The largest Initial Coin Offering, ICO for short, will probably be the one Beijing Government is to launch in the coming months, according to local official newspapers, nevertheless it will not be the only one Blockchain-based project that is not based on crowdfunding, a very popular means by which funds are raised for a new cryptocurrency venture.
As a matter of fact crypto startups are releasing their own cryptocurrency during ICOs with a purpose of funding their projects built on the Blockchain. Ironically the Chinese Government is not willing to secure funding for its cryptocurrency project indeed, neither build an anonymous payment system, rather looking for a contemporary and secure way to control transactions on the largest market on earth, reflecting cunningly to the insatiable hunger of millions of Chinese netizens for digital tokens. The big takeaway here is China’s a rising, affluent economy. We’re seeing a complete rise of the consumer based on e-commerce.
But when momentum is high there is usually much more than meets the eye. A new project, first of its kind in China, called 8th Continent Social Marketplace, as you very well guessed the “Eighth Continent” is the equivalent of China, is also launching its own ICO, and challenging the classic scheme of crowdfunding. Since the platform behind it, the Social Marketplace is ready to be rolled out once ICO closes, the purpose of this particular initial token sale is to organise a “Distributive Crowdsale” as the owners call the merits of their action instead of a classic crowdfunding.
What is a Distributive Crowdsale and in what is it different from a crowdfunding rally? If basic crowdfunding ICOs as a general rule are simply a win-win situation for investors and entrepreneurs, providing large returns in short time period on the one hand, and offering on the other easy access to liquidity and a much larger pool of investors, the Crowdsale seems to put the stakes higher. It is all about strategy and perks. If crowdfunding people get their share from the ICO to fund alleged development of their solution, based on the cutting edge technology of blockchains’ open ledger, claiming to build something they might not build after the ICO, the Distributive Crowdsale founders don’t get a penny from the ICO, token sold are distributed respectively to the buyers on 8th Continent platform directly. Then what is in it for the entrepreneurs? The Distributive Crowdsale is no mere charity: participants are asked to be active and trade digital products and assets on the 8th Continent Social Marketplace for a period of 88 days before they can get to their funds, or if they are busy they can buy the units of an equity investment trust involved in holding securities of the best performing companies on the marketplace with a core investment cycle of one year. Both ways investors’ funds converted to digital currency are transformed into working capital.
While the 0.8% transaction fee charged by the operator probably suffice to finance the platform and its related services, and maybe is a profitable venture for some, the trading business on the digital marketplace seems to be also lucrative for the investors for many reasons. The increase in value of the tokens purchased after the ICO driven by the buy ins of constantly growing trader community, and the profit users generate while trading, are probably the major ones. But there is another one more subtle: a substantially new business strategy shall prevent losses to all of those who chose to take part in it. The holy grail 8th Continent holds under his large sleeves is called ad fee sharing, or “overcoming the zero-sum game paradigm”. Instead of running a game where any quantifiable gains by one party are equal to the losses of another party, why not branding the digital products and services subject to be traded by the users, and let the advertisers pay a small amount which will be divided equally between the users and the operator? The idea seems pretty clever, even if not new, yet no stock exchanges or commodities markets implemented it though before 8th Continent Social Marketplace.
We’d like to see what comes next; the ICO on May 18th for sure, to be launched on 8cico.com also available, which will probably be an interesting investment for those who believe in the working product, and expect a substantial profit due to value increase of 8th Continent’s token, the ECB secured namely by the potential masses joining the platform in China the year to come, as well as circulating supply limited to the buy ins of 8th Continent users.
Benjamin Diaz started working for Debate Report in 2017. Ben grew up in a small town in northern Ontario. He studied chemistry in college, graduated, and married his wife a year later. Benhas been a proud Torontonian for the past 10 years. He covers politics and the economy. Previously he wrote for CTV News and the Huffington Post Canada.