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Author Archives: David Drake

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David Drake, Contributing Journalist.Reach him directly at David@LDJCapital.com.

Why Do ICO Projects Have a High Failure Rate?

  by David Drake     Over the last 18 months, initial coin offering (ICO), an unregulated method of raising funds, has gained popularity. This is because startups with innovative ideas opt to raise capital for their blockchain projects through ICOs. Backed by enterprising and innovative developers, startups are developing solutions to problems in different sectors. Examples of such projects include Bitque, an ICO project that enables traders to generate hedge trades on the short term and BlockVest, a platform that uses digital identity and blockchain technology to digitize virtual assets and smart contracts to self-manage digital assets. Other notable ICO projects include AnthemGold, a project that facilitates trading of gold and other precious metals on blockchain and Bank52 that uses blockchain to create a banking ecosystem that facilitates smart data, collaboration and network effects. The last five months have seen a significant rise in amounts raised through ICOs. Approximately $13.7 ... Read More »

Why is the Number of Dead Coins So High and What Needs to Be Done?

  by David Drake     The growth in the cryptocurrency industry has improved startups’ access to finance through initial coin offerings (ICOs). This model is a better alternative to capital or debt funding than banks, private equity firms and venture capital because it provides a win-win situation for the startups and their participants. According to the global ICO report, $13.7 billion has been raised through 537 ICOs in the initial five months of this year, more than double the amount raised in 2017. The report shows that the US remains one of the leading ICO destinations with startups in the country raising $1.09 billion. However, there are concerns regarding the success rate of ICO projects. Market data released by Coinopsy and Deadcoins shows that over 1000 coins launched through ICOs are now dead. Interventions need to be put in place to address the reducing success rate of ICO projects in ... Read More »

Why Commercial Viability is the Key to Improving the Success Rate of ICO Projects

  by David Drake     The invention of blockchain has created space for tech savvy individuals and companies to craft innovative solutions to problems that arise in various sectors. For instance, in the financial market, AnthemGold is using blockchain to transform the way people buy and sell precious metals, including gold. BlockVest, on the other hand, is using smart contracts to improve the way investors manage their digital asset portfolios. At the same time, URAllowance is enhancing interactions between parents and children, while IOU is utilizing blockchain to improve shopping experience for e-commerce customers. Ideas such as these continue to intrigue investors, causing them to invest billions of dollars into the cryptocurrency space. Over the last one and half years, the number of initial coin offering (ICOs) has increased significantly as owners of blockchain-based projects use them to raise capital. In just five months, an estimated $13.7 billion has been ... Read More »

Blockchain Scalability: Why there is Need for Financial Institutions to be Patient

    by David Drake     The emergence of blockchain technology has brought hope for faster, more secure and more affordable transactions for entities across sectors. Since its invention, the technology has become a basis for innovating solutions to address pressing problems in conventional systems due to its ability of increasing transparency. Blockchain-based projects include platforms such as IOU, designed to improve e-commerce, and BlockVest, a virtual platform that enables investors to manage their digital asset portfolios. But not all blockchain innovations have to do with business and investment. URAllowance is setting up a blockchain platform to enhance interactions between parents and their children. On the other hand, SportsFix is utilizing blockchain to improve access to sports contents for sports fans. But while the biggest application of blockchain technology is expected to happen in the financial sector, concerns are emerging regarding whether or not the technology can handle  demands from ... Read More »

Can Conflicting Interests Reduce Blockchain Adoption in the Finance Industry

  by David Drake     The status of services in the banking sector is characterized by time lags and high transaction costs. For these reasons, blockchain has been hailed as a revolutionary technology due to its ability to reduce transaction costs and increase the effectiveness of cross-border transactions. But big banks are now beginning to question the ability of blockchain to solve these problems and whether the technology has matured enough to warrant large scale application.  Big banks such as Russia’s Central Bank, the Bank of Canada and the Central Bank of the Netherlands are among leaders in the banking industry that have raised these concerns. Their concerns come soon after Western Union’s CEO claimed that cost of payments had not reduced after six months of testing the Ripple XRP. Looming Competition But cryptocurrency players seem to view the situation differently and are critical of these negative commentaries. Alex Karasulu, ... Read More »

Will SEC’s Decision Not to Classify Ether as Security Fuel Demand for Decentralised Applications?

  by David Drake   Since the Ethereum blockchain network went live in 2015, it has significantly impacted the cryptocurrency industry. The network has been used by developers to create decentralized applications (DApps) and launch cryptocurrency based projects due to its smart contract feature. Additionally, ether, the utility token that runs on the Ethereum network, has been used to power decentralized applications developed on the network. For the past one year, the number of Initial Coin Offering (ICO) projects launched on the Ethereum network have increased significantly across sectors. Revolutionary projects in sports and finance sectors like SportsFix and URAllowance have joined the growing list. Despite this growth, ether, like other leading cryptocurrencies in the market, has faced uncertain times that have seen its prices fluctuate since the beginning of the year. When the Securities and Exchange Commission (SEC) chair said all tokens would be considered as securities and would ... Read More »

SEC Regulation: Just What is Keeping Cryptocurrency Exchanges from Self-Reporting?

  by David Drake     Since its inception, the cryptocurrency industry has largely been unregulated. This has created a less rigid environment for innovative, blockchain-backed companies like BlockVest and AnthemGold to raise funds to finance their projects through initial coin offerings (ICOs). However, the unregulated cryptocurrency space has created opportunities for scams. To guard investors against fraudulent actions, there have been calls to governments to put regulatory measures in place. In February this year, the Securities and Exchange Commission (SEC) targeted 80 ICO companies that it believed were in breach of securities laws with subpoenas. The regulator could be planning to launch another crackdown, this time on cryptocurrency exchanges. Earlier this month, the agency, through its Director for Trading and Markets Division, Brett Redfearn, said it is surprised that despite several cryptocurrency exchanges operating in the US, the level of self-reporting is quite low. This follows the clarification made by ... Read More »

Are there Tools to Guard the Crypto Market Image Amidst Rising Fake ICOs?

  by David Drake     The cryptocurrency market has gained popularity faster than anyone had anticipated, and right alongside it, is a new way to raise capital for blockchain-based projects, initial coin offerings (ICOs). In fact, over the past 18 months, cryptocurrency-related projects have been coming up in almost every single industry. The flip side of it is that not all projects are genuine – an aspect that captured the attention of the SEC to the extent that the regulator issued a public investor alert in August, 2017. Even with this alert, the number of fraudulent initial coin offering (ICO) companies seems to be on the rise. Recently, I came across an ICO platform, Crypto-flare, that has flagrantly faked its core team and advisors. Collateral Risks Crypto-flare alleges that Saars Levi is the CEO and founder, in addition to listing me and Pialy Aditya as its advisors. None of us ... Read More »

What Can the Crypto Market Expect following SEC’s Announcement that Ether is Not a Security?

  by David Drake     Ether, the digital currency based on the Ethereum blockchain technology, will not be considered as a security. This is according to William Hinman, the Securities and Exchange Commission, (SEC) Corporate Finance Division Director. Speaking during the Yahoo Finance All Markets Conference, Hinman made it clear that ether need not be regulated like stocks and bonds. This is because Ether, as well as Bitcoin, use decentralized networks and do not have defined structures like corporate stocks. Based on Hinman’s statement, it is clear that the SEC will stop considering cryptocurrencies that get fully decentralized as securities. The ICO Challenge The main challenge facing ICOs is a lack of a clearly defined regulatory framework. Also, there has been little transparency as to how the regulator applies the securities laws on digital assets with compound issues involved in outlining the probable use of various laws. However, the move ... Read More »

How SEC’s Clarity on Ether Could Boost Cryptocurrency Growth

  by David Drake     Ethereum network has played a significant role in the growth of the cryptocurrency market. As the network on which the digital currency, ether, runs, Ethereum provides a platform for developers to create decentralised applications. Earlier this year, there was uncertainty among crypto-developers when the Securities and Exchange Commission (SEC) through its Chairman, said tokens and digital assets would be considered as securities. Ether was originally offered as an initial coin offering (ICO) but has since been highly decentralised. The statement by SEC’s director of corporate finance, Mr. William Hinman has clarified that the digital currency is not a security. This means it would not be regulated the same way the SEC regulates corporate bonds and stocks. The main reason for not classifying ether as a security is the fact that it functions in a way similar to commodities such as gold, due to  its high ... Read More »

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