2016: The Year Blockchain ICOs Disrupted Venture Capital

Projects with a business model

In 2016, we saw several projects funded with an ICO that had a business model with actual earnings.

ICO token holders would be rewarded with 'dividends' when the underlying project or company gained traction. Note that these 'dividends' come from underlying earnings, not from inflation, which is the source in regular proof-of-stake cryptocurrencies.

With this development, for the first time, we were able to provide a valuation model for these cryptocurrency tokens, since their value could be computed beyond mere speculation. The value for these tokens will ultimately be backed by the cash-flow generated by these projects.

Although the final value is heavily dependent on the accuracy of the assumptions made in the model, investors can plug in different numbers in their own model and come up with their own ranges of value.

The notable 2016 ICOs that fell under this category were

  • ICONOMI ($10m): A project that aims to create crypto-index and hedge funds, and an open-fund platform for other investors to host their fund-management.
  • SingularDTV ($7.5m): A project, the first ICO from ConsenSys, that aims to provide a documentary and TV series, along with a digital rights management platform.

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George Zervos

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