Four Billion Dollars, that is billion with a “B”. That’s how much a Cayman Islands blockchain startup has generated as of the end of May. That’s a massive amount in the cryptocurrency world of virtual money. Block.one’s $4 billion dollar ICO (initial coin offering) has exceeded every stock IPO offered on the markets this year. Yes, Block.one has raised more money than any IPO on the planet this year.
Banking a Reputation to the Tune of a $4 Billion ICO
There Was No Product
Those facts alone are notably impressive. But what makes this absolutely amazing is that they didn’t even have a product. I should say they didn’t have a live product.
That brings up a valid question. Why would investors pour such an amount of money into a blockchain without the blockchain company actually having a blockchain platform yet? The answer is reputation.
It Was All Faith and Reputation
In other words, investors were betting on the founders of Block.one. The people behind Block.one are well known in the industry and to investors. They have successfully run other blockchain projects in the past. The investors believed they could repeat their previous successes.
So, investors were investing in a company that does not have an actual product yet. That is odd in and of itself. But that’s not all. The investors did not know how block.one was going to be using all of that money. They had a rough idea, perhaps. But they didn’t know for sure.
Obviously, that didn’t stop them from putting their money into this “big buzz’ project.
Here’s What it Was
This ICO was about a cryptocurrency called “Eos”. Unlike a stock IPO which confers ownership upon the investors, an ICO issues tokens to the investors. These tokens represent a promise and they represent access. The promise is that platform will be useful in a network. Once that platform is built, of course. Once the platform is operational on the network, the tokens are like your tickets to “get in”. The tokens themselves represent assets and utility.
Other than that, cryptocurrency investing is pretty straightforward.
This blockchain system, according to what the developers said, will be an improvement over other current platforms such as ethereum. The catchword here is efficiency. The Block.one platform is touted as being a more efficient platform for the operations of dApps (decentralized applications).
There’s quite a bit of big talk about Eos.ios. It could be a real crypto game changer. It could promote and help to significantly spread the use and acceptance of cryptocurrency and related technology. This is dependent upon if it is as successful as its supporters claim. Since the June 1 launch date, the hype appears to be matching the reality.
Block.one is not the usual when it comes to ICOs. Their fundraising has been incredibly successful. Plus, they still own 10% of all EOS tokens. That equals $2 billion. The company is extremely well capitalized.
By comparison, other initial offerings have not matched up to the revenue created with block.one’s ICO. For example, the biggest IPO this year was from AXA Equitable Holdings. That was a $2.8 billion IPO. ADT had a $1.5 billion IPO. While neither of those is anything to sneeze at, block.one’s $4 billion ICO dwarfs them.
This incredible amount of money was being poured into an ICO despite some weakness in cryptocurrency values. Bitcoin, for example, has lost about half of its value since its peak last year. Apparently, that fact has not damaged the faith investors have in cryptocurrency.
Nor has the problems of the Telegram messaging app affected investor confidence. Telegram had raised almost $1.75 billion thanks to private investors. Unfortunately, they hit some bumps in the road. Their public coin offering was canceled. They still have been taking reputation hits.
Despite the ups and downs in the world of cryptocurrency and blockchains, investors are remaining optimistic. Optimism is the only word I can think of to describe $4 billion being invested with only a promise of a product.
That is a lot of faith in the reputation of Block.one’s founder. It is looking like it was well placed.