Headlines were popping after Mark Cuban announced he was participating in an initial coin offering. The billionaire owns the Dallas Mavericks and stated the offering would be made using one of his portfolio companies.
An initial coin offering refers to the sale of virtual tokens with the ability to bet on eSports machines through the use of a specific platform. The tokens are referred to as UnikoinGold and are a type of cryptocurrency with the purpose of being exchanged for other types of cryptocurrency including bitcoin and ethereum. The currency can then be exchanged for United States dollars.
The profits from the ICO will be used by Unikrn to fund its businesses growth. In the past, the company has raised $10 million from Mark Cuban, Binary Capital, Ashton Kutcher, Indicator Ventures and much more for venture funding. According to Sood, there is a vast difference between participating in an initial coin offering and making an investment in a company.
Sood has explained that selling equity to a venture fund is called venture funding but selling tokens that work specifically on your platform is called token sales. It is not considered an investment because it is liquid. UnikoinGold uses the ethereum known as blockchain. Although there are similarities to Bitcoin, it is still very different. Mark Cuban’s announcement resulted in new coverage because he called bitcoin a bubble. When questioned about his decision his reply was high risk, high reward.
More and more companies have started using the ICO model for financing. The Bancor Foundation used an ICO to raise $153 million. There are fewer regulations with this process than a standard model for fundraising. Sood used to be Microsoft Ventures general manager, and he claims a company can’t simply create a token and become a host for an ICO because this does not establish value. He believes if a token has no value and is not loved by its users it is nothing more than a useless piece of code.
Sood also claimed that two years back Unikrn was approached by Cuban and asked to explore the technology of blockchains. This provides the transactions of public ledgers and is the heart of cryptocurrencies. He felt the possible applications went well past financial markets such as supply chains and medical markets. Sood feels the way commerce is accomplished will change because of blockchain technology. This type of transaction crosses borders seamlessly, and Sood says it must be embraced by the banks. He stated that going into a bank branch and going through the process of regulation will soon end.
Sood additionally believes that once a bank truly embraces cryptocurrency in a secure, safe and insured manner, they will become the world’s best bank. Although the biggest exchanges for cryptocurrency have licenses for official money transmitters, Sood still feels the entire industry is just beginning. A good example is ethereum because last week it crashed from $319 to ten cents. This was labeled a flash crash since the price came back quickly. If Sood is correct, consumer adoption will be the start of future commerce.