Babbitt column | Blockchain project financing or not financing, this is a problem

First, the blockchain, angel or devil?

At present, there are two extreme views on the blockchain in the society. The first is that the blockchain is the future, it is a very great innovation, and it is the greatest technological revolution after the Internet. The other view is that the blockchain There is no practical meaning and it is impossible to land. The current blockchain projects are all fraudulent projects.

In fact, people have no big doubts about the blockchain technology itself. For example, the giants of the Internet that you can think of now have invested capital, talents, and energy to develop blockchain projects. Many projects have even The prototype of the product has been taken out, and the blockchain has been mentioned many times at the national level. Some local governments have already written the development blockchain into the government work report; I believe that even ordinary people recognize the blockchain technology, of course. If you only talk about technology.

The real difference between people is financing.

Second, financing, or not financing?

Regarding the financing of blockchain projects, many people in the circle said that the blockchain cannot be separated from financing, and the chain and the currency cannot be separated. The most essential role of the blockchain is to issue coins.

But there are also many people who say that blockchain and currency financing can be separated. You see that most of the big companies don't have money, just do simple technology accumulation and product development. Even if a small amount of money is issued, the currency is not publicly financed.

Regarding the financing, the attitude of the state is very clear. It has already been fixed in the rectification letter of the "Notice on the cleanup and rectification of the financing of the issuance of tokens" – all those involving digital currency financing are Illegal fund raising.

The provisions promulgated by the state are written as follows:

Token issuance financing refers to the so-called “virtual currency”, such as bitcoin and Ethereum, which is raised by the financing entity through the illegal sale and circulation of tokens. It is essentially an unauthorised illegal public financing, suspected of illegal sale. Counterfeit tickets, illegal issuance of securities, and illegal criminal activities such as illegal fund-raising, financial fraud, and pyramid schemes.

Tokens or “virtual currency” used in token financing are not issued by monetary authorities, do not have monetary attributes such as legal and mandatory, do not have legal status equivalent to currency, and cannot and should not be circulated as currency in the market. use.

From the date of issuance, all types of token issuance financing activities should be stopped immediately. Organizations and individuals that have completed the issuance of tokens shall make arrangements such as retreat, reasonably protect the rights and interests of investors, and properly handle risks. The relevant departments will seriously investigate and punish the refusal of the token issuing financing activities and the illegal and illegal activities in the completed token issuing financing projects. Is this simple and rude positioning correct? Is it conducive to the development of the industry? Will the ban be lifted in the future?

There are reasons for the introduction of this policy by the state, and it was promulgated at a special time. At the time when ICO was the hottest, all kinds of fraudulent projects were rampant and had already had a big impact on the market.

Regarding whether ICO is illegally raising funds, we need to think about deeper questions: When we participate in ICO, what do we get when we pay money? What do people expect from themselves?

Whether it's the unknown small currency, or the EOS, ETH we know well, when we get these tokens through ICO, we didn't even think about what to do with it. For example, you can try to answer, what do you expect to do with EOS after it? What do you expect to do with ETH?

At present, most of the ICO tokens have very few real practical uses. Most people pay the price of money, which is to hope for a value-added potential, and that is all.

Third, financing, you need to first determine the rights behind the money consideration

To pay for money and to add value, a carrier is needed between these two things.

Behind this carrier must have a clear support of rights. If there is no support for rights, if anything can be used as this carrier, then there will be malicious speculation, such as the fried tulips in the past, such as the current fried shoes and fried underwear.

The current digital currency can be roughly divided into three types: the first one is like Bitcoin, which has a payment function, and its own positioning is money; the second is essentially the right to use, such as BNB (although through repurchase and destruction) Can be linked to the profit of the currency security), the point card of the trading platform, the gas of Ethereum, the points issued by various merchants, etc.; the third type is the generalization of traditional assets, such as equity, trust, such projects are currently compared Less, the future may become the mainstream.

We analyze from the back to the next, the third case of the traditional assets of the pass, currently there are few on the market, we can not discuss for the time being; currently ICO financing on the market, generally belong to the second, that is It is said that the Token at this time corresponds to the right to use.

For example, when you buy BNB, BNB can be used to deduct the handling fee, then you are essentially a discount coupon for the purchase fee;

When you buy Ethereum to pay for the cost of gas, you are actually paying the “toll fee” in Taifangfang;

When the rights behind the pass are the right to use, the Token is a bit like our traditional goods. You pay for it, get the goods, and the functions that the goods can achieve.

When using this Token for financing, the essence is equivalent to the pre-sale of goods.

The pre-sale model is very common in our lives. For example, there are always hair salons, cake shops, Internet cafes around us, many of which are pre-sale models. You recharge first, then I will give you a point or a card. There is an equal amount in this card, you can think that this amount is only used to enjoy the equivalent service.

The risk of pre-sale is very large. I believe everyone knows that news of hair salons, cake shops and Internet cafes can often be heard in the news. The cost of recharging customers cannot be refunded. If the risk of this traditional pre-sale model is already so large, then the pre-sale model with financial attributes is more risky.

More importantly, if you treat these tokens as a commodity, then the commodity should not have price fluctuations at all, the commodity should not be used for financing, and the commodity should not have a secondary market .

This is why the state explicitly bans all digital currency financing and lists all digital currency financing as illegal fundraising. From the bottom-level principle, it is reasonable for the state to explicitly ban ICO.

Fourth, no financing, many projects can survive

I am in the article "Bitcoin is not financing, what financing do you rely on? As mentioned in it, Bitcoin, which is the head of the digital currency, has not been financed throughout the development process.

With the strength of Nakamoto, if he wants to raise funds, there should be no problem, but he did not choose a financing model.

Bitcoin was involved in mining in the early days. When you participated in mining, you actually participated in the ecological construction of Bitcoin. In return, you can get BTC, but the BTC issued at this time has no price. To be precise, there is only value without price.

Although there is only price and no price at this time, the early developers rely on interest, love and vision to participate in the project, but with the development of the project, as the wisdom, ability, function and ecology accumulated on the project become more and more The richer the value accumulates over a certain critical point, at which point the token will produce a price.

The price at this time is naturally generated, rather than being forced by the secondary market by the exchange. With the price, the incentive effect is more obvious, the value of the project will be more and more condensed, and the development will be accelerated, thus forming such an organic cycle.

For a long time before, the developers and participants who did not get the benefit of the value of the obligation, only then got the incentives that can be realized. The value they paid before was given feedback. They took the risks, paid the labor, and now they get The harvest.

When Bitcoin has a price, the project party and other ecological participants can solve the funding problem of the project development by selling the token, so that no financing is needed.

There is a very essential difference here. We call it the difference between the blockchain project and the traditional project development concept. We believe that the blockchain project is more inclined to give the project value first, and then give the project price instead of Just like the present, the opposite is to give the project a price and then give the project value.

Liu Chang used the teacher to say: "The essence of blockchain is distributed consensus." The reason why distributed consensus is useful is because it integrates the wisdom, talents and abilities of the whole society in the form of open source to promote the completion of the project. Even if it does not rely on financing, it has accumulated the wisdom, talents and capabilities. I can also slowly start the project.

This kind of attraction is to attract seed users through the attraction of the project itself, participate in project construction, and then accumulate value, and then generate prices, and solve the financing development problem of the project through the secondary market transaction, which is also an effective road, and from the bit In terms of the development of the currency, this should be the most natural development path for real blockchain projects.

5. Traditional capital channels are still the best financing route

Of course, not all projects can be completely decentralized like Bitcoin, which can attract so many people to participate. More projects need to develop faster and get users faster. It is really inseparable. Financing.

When the government made it clear that all digital currency financing was illegally funded, people suddenly found that traditional capital channels were still relatively efficient in order to finance the traditional capital channels.

First of all, only the financing of institutions is financing a limited specific object, and does not satisfy the definition of unspecified object financing in illegal fund-raising; at the same time, it can also provide free distribution to retail investors, or exchange Token for ordinary users. Certain rights and contributions, such as participation in mining, such as participation in promotion, such as identity authentication, can also take advantage of the distributed collaboration of blockchain, using Token as a means of motivation.

Secondly, if your Token represents a product that is equity, trust, or asset securitization, then Token is just an electronic version of the original paper rights, which is essentially the same as the original financial product. Of course, the financing of these Tokens also requires traditional financing channels, while accepting the supervision in the "Company Law" and "Securities Law" in traditional finance.

Since the state has clearly determined that all digital currency financing is illegal fundraising, this is a red line and cannot be touched casually. Nowadays, a number of emerging financing projects are basically traditional financing routes, only accept institutional financing, and with the formalization and maturity of blockchain development, I believe that a large number of follow-up projects will continue to adopt this kind of The financing model, the traditional financial route will be the mainstream route for the blockchain project for the next period of time.

Six modes of development of blockchain projects

The development of blockchain projects may generally have the following modes:

The first type, no financing, no currency. For example, those products developed by traditional Internet companies do not need to issue coins or external financing, and they have sufficient funds to support them. There is nothing to say about this situation. They simply use blockchain technology to send a product. At this time, the real thing to think about is how to react chemically with the blockchain without sending coins.

The second kind, financing, but not the currency. This is the model of traditional Internet companies. They have not issued Token, but they will raise funds and take the traditional capital investment path of traditional angel investment, A, B, C, PE, VC and listing.

The third type, the currency, but not financing. For example, like Bitcoin, using the characteristics of distributed collaboration, everyone will first make the ecology together, slowly make the tokens have a price, and then solve the funding problem of project development through the secondary market; another way is the project side. The use of the issued currency as a commodity, such as the use of points, points card, etc., this kind of thing naturally does not need financing.

The fourth kind, the currency, financing. This situation is currently the most mainstream in the blockchain industry and the main regulatory object of the country. For this situation, the most important thing is to clarify the rights and interests behind Token. The rights must be standardized first, and the financing problem can be standardized accordingly. Otherwise, ICO will always be in a state prohibited by the state. The current solution is to issue the currency, and then the currency is only for institutional financing. It is free for ordinary users. This is a compromise, which effectively avoids supervision and makes full use of the blockchain distributed division of labor. And the incentives of Token.

The above four are all possible ways to finance future blockchain projects. ICO will not be lifted in a short period of time. Each blockchain project needs to find a method that is both compliant and suitable for itself.

Author: Monte Carlo