Development of Blockchain Industry

SEED
SEED
Sep 5, 2018 · 4 min read

What on EARTH is a Blockchain and how did it develop? [Part 2]

The Rise of Ethereum and Smart Contracts

Image 1: Moving from Traditional Contracts to Smart Contracts

Vitalik Buterin was a co-founder of Ethereum and Bitcoin magazine and also an initial contributor to the Bitcoin codebase. However, around 2013, he became frustrated with its programming limitations and argued for a malleable blockchain(Marr, 2018). He goes on to make a second public blockchain and this is the infamous Ethereum. The biggest difference between Bitcoin and Ethereum is that the Ethereum goes beyond recording currency transactions and has the ability to record assests such as loans or contracts. Introduced in 2015, Ethereum unleashed a new concept called “Smart Contracts” in the blockchain industry. The Smart Contract here refers to the automatic processing of a contract once the set of contract conditions are met. This is an efficient way that reduces the time and cost, and therefore has attracted many corporations such as Microsoft and UBS.

Development and Evolution of Technology, and…

As the blockchain technology developed bit by bit in terms of operation, protocols, system technology and various other fields, more cryptocurrencies based on new blockchains began to appear. New ways for the developers of the new cryptocurrencies to fund their development began to appear as well, and this is the point where we hear about the ICOs. If you are new to the crypto world, it is quite likely you are not sure what the ICOs mean. ICO is a abbreviated form of Initial Coin Offering and it is a form of Crowd funding, at which the developers of the new project offer up the cryptocurrencies that they developed(eg. ‘P’ coin in Image 2) in exchange for Bitcoin(eg. ‘B’ coin in Image 2) or Ethereum. This is a similar concept to Initial Public Offering(IPO) at which companies offer their stocks to gather investors.

Image 2: How ICOs Proceed

ICOs can raise enormous amount of money in a short period of time because it can be carried out globally. Also compared to the traditional way of raising funds in ventures, ICOs are easy to structure because of technologies like ERC20 Token Standard. This is one of the reasons why so many companies raise funds using ICOs. However, several parties, including the governments of various countries, raise their voices about the dangers of ICO. They point out that ICO, by definition raises funds based on a non-existing product or services and therefore it is highly speculative and high-risk for the participants (investors).

Image 3: How Reverse ICOs Proceed

One of the methods used to resolve such risks and to provide a more secure investment is the Reverse ICO. Reverse ICO is simply put, a form of ICO in which the timing for development and fund raising has been reversed. Reverse ICO is an ICO structured by the companies already operating based on existing business model, expanding the services they provide to implement the blockchain technology. In other words, fully operational company, as it is expanding to provide a new blockchain based service, structures the reverse ICO. Therefore, it is 1) based on a pre-existing and fully operational business, 2) the revenue data already exists, and most importantly, 3) the solution or product is already out in the market being used by customers. In addition, because it is built on top of an existing business, there is very little chance that this is one of the scam ICOs.

Table 1: Short Comparison between ICO and Reverse ICO

The blockchain technology, or the 4th Industrial Revolution, is already all around us in our daily lives and growing in its use. According to Forbes magazine, 15% of the finance institutions are already using the blockchain technologies, and Don Tapscott explained in his speech on TED that the blockchain technology is not only changing our daily lives in areas such as copyrights, but also in privacy and financial transactions. As this goes to show, our lives and blockchain is now inseparable. And why should it be?

SAVING EARTH, YOU CAN DO IT WITH SEED

* Official SEED Channel *

• Website : www.seedfoundation.io
• Naver Blog : http://blog.naver.com/seed_io
• YouTube : www.youtube.com/channel/UCiah9KCG4krzkLUQJrH_MVA
• KakaoTalk : https://open.kakao.com/o/gJc2ecR (PW : 8888)
• Telegram : www.t.me/seed_io
• Facebook : www.facebook.com/seedfoundation.io/
• Twitter : www.twitter.com/seed_io
• Instagram : www.instagram.com/official_seed_foundation/
• Medium : https://medium.com/@seedadmin

Reference:

Cloudbric. “What is a Reverse ICO? Reverse ICO vs. Traditional ICO”, https://www.cloudbric.com/blog/2018/05/reverse-ico-vs-traditional-ico/

Bitcoin Magazine. “What is an ICO”, https://bitcoinmagazine.com/guides/what-ico/

Kastelein, Richard. “What Initial Coin Offerings Are, and Why VC Firms Care”, Harvard Business Review: Venture Capital. https://hbr.org/2017/03/what-initial-coin-offerings-are-and-why-vc-firms-care

Gupta, Vinay. “A Breif History of Blockchain”, Harvard Business Review: Technology. https://hbr.org/2017/02/a-brief-history-of-blockchain

Reiff, Nathan. “Blockchain Technology’s Three Generations”, Investopedia, https://www.investopedia.com/tech/blockchain-technologys-three-generations/

Marr, Bernard. “A Very Brief History Of Blockchain Technology Everyone Should Read”, Forbes, https://www.forbes.com/sites/bernardmarr/2018/02/16/a-very-brief-history-of-blockchain-technology-everyone-should-read/#30be03627bc4

SEED

Written by

SEED

SAVING EARTH, YOU CAN DO IT WITH SEED. www.seedfoundation.io

Welcome to a place where words matter. On Medium, smart voices and original ideas take center stage - with no ads in sight. Watch
Follow all the topics you care about, and we’ll deliver the best stories for you to your homepage and inbox. Explore
Get unlimited access to the best stories on Medium — and support writers while you’re at it. Just $5/month. Upgrade