by Harshitha Kilari & Joel Camacho

Photo by Oliver Plattner on Unsplash

In Part 1 of this article, we looked at the venture capital industry through the lens of the Ewing Marion Kauffman Foundation. According to them, venture capital is a broken industry. In a now seminal article originally published in May of 2012, the Kauffman Foundation’s investment team chastises venture firms for being too big, delivering subpar returns, and remaining stuck in the past. They note that in their twenty-year history of investing in venture funds, only 20% of a 100 total investments “generated returns that beat a public-market equivalent by more than 3 percent annually.”¹ …


By Harshitha Kilari and Joel Camacho

Photo by Joseph Barrientos on Unsplash

The venture capital industry, according to the Ewing Marion Kauffman Foundation, is broken. In a now seminal article originally published in May of 2012, the Kauffman Foundation’s investment team chastises venture firms for being too big, delivering subpar returns, and remaining stuck in the past. They note that in their twenty-year history of investing in venture funds, only 20% of a 100 total investments “generated returns that beat a public-market equivalent by more than 3 percent annually.”¹ …


Open innovation has a strong foothold in the tech industry. Big tech companies create application programing interfaces, or APIs, to tap into the knowledge base of outside software developers. By doing this, centralized companies are able to access external pools of knowledge that enhance the value of their own proprietary application. One prominent such example is Facebook’s ‘Like’ button API. Facebook made integrating the ‘Like’ free and easy because it let them tap into apps’ users, giving them access to massive data they didn’t have access to before.

This type of open innovation isn’t unique to Facebook — most all…


The SEC implied most utility tokens may be securities — what are the implications of such a stance?

Source of the image

I have argued that security tokens offerings (STOs) will be the new standard adopted by blockchain companies for raising capital. In essence, the invisible hand will push buyers of digital assets to invest in security tokens over utility tokens. Would Adam Smith cringe at the fact that a term he coined (pun intended; not going to point them out but more puns to come) back in the 1700s is being applied to crypto, or would he crack a smile at the fact that his brainchild is still very much lending a helping hand to those of us thinking through novel…


A Thought Experiment on How Security Tokens Can Decrease Utility Token Speculation, Paving the Way for Functional and Robust Decentralized Products

Source of image

You can read The Argument for Security Tokens (Part 1 of 3) and The Argument for Security Tokens (Part 2 of 3).

Introduction

Over the course of three posts, this thought experiment will lay out the problems that exist and will exist as long as utility tokens are seen as vehicles of speculation, and assert the reasons why security tokens will be the new standard for how crypto companies capitalize themselves.

This thought experiment is broken down into three…


A Thought Experiment on How Security Tokens Can Decrease Utility Token Speculation, Paving the Way for Functional and Robust Decentralized Products

You can read the first part of The Argument for Security Tokens here. Note the introduction is the same in both parts.

Introduction

Over the course of three posts, this thought experiment will lay out the problems that exist and will exist as long as utility tokens are seen as vehicles of speculation, and assert the reasons why security tokens will be the new standard for how crypto companies capitalize themselves.

This thought experiment is broken down into three scenarios:


A Thought Experiment on How Security Tokens Can Decrease Utility Token Speculation, Paving the Way for Functional and Robust Decentralized Products

Introduction

Over the course of three posts, this thought experiment will lay out the problems that exist and will exist as long as utility tokens are seen as vehicles for speculation, and assert the reasons why security tokens will be the new standard for how blockchain/crypto companies capitalize themselves.

This thought experiment is broken down into three scenarios:


What are these types of tokens, what is their history, and what are their benefits?

Photo by Andre Francois on Unsplash

You probably have heard of or read in newspapers the words cryptocurrency or utility token when it comes to describing types of digital assets. Cryptocurrency implies desire to function as a currency — think of Bitcoin, Litecoin, Monero, or even the stablecoin DAI. As for utility tokens, my previous post explains what they are and how they are functioning within the cryptosphere.

Security tokens are another type of digital asset, or what I like to call a cryptoasset, that have been garnering quite a bit of attention lately.

Security tokens are essentially digital contracts for fractions of any asset that…


“A digital token of cryptocurrency that is issued in order to fund development of the cryptocurrency and that can be later used to purchase a good or service offered by the issuer of the cryptocurrency”

The above is the Merriam-Webster definition of a utility token. Yes, it is actually in the dictionary.

Let’s unpack it.

A utility token is a non-physical token (think of a Chuck-e-Cheese or Dave & Busters arcade token that you can’t touch, or hold in your hands) that has been created for crowdfunding purposes (think of KickStarter, GoFundMe — those types of sites). …

Joel Camacho

Ex-Goldman Sachs Banker. Now blockchain investor. www.cmx-capital.com

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