Weekly Roundup: Too Many ICOs, Too Many Coins, Too Little Adoption
This week we look at how every-day businesses are being “blockchainized” by the score, spell out the differences between ICOs and IPOs for you, discuss what the Ethereum hard fork means and review the latest, well-backed crypto to assume the bitcoin moniker.
Banking ICOs Have Raked in Close to $1 Billion So Far This Year
Big money continues to flow from Wall Street into blockchain-based projects at record speeds, with the advent of the cryptographic record finding itself being applied in a myriad of ways. In 2017, hopeful startup ventures are looking to blockchain-ize everything from e-sports gambling to the employment market to real estate. Now its looking like streaming services like Netflix may one day be blockchainized as well. Over $1.2 billion has been raised in the first half of 2017 in ICO-related token sales alone, with bank-type projects dominating a good 80-90% of all funds raised.
It seems as if everything that can be made into a token, is, which is one of the biggest separating features between ICOs and IPOs (stock offerings). Anybody can make a token, name it after their cat and then distribute shares of tokens equally to represent ownership of said cat. This requires no legally binding agreements, formal registration with a government agency or any licensing. In this respect, ICOs are hardly like their IPO counterparts. Their lack of a standardized or regulatory framework renders them a whole new ballgame without many set rules.
Because the cryptocurrency game is indeed different, Wall Street first ignored it, then tried to shrug it off, and is now fully investing in it. Even old school financiers like JP Morgan’s Jamie Dimon, who recently made the very public assertion that bitcoin was nothing but a giant “fraud,” are attempting to manipulate the price of BTC for their own financial gain. It was revealed last week that JP Morgan was buying up vast amounts of bitcoin and competing coins rather secretively after Dimon’s comments were blamed for dropping the price of BTC down 24% in one day. Meanwhile, the CEO of another similar-sized behemoth bank recently took the exact opposite stance as Dimon, likening the fear over bitcoin replacing dollar to those who feared the dollar replacing gold.
Ethereum Hard Fork Activates 10/17
Though this little secret about Ethereum, the biggest altcoin in the world, has been all but forgotten, its true that Ethereum (ETH) itself is a fork and that Ethereum Classic (ETC) is actually the original Ethereum. Unlike the ETH/ETC hard fork, the new ETH fork is not likely to be contentious, but will simply allow the Ethereum Virtual Machine (EVM) to run more efficiently while adding a customizable layer of anonymity as well. The first Ethereum fork, which took place on July 20th, 2016, was the result of a “community decision” to “roll back” the Ethereum blockchain. In this case, the rollback would be to a period just before June 17th of the same year, when the infamous hacking of the Ethereum token The DAO (Digital Autonomous Organization) occurred. The DAO had been the most successful launch of an Ethereum token ever, and was hailed as having the ability to “reinvent companies.” Unfortunately, the only thing The DAO ended up reinventing was Ethereum, as its hard-coded rollback in the blockchain was a more popular alternative to letting the thieves responsible for the hacking get away with nearly $50 million in Ethereum. The Ethereum software that ran the old, uninterrupted chain would now be called ETC, and the latest version of the software with the rolled-back chain called ETH.
Unlike the giant ETH/ETC split in 2016, this hard fork is being conducted with a 100% consensus, as its modifications to the Ethereum Virtual Machine are only seen as beneficial. However, all EVM users must implement the latest version of the software at the exact same time (block 4,370,000 to be specific) or there is a risk of some hiccups occurring in the system.
Both bitcoin and litecoin survived User Activated Soft Forks (UASF) this year of the benefits to Ethereum’s upgraded client include making the network faster, more robust, and secure. Forks themselves are ironically becoming drawing points for coin ownership, as coin holders know that after the activation of a hard fork, they now have two coins instead of one. If the forked coin gathers any momentum ala Bitcoin Cash (BCH), the potential for nearly free profit is huge.
Now There’s Bitcoin Gold…
BCH is by far the most successful bitcoin fork in existence, with smaller rivals BitcoinXT and Bitcoin Classic not faring nearly as well. Now there is another well-financed coin that is incorporating the bitcoin brand into their own cryptocurrency, the aptly named Bitcoin Gold (BTG). Given that there are currently several hundred cryptocurrencies already in existence, the immediate question to be raised might be “why bother?” One of bitcoin’s biggest criticisms has always been the exclusivity of its mining process.
Unless you were wealthy enough to buy linked chains of top-of-the-line ASIC miners and spared no expense on electricity, an individual miner using only their own CPU stands a near-zero chance of ever successfully mining their own bitcoin block. Since BTC mining pools have become something resembling an oligarchy, bitcoin spinoffs like BCH and BTG implement different mining algorithms that place some of the power back in the hands of an ordinary person with no special mining hardware.
Also in the News
- Bitcoin will get another user consensus-driven hard fork of its own in November, as part of the original New York Agreement that was voted into action on May 23rd by most bitcoin miners. The fork is the second part of BIP 91 (Bitcoin Improvement Protocol #91), the first part of which included activating Segregated Witness as a way of reducing the size of each bitcoin transaction, making it easier to fit more transactions in a single 10 minute block.
- Cayman Islands-based company Block.One recently beat out Bancor as having the biggest Ethereum token ICO ever, raising over $185 million in just five days. The celebrity-endorsed startup states it “provides end-to-end solutions to bring businesses onto the blockchain from strategic planning to product deployment.”
- The part of the Ethereum hard fork upgrade allowing for “total anonymity” will simultaneously “help prevent fraud on major exchanges” through a mathematical upgrade to blockchain mechanics known as “Zero-Knowledge Proofs.” The technology had already been employed since the launch of Z-Cash (ZEC), the highly anonymous and moderately successful coin.