but the most important aspect of that non-diluted financing (which all of us here appreciate) is a responsibility to the community and that’s essential to our mission and business.
Ultimately, when I get asked if I have concerns around cryptocurrency hype, my answer is no. Our business is based on the solid fundamentals of serving an established set of customers. Most of our investor prospects understand the differences between bitcoin and Blockchain. If they do not, then they probably do not see the opportunity to invest in building a more sustainable economy for that profitable market. An ICO will allow us to create a tighter community with efficiencies that will help them, and us, succeed.