Oct 15, 2017

By Jennifer Sertl

Initial Coin Offerings and Increasing Participatory Flow

Not everything that counts can be counted, and not everything that can be counted counts ~ Einstein

Gearing up for Sibos in Toronto this week I took some time to revisit Don Tapscott’s four principles for the open world (2012):

  • Collaboration
  • Transparency
  • Sharing
  • Empowerment

Perhaps the most powerful point he made was “this is not an Information Age but an Age of Networked Intelligence.”

Networked intelligence is alive, adaptive and always seeking new forms to in which to emerge. Today, networked intelligence is making itself known in the form of Initial Coin Offerings (ICOs). An ICO is a ( so far) unregulated means by which funds are raised for a new cryptocurrency venture. An ICO is used by startups to bypass the rigorous and regulated capital-raising process required by venture capitalists or banks. In an ICO campaign, a percentage of the cryptocurrency is sold to early backers of the project in exchange for legal tender or other cryptocurrencies. Cryptocurrency is still not mainstream and most people think of Bitcoin when they hear about cryptocurrency. In July 2017 there were over 900 cryptocurrencies available and that number is sure to grow exponentially.

The existentialist in my wants to establish a bit more context prior to moving forward. Let’s break down the etymology of currency:

currency. 1650s, “condition of flowing,” from Latin currens, present participle of currere “to run” (see current (adj.)); the sense of a flow or course extended 1699 (by John Locke) to “circulation of money.”

Currency = to flow! Ideas need momentum. Start-ups need momentum. The predominate funding models are full of regulation and bureaucracy that are the very antithesis of flow. I remember hearing Kiva’s Premal Shah talk about “codified lending” back in 2012 where people were given loans not by their credit score but by their social score. If peers supported the endeavor and expressed confidence — one could secure a Kiva loan. That was disruptive. ICOs are disruptive in a similar way. When individuals appreciate and support an endeavor, an idea, a cause — they can in fact participate in breathing economic vitality into that endeavor, idea or cause by purchasing allocated tokens for the designated compaign. In and ICO one doesn’t just affirm an an endeavor, idea or cause — one becomes an economic engine by way of token participation. The deployment and aggregation of participation happens at an unprecidented pace and even more importantly it is distributed. The reason I selected the spider web with dew as a header for this article is the way it expresses distribution.

The ICO landscape is gaining traction which also means it is soon to be regulated. To keep up with new emerging patterns in this “flow” the voices I encourage you to track include:

Kenzi Wang, Co-Founder of Superbloom Capital

George Burke and Chandra Duggirala, Founders of Aqua Foundation

David del Ser the Director of Inclusive Fintech, and of the Catalyst Fund from BFA.

You can listen Brett King’s recent program “ICO’s are Hot! Can they include more people in investing?

What makes me most excited about the ICO wave is what is possible for the unbanked. According to Kosta Peric, our current finacial system excludes 40% of the population. I would much rather that those who are gaining economic access for the first time to be introduced to a participatory model (ICO) vs. an extractive model (VC).

What makes me the most concerned about the ICO wave is the ways in which participation can be commoditized. David del Ser and I are on the same page — we need to ensure we create scenarios for both optimism and dystopia. Every system has unintended consequences. This is a good time for Foucault: you may know what you do and why you do it, you don’t know what what you do does. Justin Timberlake was in the movie In Time which was a dystopian movie about the value of incremental time, a person was valued by seconds. There is a fundamental desire to quantify every aspect of running a platform. Not everything that counts can be counted, and not everything that can be counted counts, classic Einstein. Even with new technology — we are not allowed to buffer the intangible. The quantifiable “awe” still aludes us and for that I am happy.

In the rigor,

Jennifer

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