On midsummer night 2017 the factory Berlin hosted “Blockchain Leaders” a talk and panel discussion event featuring Peter Smith from blockchain.info and Erik Voorhees from shapeshift.io. Both speakers talked about their personal backgrounds and told some entertaining stories from the days when their companies first started out. It’s difficult to report everything that was said, so instead I want to try to summarize some of the big topics that were touched on over the course of the evening.
Smith said that he thinks it is likely that the Initial Coin Offering model could replace venture capital in the mid- to longterm. One hugely positive side-effect of that is that regular people can profit from the high growth of successful companies instead of only well connected VCs. Furthermore the ICO model leaves the investors with tradable assets immediately, where in the older VC model, investors have to wait until an eventual initial public offering at a stock exchange. Also the commissions companies pay for IPOs are so high, that ICOs (which are virtually free) will proof superior. Smith predicts that the ICO-model will spread from the crypto scene into the tech scene and later even into other sectors.
Voorhees added to that, that ICOs are magical because they allow projects to get funding that would not have been funded before. He stated that the ICO model in and of itself is a good example for a development that nobody could have forseen only a few years earlier. These kinds of developments are only possible in the absence of government intervention and are a good case in point why refrain from intervening in markets.
Both speakers however cautioned that the current ICO hype might be hugely exaggerated and that big corrections are likely to come.
Of course Voorhees talked about Shapeshift’s new product: Prism which was recently announced at the Consensus 2017 conference. The product is built entirely with ethereum smart contracts and enables users to get exposure to a basket of digital currencies without having to trust a third party and without having to buy and hold all these digital currencies locally. All that is needed is an ethereum wallet. The product is currently in a private Beta, but it is possible to get an invite through the Prism website.
Futhermore the shapeshift CEO told that it took 1.5 years to build the platform. One major difficulty was to find a qualified solidity developer when they first started. The timing turned out to be very lucky: cryptocurrency-valuations are currently at their all-time-high. This manifests itself also in the exchange volume of the Shapeshift platform. While there were only about 20 million USD worth of coins traded in december 2016, barely 6 months later the monthly volume at Shapeshift will exceed 300 million.
Smith told that he was talking with a lot of central bankers at Davos recently. He said that he has the impression that central bankers take the topic seriously. He believes that central banks understand their money as a “product” that is in competition with other forms of money – for instance cryptocurrency and that they are well aware of the areas where crypto performs better than their own product (speed of transaction and arguably store of value).
Smith however sees a role for central banks in the crypto-space. He argues that there seems to be a demand for centrally issued currency (as a token on a blockchain). One of the biggest obstacles for the whole crypto industry is that no stable coins with a fixed value relative to fiat currencies exist. Centrally issued fiat tokens could fill that hole.
The whole evening was very interesting, there were many more topics which I didn’t even touch on in this post (for instance the New York agreement as a asolution to the Bitcoin scaling problem which both support). Nicolas Brand of Lakestar moderated the evening very smoothly and the Factory Berlin provided the ideal event location. I want to thank everybody involved for organizing this great event!