Understanding Blockchain Tech and ICOs
Bitcoin is the talk of the town the last few months, rising from $800 to nearly $20,000 and dropping back down to $13,000 in 2017 alone, but incredibly volatile with prophet taking showing drops of over $1500 in a day or two. This has led to an explosion of cryptocurrencies in the past year with thousands of them now available, many are scams or have no hope of being successfully deployed, but there are some legitimately interesting ideas in a few different spaces.
The customized cryptocurrencies are typically released via an Initial Coin Offering (ICO) that is a method of crowdfunding where companies mint a currency, usually on top of Ethereum and then pre-sell them. These “tokens” are then used as currency in whatever their platform is to get paid or to pay for services in the platform.
In the gaming and entertainment space, there are a variety of interesting things happening. SAAV Games is running an ICO called SAAVcoin where the game play currency is tied to a cryptocurrency that is also traded on the open market adding an economic management element to the time management game. Their game is in beta on iOS, Android, Windows, Mac and Linux. Gameflip is a similar concept, but larger scale as the company already has a platform for selling in game items for fiat currency, but are adding blockchain to it with their FLIP token.
Then there is Flixxo which says they are an incentivized video streaming and download service created by the founder of Popcorn Time. This ICO is also in process and they plan to pay their Flixx token to content creators and people who seed their torrents. In turn, consumers of the content will pay in Flixx and advertisers will also pay to be able to get ads into content which creators will get paid in. Their system is currently in alpha test. A very similar project called LBRY is doing a YouTube/Netflix kind of play with content on the blockchain. While not at a 1.0 release yet, they have a fair amount of content and a working client application. They have an app and a platform, so people other than themselves can make use of it. The entire system is open source and available today. The cost and incentive particulars are not currently known.
The explosion of legalized cannabis around the US in particular, is giving rise to a variety of tokens in this space that are focused on different ideas. There is the notorious Potcoin that Dennis Rodman had endorsed and is nothing more than a currency to buy cannabis, there is really no valid use case since you could use any cryptocurrency for it and simplify the process.
Then you have companies like Duber and Paragon which are more interesting in that they are trying to use blockchain technology to manage the supply chain of cannabis from grower to seller. The case for a specialized token in both these markets seems nebulous beyond the need to fundraise, but their objective could probably be better realized using infrastructure blockchain like Dragonchain, which I’ll talk about next.
Bitcoin and Ethereum have demonstrated from recent news items that they have some serious issues that need to be addressed, from security to scalability to speed. Dan Larimer predicted the scalability issues with Ethereum several years ago and currently is at EOS doing a year long ICO that will ostensibly be a better Ethereum, but we won’t really know until next year if this will deliver, but they have the pedigree to do it, the smart contract concept that really took off with Ethereum, is a powerful concept.
Bram Cohen, the developer of Bittorrent recently announced his Chia project, which aims to essentially be a drop in replacement for Bitcoin, the whitepaper describes a system of Proof of Time and Proof of Space for validation instead of the energy and computing wasteful concepts of Proof of Work that is used by Bitcoin, Ethereum and most of the others. This would be a real game changer and make cryptocurrency a lot more democratic, faster and reliable. It is only in the early stages right now, but this is definitely the one to watch.
The original perceived value of Bitcoin was that there would only be 21 million of them and it would take about 100 years to mine the last few percent. But since summer we’ve seen two code forks to Bitcoin Cash and Bitcoin Gold, and a recently aborted attempt at Bitcoin Segwit2x. Unfortunately, all these code forks mean that there is essentially a limitless supply and the market volatility is indicating that, so there appears to be value in these product/platform specific tokens, just for some stability and reduced transaction costs.
For a stable currency in the future, Chia is looking to be the most interesting as it doesn’t waste energy and computing power like all the others. As a development platform, Dragonchain currently offers the most flexibility for serious software development.
Ultimately, what custom tokens you might want to invest in will require research on your part, but anyone that already has some working code is the best place to start.