The Bitcoin boom has drawn attention to investors. What is behind the boom?
The 18th Blockchain Conference was held in Hong Kong on 10 November 2017. The conference organiser aimed to bring senior figures in finance, tech, government, venture capital and start-ups into a room and discuss blockchain beyond Bitcoin.
Blockchain state of play
Bitcoin is a decentralised digital currency. It was released in 2009. Bitcoin is a P2P (Peer to Peer) payment system, meaning that users can make transactions directly. The blockchain technology is adopted to verify and record the transactions.
The price of cryptocurrency Bitcoin has boosted to over US$8,000 and is estimated to be reaching US$10,000 by the end of 2017. The unit price of Bitcoin has increased more than 735% this year alone and has soared nearly 40,000% in the past five years. However, according to Coinformant, the value of cryptocurrencies can fluctuate wildly either way.
Still, experts think Bitcoin is the most undervalued asset. Brad Hagen from Mainframe told us that only 0.1% global population owns cryptocurrency. “It (Bitcoin) was attacked by government and exchangers in China; it was attacked by CEOs in investment banks because it is taking all of their businesses. No government control it, community cannot control it, the users don’t control it, nobody actually controls it due to its decentralisation. There is more for us to explore in Bitcoin’s self-sufficient ecosystem”, said Simon Dixon, CEO and co-founder of BnkToTheFuture.com at the blockchain state of play panel. He argued that there is still plenty of room to grow in terms of Bitcoin price.
ICOs: pros and cons of this cypro-financing technique
An ICO (Initial Coin Offering) is sort of like an initial public offering. A company can use ICO as a funding means by releasing its own digital currency (token) in exchange for Bitcoin to attract investors.
ICOs has become a trend recently. Over US$2 billion is reported to have been raised in 2017 by the way of token offerings.
Dr Wallace Lynch, the founder of Alpha Token, said, “By adopting ICO, first time in human history that we can focus on increasing user experience and products itself, make big profits while not sharing cuts from customers. However, it is not suitable for all, but only some specific field, because not all things are to be tokenised.” He insisted that ICO will be an absolute win-win game for both owners and users.
Brad Hagen also pointed out that ICO is offering us an unprecedented opportunity to take part in businesses. “We don’t have the opportunity to hold stocks of Uber, Facebook; but now with ICO, everyone can have access to the tokens of a company, this is a chance we should grasp”, said Brad.
Currently, there is little international convergence of regulation in relation to token offerings. It is far too early in the development of this market to predict what the common regulatory approach will be. Some countries are already banning ICOs due to the lack of regulations.
On 4 September 2017, China demanded that all token offerings cease immediately. All proceeds raised should be returned to the investors. Meanwhile, cryptocurrency exchanges could no longer provide any trading services or pricing services in China.
Tokenization is changing the way business raise money and operate. Although the experts are optimistic about the future of ICOs, it remains to be seen how far this fund-raising method will go.
Blockchain 2020 – Experts’ concern for the near-term future
When asked about what were their greatest concern for the near-term future for this emerging business, experts gave different answers. Roger Haenni, CEO of Datum, said, “We are not charged for taxes currently. But tax will become an issue next year.”
Many were concerned about the crime and government regulations. There were already reports about drug dealers using Bitcoin to proceed transactions. The upcoming regulations for the Bitcoin transactions may not necessarily be a hinder to the growth of the industry; it may help to educate the investors and standardise the market, thus stimulating the market.