All Financial Wisdom

Startups and the Blockchain

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They said it more than five years ago; They compared the arrival of blockchain technology with the appearance of the internet. The rest of the world still did not quite understand what was going on; governments did not even know.

Today, it is widely acknowledged that the blockchain will bring not only opportunities, but also more efficiency in society.

The blockchain is a technology that controls, regulates, stores, and verifies, through a chain of ordered and unmodified blocks, transactions. In 2009, with the appearance of cryptocurrencies such as bitcoin – which uses this technology in its processes – began to talk about the range of possibilities that this new system encompasses.

Bitcoin was an anti-system revolution, it was born as an alternative to not use the regulated and standard points of purchase and sale of payments. From 2013 to 2015, bitcoin evolved and, consequently, the blockchain.

Transactions that took three days to complete now only last three seconds.”

If you do not store data (in an array), in the end they are distributed in this network. This will translate into greater transparency in processes.

“It’s a paradigm shift,” -anyone who is a believer of blockchain technology.

Blockchain technology, in a nutshell, is going to have application in multitude of industries and sectors of the economy.

The blockchain and Startups

Traditionally, the entrepreneur had two options for raising capital: loans or investors. The arrival of other instruments such as crowdfunding platforms gave way for startups to receive funds from other sources.

The experts say that smart contracts could be used to enforce the investment or loan agreements signed between investors and startups. It is a way of writing what needs to be done with the encrypted digital value in that block chain. It is a way to authenticate information and give credibility in a safe way.

However, this is a process that is probably way too new and untested to be widely adopted by mainstream finance.

ICOs in Crypto Currency

The Initial Coin Offering works similarly to initial public offerings (IPOs). What is the difference? The currency is in the form of crypto conversion tokens. One of the most popular examples in the ecosystem is Ethereum, which started its own financing through an Ether pre-sale in 2014. Most of the ICOs that have been raised are for crypto-coin companies, and it makes sense: they’re selling their own story, but it’s a promise.

Look, realistically, while this all sounds promising, the biggest problem so far is the (lack) of regulation.

Bottom Line

For some, it’s a matter of time. ICOs have to mature and users do as well. As we regulate and mature we are going to be in an incredible spectrum. It is a historical moment that we have to take advantage of.

For now, it is pure speculation: The maximum risk is to assume that you can lose everything.

Cryptocurrencies are indeed the future. Or an enormous bubble, depending on who you ask. How many of these crypto currencies, and startups working with them, will succeed. The answer: not all.

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