Turnover Magazine

into AML or KYC?” He continues: “Companies
that do that take up to 14% of the value
and that’s a lot of money to lose.” Cryptocurrency
is a way to eliminate the middle-man,
which means YOU can be in charge of your
business transactions, rather than the bank
or government.
So, doesn’t that mean that criminals can
use the blockchain illicitly? In short, yes.
However, it is not the cryptocurrency that
makes a criminal commit a crime. Crimes
are being committed every day with cash
due to its commensurate anonymity. Antonio
Straughn, 51, founder of Soundman Records,
the world’s first drum and bass record
label to accept Bitcoin says: “Yes, some people
will take advantage of the technology but
it’s not fair to say that those people who engage
in cryptocurrency are criminals or that
we should pull the plug on Bitcoin because
some people are abusing it.”
Alessandra Sollberger believes that
blockchain technology has made starting
out in business more accessible. “Things like
censorship resistance [being free from government
or bank interference], which is one
of the properties of the blockchain, are very
much in favour of new players and applications
which transcend what the regulation
jurisdiction of a specific country might or
might not allow.” She finishes: “Overall, it is
an incredible tool for entrepreneurs trying to
do something drastically different.”
ICOs or Initial Coin Offerings revolutionised
the way businesses acquired funding.
An ICO is a method of crowdfunding
for a business. Start-ups create their own
digital currency or ‘coin’ and then investor’s
send money to the company in exchange
for a token. Olinga Ta’eed explains: “Before
ICOs, if you wanted to do serious funding,
then you’d have had to go into regulated
markets where you’d need a very large sum
of money, it could take a long time and you
could get turned down.” He continues: “The
ICO market is like crowdfunding on acid.
You say, for everyone that gives me money,
I will give you a token, and this token could
be worth something in the future. It shook
people’s imagination. It is a way of liberating
finance projects.”
At the beginning, ICOs were an exciting
way to raise money. Some ICO success stories
include EOS who raised $4 billion in 12
months, Tezos who raised $250 million in 45
minutes and Bancor who raised $150 million
in 35 minutes. According to ICO Data, 2017
saw a total of 875 ICOs who raised a combined
sum of over $6 billion. The fact that
the market is unregulated, although making
it easier for anyone to start their own business,
meant that many people were scammed
in the process. In May of last year, the Wall
Street Journal found that 271 ICOs out of
“The
money is in
blockchain”
1,450 were “ponzi-schemes”. Due to the large
number of the scams, the ICO market has
dramatically declined. The following graph
shows the funds raised from ICOs in 2018 in
which 1247 ICOs were started.
Saad Naja, 25, has a history in investment
banking, for the likes of Deutsche
Bank and Goldman Sachs, and working in
start-ups. He is also one of the early Bitcoin
investors and frequently talks on panels
at blockchain conferences. Although once
having belief in ICOs, he now believes that
their time has gone. “To be completely honest,
ICOs are dead. So many people invested
in ICO in 2018 and they got burnt.” As well
as losing money through scams, the ability
to raise vast amounts of money quickly
meant that some people were overwhelmed.
“People who had no experience of growing
a business suddenly had millions of pounds
in funding but had no idea how to make the
project into an actual business,” Saad adds.
Now, ICOs have been taken over by
STOs which stands for Security Token Offering.
In a study, Node Blockchain, a crypto
asset company, describes the difference between
an ICO and STO. Instead of a company
issuing a token that “represented nothing
more than a promise to deliver a future good
or service… in the case of an STO, which is
essentially a financial security issued in the
form of a token; investors have an ownership
right to the underlying company and
Number of ICOs in 2018
or its assets.” This means that, unlike ICOs
which are risky and speculative, STOs are a
lot more secure.
What’s the future?
Many people believe that Bitcoin
has come and gone but
Olinga Ta’eed assures that
this is not true. He trusts
that digital currency will
take over other methods
of payments. Olinga also
believes that blockchain
technology will be central
to businesses in the future
outside of financial uses. “As
yet, outside Bitcoin, there
is not one application that
demonstrates the absolute necessity
of blockchain.” He continues:
“It wasn’t until
Facebook and Google
came that people saw the extraordinary
utility of the internet;
blockchain is waiting
for its innovator.”
Saad Naja believes:
“Blockchain
technology can’t
help every
company and it all depends on
what sector you’re in and how you’re using
the technology. However, in the next 5 to 10
years, everyday companies will begin using
blockchain technology.
“A lot of people are testing it and experimenting,
but no one has really applied it to
their business in a proper way. If you’re able
to really solve platform issues using blockchain
technology as a company, then you’ll
make far more money.” He finishes: “The
money is in blockchain.”
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