By Derek Edward Schloss and Stephen McKeon
By 2010, the recording music industry was in big trouble.
Napster had debuted a decade earlier, giving an entire generation of fans the ability to swipe their favorite songs and albums off the internet. Revenue from U.S. music sales plunged 60%. Digital piracy was rampant.
Limewire. uTorrent. Demonoid. Pirate Bay. Well-funded incumbents tried to shut down a number of peer-to-peer file sharing sites, but found themselves playing an expensive game of legal whack-a-mole. Spend the resources to hammer one down and another would immediately spawn.
Looking to upgrade the existing paid model, pioneer services like Apple iTunes launched distribution platforms that facilitated paid downloads of digital music, either as singles or as albums. But in 2010, Forrester Research reported that only 44% of U.S. internet users believed that downloading digital music was worth paying for. …
By Derek Schloss and Stephen McKeon
Over the coming decade, we believe verifiably scarce and boundary-pushing digital works will power one of the internet’s most valuable industries. Crypto art is a natural evolution of the perpetual question: what is art? But in a natively digital medium, art takes on a more expansive role, intersecting with virtual worlds, decentralized finance, and the social experience.
Don’t quite understand the opportunity? We’ve got you covered.
The Case For Crypto Art
To understand crypto art, it’s important to frame the opportunity in the context of previous art movements. Looking back across history, legacy art movements can typically be viewed as reactions to (1) prior art movements; and (2) relevant cultural events. …
By Derek Schloss and Stephen McKeon
Ampleforth has received a lot of attention lately from both market participants as well as new experimental projects that are incorporating similar features into their own protocols. It’s a project that we’ve been following for a long time so we wrote this two-part article as an explainer and a framework for thinking about how it may evolve. Part I covers Ampleforth’s design and pricing mechanics. Part II (below) covers Ampleforth’s psychology and demand drivers.
The Psychology of Ampleforth
The network value of Ampleforth spiked in July and subsequently retraced about 65% from the high point. What caused this spike in demand and, more importantly, what are the longer term drivers of demand? …
For the first time in history, assets can be sent as easily as information — peer to peer, near-instantaneously, at any size. The Bitcoin network’s open, immutable, transparent ledger—working in concert with unique incentives and powerful scarcity—has reshaped how individuals and institutions across the world think about money, and money-like value.
The opportunity calculus for security tokens is different than what I just described. Blockchain-based securities are distinct from the fixed-supply, bearer, store-of-value cryptoassets like BTC, ZEC, DCR, and others.¹
Instead — security tokens, and the trust-minimized contracting environment they operate within, may be best understood as a formatting revolution.
Let’s begin. …
By: Derek Edward Schloss | STA Director of Strategy
In the past, colleagues and friends outside the blockchain space have asked about my work researching the intersection of securities laws, digital assets, and distributed networks. It’s a question I struggle to answer—mostly, because I’d like my response to be anchored to something relatable (to them and their work), and I find this difficult to do at our industry’s current stage.
Derek Edward Schloss (TDW): Mitesh, great to sit down with you on STA’s The Digital Wrapper. Let’s start off by hearing a bit about your pre-blockchain background, and how you found your way into the space.
Mitesh Shah (Omnia Markets): Before jumping into the blockchain space, I was a student and received my MBA after a five-year accelerated program at St. John’s University, Tobin College of Business. I started working as a financial and equity analyst at SKN Capital Management LLC where I managed several portfolios. In my role, I would come up with different portfolio strategies, and eventually started using — and became certified for use with — Bloomberg Terminal¹. I ended up becoming very passionate about the blockchain and crypto space, and over time, I wanted to bring my expertise as a financial analyst into blockchain and cryptocurrency and carry these same tools with me. What made this even more exciting were the advances in artificial intelligence² and machine learning³ abilities. …
Derek Edward Schloss (TDW): Ben, it’s great to sit down with you on Security Token Academy’s The Digital Wrapper. I’m looking forward to learning more about your products and work over at Wave Financial. I always enjoy hearing about pre-blockchain backgrounds — I noticed you’ve spent quite a bit of your career working in Asia.
Benjamin Tsai (Wave Financial): Thanks Derek — yes, I was originally trained as an engineer, and I spent some time in Asia as an engineer. I ended up going back to business school, and after the program, I spent about fifteen years in Asia working in finance, in Tokyo, Hong Kong, Singapore, and Taipei. …
Derek Edward Schloss (TDW): Marc, great to have you on The Digital Wrapper. This is a conversation I’ve been looking forward to — today, you’re a Partner at law firm Fisher Broyles, but let’s start at the beginning. How did your legal practice take you into blockchain?
Marc Boiron (Fisher Broyles): In 2015, somebody started talking to me about Bitcoin and I got really interested in the technology. At the time I was a securities attorney working with early-stage companies. I didn’t really focus on it too much until late 2016. At that point I remember thinking, “You know what? I absolutely love this tech. All I do is think about it, so I might as well get into it from a legal perspective.” By the second quarter of 2017, I had dropped everything else. …
Derek Edward Schloss (TDW): Jamie, Brian — great to have you both on The Digital Wrapper. For those new to Securitize, let’s start at the very beginning. How did Securitize get started?
Jamie Finn (Securitize): Sure. So a few years ago, Carlos Domingo¹ approached me with this idea of creating a tokenized venture fund called SPiCE VC. At the time, we found there wasn’t any technology yet to tokenize a venture fund. So Carlos went ahead and built his own.
Derek Edward Schloss (TDW): The classic story of entrepreneurship — building a solution to solve his own problem.
Jamie Finn (Securitize): Exactly. And I got involved initially as an investor in SPiCE VC, just because I believed in what Carlos was doing. He and I had worked together previously at Telefonica. That — combined with the giant crypto pump back then — led me down the rabbit hole of wanting to learn everything I could possibly learn about blockchain and crypto. I realized there was going to be a massive opportunity for digital versions of securities. Almost all securities today end up being paper-based, and the process is very manual. In contrast, everything I’ve done in my life has always been digital. In November 2017 we spun out Securitize as a new company. …
You might not know it yet, but security tokens are having a strong year.
According to a recent PwC report, companies last year (2018) raised $442M from security token offerings, up from just $22M the year prior (2017) — a 20x jump.
Even more striking is the number of already-announced tokenization projects in 2019, a list that includes heavyweights like Facebook and Overstock. At the year’s halfway mark, security token deals are likely an order of magnitude greater than the last two years combined.
More on this in a minute.
For background, a security token is a digitized asset (e.g. stock), classed as a security under the laws of a governing jurisdiction (e.g. United States), issued, tracked, and traded using blockchain — a type of shared accounting database. Last year I wrote Security Tokens and the Digital Wrapper, a piece that spoke to the unique features of security tokens in the context of another technological advancement: the digitization of mail in the United States. …