The potential of Blockchain, which is the transaction record that supports Bitcoin, and how the cryptocurrency market could exceed $2 trillion by the end of this 2018. Haydn also explained how ICOs (initial coin offerings) are the next big thing and what this means for the future of mainstream infrastructure.
WHAT'S THE BACKSTORY?
Haydn bought Bitcoin in the early days when it was valued at $95, and he even experimented with mining it from his home computer. But what makes Haydn’s story unusual is his background. After working in law and transitioning into the world of investment banking, Haydn ended up working for the Bank of England alongside Dr Andrew Bailey (now CEO of the Financial Conduct Authority). In other words, he knows a thing or two about how money works and he soon recognised that Bitcoin doesn’t behave anything like traditional forms of currency.
The first block of Bitcoin was mined in January 2009 and evolved from 20 years of research into cryptocurrency. It was based on two core pieces of cryptology – one invented by the NSA and the other by GCSQ. So what is Bitcoin? It’s a decentralised store of payment, a store of value, a ledger and a payment system. You can apply conditionality to it in the form of contracts. It allows you to automate commercial transactions, which has the potential to take friction out of commercial relationships. And we’re now seeing the emergence of tokens in exchange for services.
This means that companies can go from private to public status overnight by selling digital tokens to raise capital – giving them access to a global marketplace without having to approach an investment company. GNOSIS (a company delivering market-driven forecasting technology) made headlines last year when they raised $300 million through an ICO. So what is the future of Blockchain, Bitcoin and ICO – and how can companies capitalise on this groundbreaking technology? Haydn set up Blockchain Hub to help businesses answer this question and to offer support in the areas of education, strategy and sales.
WHAT IS HE DOING ABOUT IT?
In essence, Blockchain Hub is helping companies to rip it up and start again. ICOs are directly competing against mainstream infrastructure on a massive scale. They can be devoid of normal corporate structures – they are not even a legal entity, which raises complex questions if anything goes wrong. Haydn is advising companies on how to use ICOs to leverage economies of scale and raise capital. The payoff is potentially massive. Golem, a supercomputer network that aims to become the Airbnb for computing recently raised around $50m, and we can expect to see these coin protocols continue to challenge the norms we have accepted for so long.
Haydn predicts that the volume of ICOs will increase, but the net raise will be lower in the region of $2-5m per raise rather than the big capital raises of last year. Without a doubt, there is increased investor interest and growing public awareness in the sector, especially for innovative projects. A large part of Haydn’s work with Blockchain Hub is to educate companies about ICOs and offer consultancy to those looking to raise investment. However, blockchain (and in particular, ICOs) have the potential to take a lot of frictional costs out of the economy, which will probably lead to increased interest from HMRC and a greater need for regulatory guidance.
The challenge for businesses is to create safety barriers around the team and allow them to interact efficiently with the real world. ICOs managed poorly can result in no clear plan, no maximum cap on the raise, no security audit on the contract, and a team made up of people who don’t work well together. Blockchain Hub aims to guide businesses through the minefield of ICOs and take them from private to public status without the need to go to a venture company or bank.
NEXT STEPS ...
Kodak made headlines recently for announcing the launch of their own cryptocurrency, KodakCoin. Using cryptography to enforce copyright, Kodak’s ICO caused shares in the struggling company to skyrocket by more than 120%. How long before other mainstream companies enter that space? Haydn’s prediction is that crypto will exceed $2 trillion by the end of 2018 and he is continuing to help companies explore this novel technology.