The world of cryptocurrency can be daunting, to say the least. Getting started is like dipping your toes into a lake buzzing with activity, allowing little time to slow down and take it in. But at the end of the day, taking a step-by-step approach will help you grasp the concept, allowing you to buy, send, trade, and operate within the market.
It has been a tumultuous period for Quantstamp -- a blockchain-based project that aims to decentralize smart contracts auditing --after the team accepted U.S. dollars and Ether instead of its token to fund its platform. The project raised over $30 million in its Initial Coin Offering (ICO) in November, exceeding its targeted $11 million and distributing 65% of their Quantstamp Protocol (QSP) tokens out of a supply of 1 billion according to Coindesk. However, they add that the recent actions have token owners scratching their heads:
SECURITY TOKENS ARE THE NEW NOW
I vividly recall the first time I downloaded the Mosaic Browser onto my SPARC 10 workstation and surfed the nascent Web. You could find pretty much every site on the Internet listed on the NCSA What's New Page and read the whole Web in a few hours. There was no need for search engines, social media or ecommerce because there weren't very many people.
But I saw enough promise to quit my job editing economics books at the World Bank and start my first company, HuskyLabs, which was hailed by WebWeek as the world's first Web development firm. We had some good times, developing Web applications for the Baltimore Sun, NPR, CBS, Penguin Books and The Coca-Cola Company.
We even broadcast the world's first live streaming new event, PopeTV, when John Paul II visited the US. We were important enough at the time to warrant an mention in the Baltimore Sun when we moved from our loft space in Hamden to a home on the river in the woods of the Eastern Panhandle of West Virginia.
Today, I feel the same sense of excitement about security tokens. I feel like I've discovered something big, and once the rest of the world catches up, nothing will ever be the same.
And like in the early days of the web, not much is going to happen until there are people. In the web era, the people we needed were builders and browsers. In the crypto era, we need issuers and investors.
VCs vs Security Tokens
Security Token Offerings have inverted the traditional capitalization methods for startup companies. In the days of debt and equity, a successful entrepreneur would typically offer a convertible promissory note to friends, family and local angel groups, then raise a seed round, early stage, growth, expansion and mezzanine round before finally achieving liquidity in the public markets. Sometimes the entrepreneur would take on commercial loans, a revolving credit line or venture debt along the way.
Capital Formation in the Crypto Era
Until recently, all an entrepreneur had to do to launch an Initial Coin Offering ("ICO") was find a programmer to write an Ethereum smart contract in Solidity, post a whitepaper and circulate a wallet address. Capital would come roaring in.