Now on to part 3 of our ‘How To Make Money in Cryptocurrency’ series. We started by looking at a simple speculation strategy, followed by freelance and formal employment opportunities. Today we will examine the idea of creating a not-so-easy but potentially incredibly rewarding cryptocurrency startup.
No Thank You ICOs
Now, before we start rubbing our hands together with glee at all the untold millions that will be raised by your crypto startup, it’s worth bearing this in mind. 2017 saw an exponential explosion in the amount of ICOs being created and offered to the public. Some (a small fraction) were very successful. Many, however, collapsed (and are collapsing), leaving untold numbers of bagholders and ruined dreams.
But we’re talking about how to make money, right? And sure, it’s not our fault if the startup we create fails. We worked hard, and our timing wasn’t just quite right. Well, even if we could swallow that unscrupulous pill, sleeping soundly on our $400 Egyptian cotton sheets, a bigger and much pressing problem would soon present itself – the regulators. The SEC, and other relevant jurisdictions have begun to pursue these charlatans and ‘failed’ business people of 2017, who are now being deemed to have potentially offered unregistered securities. And convicted white collar crime does not come with Egyptian cotton sheets.
The above might be a bit ‘serious’ but it could not be more relevant in today’s evolving cryptocurrency and blockchain space. So, with that in mind, let’s examine a new and unexplored business concept.
Security Token Offerings
Instead of Initial Coin Offerings, the latest vogue and attention of the crypto world is focusing on the STO (security token offering). These digital assets fully embrace regulation and offer the holder legal rights over the underlying asset. For example, an STO and exchange can offer digital issuances of Google stock. The advantages are unparalleled. Not only can this ‘ownership’ of the stock be almost instantly confirmed, but it allows for something called ‘fractional ownership’. Instead of being like a derivative, where you have the ultimate right to the underlying (x10-100), you have the right to the divided underlying. 1 Google stock could be divided 1,000 times – providing access to citizens who may not normally be able to invest in stocks and shares. They can then sell these tokens on the open market, creating accessible liquidity.
It doesn’t just stop there. These STOs can also be called ABTs (Asset-Backed Tokens) and are able to represent any physical or digital asset. Own a car garage? You could technically create ABTs to represent your physical stock, raising equity through a private or public offering. Olive oil farmer? Why not start a Kickstarter/Indiegogo style fundraiser, partitioning off your groves and a percentage of future crop revenue to the holder. Real estate is another industry ripe for STO disruption.
The beauty of security tokens over their coin offering counterparts is that they have inherent and tangible value. They *should* also be completely compliant with all relevant local legislation, protecting both you – the business owner – and the public. What’s more, platforms offering the ability to create security or asset-backed tokens are on the rise, dealing with everything from compliance, through the issuance and a medium of exchange. Polymath, Smartlands, Securitize and Harbour are just a few examples.
STOs/ABTs are just one interration of the potentially transformative power and value that blockchain technology can add to an existing or new business idea. Being able to raise, and tokenize, compliant, liquid capital offers an unprecedented advantage over competitors. It will transform entire industries and business structures. The idea potentials are endless.
This is a once-in-a-lifetime opportunity to create a business which offers real, tangible value (and potentially make a lot of money in cryptocurrency). It’s just not going to be yet another ICO.