Just where is the cryptocurrency story going? Sat, Jan 06, 2018 – 5:50 AM 2018 Year of the Cryptocoin: Is it a boom, a bubble, or a bust-up waiting to happen? Our roundtable talks it over. ILLUSTRATION: SIMON ANG ”I believe in the power of crowdfunding, even if it is a donation with no recourse. Why should entrepreneurship be in the hands of so few? Truthfully, it should be in the hands of society.” – Jamie Lee ”Initial Coin Offerings are a lot cheaper, and they do not dilute shareholding.” – Darren Chua ”We believe that a diversity of products are going to serve the crypto space.” – Dustin Lau ”The current limiting factor for mass adoption is the transaction speed of the blockchain. Both the Bitcoin and Ethereum networks will see upgrades by 10 to 100 times in 2018.” – Kenneth Tan ”Before anyone invests in an ICO, they should at least know what blockchain is, before looking at the price or returns.
The disconnect is when aunties and uncles start touching this.” – Anson Zeall Up, up and away?
IF YOU’VE heard of SpankChain, chances are you are an avid follower of cryptocurrency trends or a keen patron of the adult industry. SpankChain – a blockchain-based service built to provide adult entertainers with the infrastructure to create and run their own streaming or content distribution sites – is part of the latest craze of adult ventures launching their own initial coin offerings (ICOs). And many of them aren’t doing half bad. SpankChain’s token, Spank, was trading at some US$0.40 on Friday, nearly 10 times its price since the company’s ICO in December.
Cryptocurrency (crypto for short) is clearly all the vogue now – myriads of companies have started to launch ICOs, through which they issue their own digital tokens that can be bought by backers using crypto. Such tokens entitle backers to monetary or non-monetary rewards.
For the unacquainted, crypto is digital money (such as Ethereum) that is used as a means of exchange, and can be transferred between peers without a middleman, such as a bank. It is decentralised: controlled not by a central government but by users and an algorithm. Transactions are recorded on a digital ledger, called a blockchain. Yet, even as crypto investing and ICOs gain traction, there remain die-hard sceptics.
The Business Times gathered six individuals to debate all things crypto. Whoever you agree with, 2018 is going to be the Year of the Crypto.
ROUNDTABLE PARTICIPANTS Anson Zeall , chairman of the Association of Cryptocurrency Enterprises and Startups, Singapore (Access) Darren Chua , co-founder of fintech investment and consulting company, Fairway Resources Doubting Thomas , an anonymous male who works in finance and a general sceptic of crypto Dustin Lau , chief experience officer at Kommerce, a platform that uses blockchain to conduct trade finance in Africa Jamie Lee , co-founder of Viola.AI, a Lunch Actually dating platform built on the Ethereum blockchain Kenneth Tan , co-founder of crypto crowdfunding platform, FundYourselfNow
Q: Is 2018 the year of the cryptocurrency? Will we see cryptocoins for everything? sentifi.com Market voices on:
Kenneth: Yes, 2018 is definitely the year where everything goes crypto.
Because it’s much easier today to create coins: we are seeing all sort of coins, ranging from serious ones such as Bitcoin Cash, which is a fork of Bitcoin, to funny ones such as Useless Ethereum Token (UET). Recently, someone bought a digital cat based on the Ethereum blockchain (CryptoKitties) for over US$100,000. SEE ALSO: Time to migrate ‘follow the money’ rules to the world of virtual currency
DT: I’m neutral on this.
I suspect a huge part of crypto’s rise in 2017 is due to cheap liquidity in the market and investors’ obsession with the search for yield. If the global economy continues to strengthen and the major central banks proceed on their tightening path, the squeeze in liquidity and availability of other safer investments which provide good-enough returns will cause the crypto craze to die down a little.
I liken crypto investing to venture capital (VC) investing. When equity returns are decent, investors have less incentive to take on riskier bets, since they would already have met their required returns. This is also the reason why VC and private equity valuations have become stretched. The opposite will be true if the major central banks hold back on their monetary policy tightening.
Kenneth: That’s a valid viewpoint.
Due to the zero per cent interest rate, there has been a lot of hot money since the last financial crisis. That’s how the equity and property markets got so hot – all the cheap money was put into the system. That said, I doubt any asset class comes close to crypto. Bitcoin gave a 13x return last year. Equity gave at least 20 per cent returns last year, but even its good performance didn’t stop Bitcoin from exploding.
The returns on the other asset classes need to go up by a lot for the crypto market to cool down.
Darren: Actually, the crypto trend started in mid-2017. We are already seeing cryptocoins for a plethora of products and services. In recent months, I have been to Fintech Week (in Hong Kong), Fintech Festival 2017 (Singapore) and BlockShow 2017 (Singapore). While just walking briskly through the event halls, I could see over 100 Initial Coin Offerings (ICOs) and fintech firms pitching their coins and ideas. The firms’ energy and passion, and their ideas, are mindblowing. I see 2018 being the year that ICOs will move more into the mainstream.
Anson: As representing the head of Access (the Association of Cryptocurrency Enterprises and Startups, Singapore), we do not speculate on price, hence we don’t know if it’s a craze or not.
All we know is that our members are putting in huge efforts in the innovation space with blockchain technology.
Jamie: The industry seems to be growing exponentially and spreading to many new industries and generating many new innovations and ideas. It does feel very similar to dot-com’s early days, but I’m not sure if 2018 will be the peak or just the middle of the crypto story or trend.
Initial Coin Offerings (ICOs): Innovation or scam?
Anson: Before anyone invests in an ICO, they should at least know what blockchain is, before looking at the price or returns. The disconnect is when aunties and uncles start touching this. More education is needed.
Access is working with NTUC to hold classes on the basics of crypto.
Ken: From the entrepreneur’s point of view, ICOs are an innovation tool. It is a process that for the first time, allows companies to reach out to a global pool of investors at a very low cost.
This is relative to bank loans, peer-to-peer lending and selling equity to VCs – all of which are quite expensive means of raising funds.
Darren: Compared to IPOs (Initial Public Offerings), ICOs are a more nimble way to raise money. The time and amount of preparation needed for an ICO is much less than that for an IPO, which is a long-drawn process that can take 1.
5 years and cost a lot of money. ICOs are a lot cheaper, and they do not dilute shareholding. You will need a business plan, a whitepaper that is hopefully supported by lawyers, and some marketing.
Ke.
