This is the second part of an essay about my perspective about initial coin offerings(ICOs). The first of this essay analyzed ICOs from the perspective of financial markets drawing some analogies with public market artifacts. Today. I would like to look at ICOs though the lenses of technology markets and the impact that this phenomenon can have in the next wave of technology solutions.
Until now, ICOs have been sued in its basic capacity to provide a non-dilutive fundraising mechanism for startups. However, the raise of ICOs is having a profound impact in technology markets. Let’s discuss a few key observations that might help to explain that idea:
1 — Blockchain Startups Dominate ICOs
Not surprisingly, the vast majority of ICOs have been conducted by blockchain technology startups. The are two main factors influencing that dynamic. First, ICOs are a non-trivial process from the pure technological standpoint that requires some deep understanding of blockchain technologies. Secondly, most ICO investors were early adopters of digital currencies and therefore have a preference and understanding of blockchain startups.
2 — New ICO-Specific Technology Comes Into the Market
In the same way that there are technology providers that enable and support IPOs, a new window is optning in the market for ICO-specific software platforms. From the creation of tokens to the pricing and performance monitoring of ICOs, there is plenty of opportunity for new technology offerings in this new area of the market.
3 — New Levels of Cyber-Security are Required for ICOs
ICOs are a magnet for hackers. Just look at the recent attack during the CoinDash ICO. Cyber attacks on ICOs are not only damaging to the target company bot also to its investors and the ICO industry in general. As a result, ICOs are likely to require new types of cyber-security technologies specifically tailored to that market.
4 — Tokens Become as Ubiquitous as API Keys
ICO tokens can be conceptually considered analogous to paid API keys. In the same way API keys offer developers access to resources in its underlying platform, ICO tokens provide access to resources within a product of can be redeemed for ETH and access to the Ethereum platform.
5 — ICOs can Enable IOT P2P Commerce
One of the most fascinating use cases that can be enabled by ICOs is peer-to-peer commerce between devides in an IOT topology. You can imagine a home automation scenario in which a smart dish washer can directly place an order for detergent to your favorite ecommerce platform and use tokens to pay for it.
6 — A Paid Open Source Model
I am very intrigued by what can come out of the intersection of ICOs and open source technologies. While popular open source products have been traditionally distributed as free products, we can envision plenty of scenarios in which developers leverage ICO tokens to receive certain level of compensation from fans and early adopters.
7 — Crowdsourcing Compensation
ICO tokens and crowdsourcing are a match made in heaven. Tokens are a global, liquid compensation mechanism that can be used with participants in crowdsourcing campaigns. Furthermore, the value of tokens can increase with fluctuations in the digital currency making more attractive to the participants in the campaign.
8 — Paid Gamification
Gamification is one of those super exciting trends that hasn’t quite crossed the chasm into mainstream adoption. With ICO tokens, developers can extend gamified interfaces with new compensation mechanisms that reward the best users and early adopters.
9 — ICO Tokens in SaaS Licenses
Another interesting idea is the applicability of ICO tokens to traditional SaaS license models. We can envision a scenario in which a company distributes tokens to users as part of a specific license scheme that will grant them access to specific features of the product.
10 — Smart Contract-Based Ecommerce
the proliferation of ICOs also means that companies will enable more of their capabilities via blockchain smart contracts. as a result, new forms of ecommerce powered by existing smart contracts are likely to become mainstream in the near future.