Financial Times | July 18, 2017:
This is shadow banking moving to the next stage of private money creation.
Imagine a market where almost anyone can launch their own currency in exchange for millions of dollars of liquid funding without so much as a liability. Now imagine a market where the only limit on how much you raise is not the viability of your business venture or its capacity to generate positive cash flows in the future, but the breadth and scope of your vision for decentralisation, code or capital appreciation.
That is the state of the $82bn crypto currency market. Here, the latest fad is not investing in bitcoin, the crypto currency pioneer, but in “initial coin offerings” which promise to endow tokens at some unspecified point in the future with a digital raison d’être.
At the latest count, more than 900 coins were supposedly active and tradeable in the bilateral crypto currency market, or else bore some sort of implied intrinsic value.
Among the latest to be issued is EOS, which raised $200m of crypto currency in July offering tokens that “do not have any rights, uses, purpose, attributes, functionalities or features, express or implied, including, without limitation, any uses, purpose, attributes, functionalities or features on the EOS platform”.
In the pipeline are projects as vague as InsureX, which promises “an insurance solution based on blockchain”, and Pillar, a “next generation, open-source wallet”.
These are just among the scores of coins being issued every month.
The question is whether this fad represents a legitimate mechanism for helping ventures access funding markets or is just another bubble in the making.
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