Bitcoin and other cryptocurrencies are attracting investors, leading to the growth of blockchain assets as their own grouping of alternative assets. Initial Coin Offering (ICO) investing—think IPO for cryptocurrency ventures—benefits entrepreneurs and investors alike, giving people direct access to projects or individuals that may not normally be within their reach. Not all blockchain-related companies are created equal. Before participating in an ICO, do your homework and get to know the team behind the ICO project, including their broader community. Read More >>
BLOCK INTEL’S TAKE: Alternative currencies are high risk investments, so do not expect to see many traditional venture capital firms jumping to participate in ICOs in the near term. We will probably see more firms like HyperChain Capital—a digital assets hedge fund focused on blockchain—pop up to support investors interested in a more diversified token portfolio. Opportunity alert—the linked article notes that there is an increasing need for an independent expert organization or network to evaluate ICO projects and their prospects for investment.
Risks persist on the regulatory front too, as many view some ICOs as securities offerings without the bloat of complying with securities regulations. Expect regulators to flex their muscles at some point, to ensure this new asset class does not completely subvert existing securities law. (The current frothiness of the ICO market is only increasing pressure for regulators to act.)
Watch the rollout of Tezos later this month (22 May) and Tim Draper’s big bet on the new crypto token to make it big. There are lessons to be learned.