Last week, the payments firm announced it would be retreating from the 28-strong alliance that had promised to back Facebook’s launch of the Libra, and its digital wallet, Calibra. PayPal has not explained why it had made the decision.
Perhaps its because regulators in Europe, specifically France and Germany have vowed to block the digital currency, perhaps it’s because it has little confidence in the efficacy of the Libra.
According to The Block, a PayPal spokesperson said PayPal “made the decision to forgo further participation," but remains supportive of Libra's goals and will continue to explore how the two firms can work together moving forward.
"We remain supportive of Libra’s aspirations and look forward to continued dialogue on ways to work together in the future…Facebook has been a longstanding and valued strategic partner to PayPal, and we will continue to partner with and support Facebook in various capacities…” reads the statement.
In response, spokespeople for the Libra Association, made up of 28 companies and non-profits, including Visa, Uber and Mercy Corps, said it understands the difficulties ahead and reconfiguring the financial system may be hard but that it is committed to achieving said goal.
However, as it stands, Visa, Mastercard, and Stripe have also been reported as hesitant to sign official commitments to the Libra.
With the explosion of cryptocurrencies over recent years, many businesses and start-ups are turning to Initial Coin Offerings, or ICOs, to raise money to get their projects up and running. This week Finance Monthly gets the lowdown on ICO management from Dr. Moritz Kurtz, CEO & Co-Founder of Acorn Collective, clarifying the point, purpose and benefits of launching an ICO.
In an ICO campaign, early backers of the venture buy a percentage of the cryptocurrency, often based on one of the existing public blockchains, in the form of tokens created by the company they are supporting.
An ICO can theoretically be used to fund any project or product in any category, however, before an ICO is launched it needs to clarify:
- The concept
- The token model
- Funding required
- Next stages if funded
With so many ICOs in the marketplace you must lay out your concept in detail before launching an ICO. This way contributors can see the utility of your token, and understand what they are buying into. It also makes token holders feel part of the process of creating a new technology, platform or product.
Who should run an ICO?
Whilst any product or project CAN launch an ICO, that does not mean anyone SHOULD. ICO’s have become a popular funding model with start-ups looking to bypass the traditional, and more rigorous, process of gaining funds via venture capital backing.
Although technically an ICO model can be used to fund anything, it is important to consider:
- The necessity of the blockchain
- What you want to achieve
- Utility of your token: What real-world utility will your token have?
- Potential for regulation: Currently, ICOs are largely unregulated, but that does not mean they will be in the future. As the ICO market grows, many countries plan to impose stricter regulations.
ICO for Crowdfunding
An ICO could be greatly beneficial for the crowdfunding space, as it allows for the following:
- Removes transaction and platform fees: Current platforms charge 5-10% in fees.
- Be accessible to all: Without the same commercial pressures as traditional crowdfunding platforms, an ICO-funded platform would be able to accept any legal project in any category and country.
- Integrated post-campaign marketplace: The token economy created through ICO funding means the platform could have an integrated post-campaign marketplace, alongside reasonably priced campaign support services for founders.
Essentially, an ICO can be used to ‘crowdfund crowdfunding’.
How is an ICO mutually beneficial?
Successful ICOs benefit both backers of the venture and those relying on the funds it provides.
The backers can contribute towards a product or project at an early stage, thus benefitting from the increased demand for the token as utility increases. Meanwhile, projects can receive early funding to build their business venture without having to give away equity in the company.
Things to think about
Although launching an ICO can hold great promise for start-ups, it’s not all plain sailing.
Getting the funds can be tricky. When launching an ICO you must generate interest from contributors to encourage them to buy your tokens which, in a crowded marketplace, can be challenging. Not getting enough funds is one of the biggest risks. Not meeting the minimum target means the funds are returned to the token holders and the ICO is deemed as having failed.
An ICO is a great way of raising funding for the right projects in certain industries, but is by no means an easy solution. The ICO world is currently saturated with projects and competition for funding is intense. Making sure you have a viable and sustainable idea that requires blockchain is a good start. From then on, a successful ICO requires all the same focus on marketing and community building as any other form of fundraising.
With news that the performance of ICOs has been ‘nothing short of outstanding’, hitting average returns of 1,320%, here Laurent Leloup, Founder and CEO of Chaineum, discusses with Finance Monthly the prospects of ICOs in 2018, and the staggering capacity they have to make an investment golden.
First introduced in 2014, Initial Coin Offerings (ICOs) have seen a meteoric rise in 2017; resulting in $2.3 billion being raised to date as blockchain startups turn to cryptocurrency to raise funds. Typically described as a cross between an IPO and online crowdfunding using Cryptocurrency, an ICO requires an investor to contribute a certain amount of an existing token, such as Ether, to receive a share in a new currency at a set conversion rate.
As the popularity of ICOs continues to grow, it’s important that organizations understand the range of benefits, both for companies seeking investment and those looking to invest, the ICO model provides compared to traditional investment avenues.
Benefits of an ICO
For organizations looking for investment, an ICO is considered a much faster and easier fundraising method to undertake as anyone can start one. Additionally, the online nature of an ICO means that marketing and settlement costs are significantly lower than traditional fundraising with settlements finalized through the blockchain. This removes many additional costs that are associated with traditional investment which could incur legal fees amongst other expenses.
An ICO-funded startup also benefits from a network of supporters, similar to online crowdfunded businesses, whereby those supporters hold tokens that increase in value based on usage. Essentially, this means that an ICO-funded business already has a customer base in place and is in a stronger position to see faster growth.
As well as offering benefits for companies looking for investment, ICOs also have significant advantages for those looking to invest. Many investors are attracted to cryptocurrencies for their liquidity. Rather than playing the long game and investing vast amounts of money in a startup which could then see your investment locked up in equity of the company, ICOs offer the opportunity to see gains much quicker and can take profits out of the company invested in more easily.
An additional advantage of an ICO for investors is that it has the potential to remove geographical limitations seen with traditional venture financing which typically tends to be tied to global financial hubs such as New York, Silicon Valley or London. ICOs remove this restriction and opens up opportunities for anyone in any geography. This democratization essentially allows anyone to contribute and profit from an investment.
Furthermore, cryptocurrencies can appreciate much faster in value than standard currencies. For example, Bitcoin was worth just $100 in 2013 and in September 2017 was trading between $4,000-$5,000. As well cryptocurrencies from Blockchain startups Monero and NEM both saw huge increases in value at 2,000% increases. Therefore the potential ROI for investors using cryptocurrency is much higher.
What to look for in an ICO?
From an investment point of view, not all ICOs are created equal. Whilst there are apparent benefits to this new investment model, a number of poorly-managed operations have caused some concern within the industry towards the transparency and legitimacy of some ICOs.
However, previous successful ICOs have demonstrated that ambitious blockchain firms can achieve their objective in raising funds through this innovative new model. So what should investors look for when thinking of investing in an ICO?
Firstly, before considering investing in an ICO, it’s important to look for those that offer due diligence. There is currently no formal process to audit an ICO organization which means a company is able to start selling cryptocurrency tokens before a functioning product even exists. Understandably this has led some critics to comment on the legitimacy of some projects.
Before investing, it’s important to carry out a detailed analysis of the project, its objectives, and resource to gauge the likelihood of the project coming to fruition. In addition, the project should be able to provide regular operational updates on its status to ensure the investor feels confident with its progress.
As well as ensuring the legitimacy of an ICO through their due diligence, investors should look for an ICO with a certain level of transparency so they feel confident in their venture. Due to the nature of Blockchain technology, it can be difficult to identify who is purchasing tokens. This means that the true extent of the transaction is not quite clear. However, some blockchain platforms enable organizations to require and share personal information when making a transaction. Therefore before investing, it’s wise to consider the project’s Know Your Customer (KYC) measurements in place.
ICOs have seen rapid growth within the last year with more projects planned in the near future. However, for those looking to invest or launch their own ICO, it’s essential to understand how to navigate the ecosystem, including risks associated with the mechanism. Despite being a relatively new fundraising model, the rate at which they have grown in popularity means that we will continue to see more and more blockchain startups turn to the cryptocurrency community."
The Ethos Group, a leading provider of Unified Communications in the UK and Europe, is launching a brand new mobile phone service. Matt Hill, Managing Director of the Voice and Data division at Ethos, speaks to Finance Monthly about this brand new product, how it fits in with Ethos’ current product and solution portfolio and why your business should invest in it.
We’ve all been there, on the phone to a customer whilst driving on the open road or sat speeding past the English countryside on a train when suddenly you lose signal, and your connection to the customer.
Mobile phone network coverage in the UK is a patchwork of different operators, running their networks on different masts. The result is that in often less populated areas one mobile running on one network may have a good signal, while another mobile on a different network may have none.
Over a fifth of the UK has partial or non-existent mobile coverage, where one or more of the carrier networks can’t deliver adequate connectivity. These areas are called “not-spots” and they cost the UK economy dearly.
But what does poor and patchy coverage mean for financial organisations? In 2015, the FCA set rules and regulations obliging financial firms to retain records of specific telephone conversations for at least six months. When you consider that two-thirds of businesses now use remote workers, losing signal whilst travelling through these “not-spots” make it increasingly difficult for these financial firms to comply with these regulations on their mobile devices whilst remotely working. The loss to UK plc is in the tens of millions and as businesses become ever more dependent on mobile data and communications, the loss escalates.
Thankfully, there is a solution. Multi-Net offers businesses the ability to unlock their mobile fleet by allowing a business mobile to roam carrier networks by switching the device between each network as the signal strength varies. This gives businesses the best possible network coverage across the UK and helps them to avoid the financial, and compliance, liability that not-spots represent.
In addition, Multi-Net will converge with fixed-line telephony systems and in the converged future of telephony, all the feature functionality of a fixed-line handset will be on a mobile device – and vice versa. This means that features that are traditionally aligned with fixed-line systems, such as call recording, will be available to mobile devices giving businesses greater control of their entire telephony network, regardless of the device.
With this, you will be able to record inbound or outbound calls for compliance, customer service or audit purposes. This feature allows secure online access to file storage and retrieval of call details. This means that financial organisations can comply with FCA’s regulations, no matter where your employees are.
It is hugely important that businesses partner with providers, like Ethos, to get ahead of the competition. Indeed, there are powerful developments in mobile already coming to the market that can deliver huge benefits to financial organisations. Multi-Net and Converged mobile telephony will build on these capabilities and drive businesses into the future. Companies that engage with the providers, like Ethos, looking to offer these solutions will be best placed to reap the rewards of game-changing technological advancement.
Want to find out more? Join Ethos at St. George’s Park, Burton-upon-Trent on Thursday 11th May, 10am-4pm.
Email marketing@ethos.co.uk to register.
