IBM Boosts Blockchain Project

IBM Boosts Blockchain Project

Multinational technology company IBM is bolstering its blockchain efforts after it utilized the nascent technology to give users a greater control over their personal data.

The computer manufacturing company announced that its blockchain arm is working with which ascribes to the concept that legal ownership of a person’s data should be a “31st human right” worldwide aside from the 30 already ratified by the Untied Nations.

Hu-manity users receive a title of ownership, similar to a property deed, once they claim their data property rights. Therefore, their personal information, signature and photograph can be added in the form of a hash on the blockchain, alongside details such as the individual’s data-sharing preferences.

The app’s global consent ledger which logs the granting and revocation of permission to use a personal data is developed on the IBM Blockchain Platform via the Hyperledger Fabric, the two entities will also collaborate with Sovrin on this project.

IBM noted its partnership with Hu-manity implies the company is seeing a long-term business value in this use case for the distributed ledger technology, Marie Wieck, general manager of IBM Blockchain, said. “Getting people’s permissioned rights on a blockchain will create a marketplace and entirely new economic business models as a result,” Wieck said.

Hu-manity’s app is generally consumer-facing but corporations starting in the healthcare industry can use the enterprise version in the first quarter of 2019.

“We tend to agree that data is the next natural resource and like a natural resource has to be mined responsibly in the same way,” she added. “Blockchain combined with the notion of rights to individual data, facilitates the distributed sharing of that information securely and at scale,” she added.

Users are also expected to own location data, search history, and e-commerce habits, according to Richie Etwaru, founder and chief executive officer of Hu-manity.

Personal details provided by users are akin to the production of crude oil, Etwaru said. “The partnership with IBM enables private blockchain to create a direct relationship between the crude data provider – the human being – and the buyer of the refined data at the end of the supply chain.”

Personal records including the patient’s health record changes hands for about $400, he said, adding regulations in the United States and other countries are vague when it comes to such an information and can be interpreted in various ways.

Etwaru said a wide adoption of an empowering data-sharing app would result in a “call to action, and pool consensus around how laws should actually work.” Aside from users, companies could have clarity and transparency through a movement.

“The end buyer could have better compliance posture if they use our data and we can figure out the economics between the individual and the buyer. The pharmaceutical industry has never really been offered an explicit consenting relationship with individuals before,” he added.

“In clinical trials, there would be a way of tracking data and ensuring these are all real human beings and doing it at scale. Trust and transparency have been a challenge up until now,” Wieck said.

Recent PressSee All

+Recent NewsSee All

Dish Network Now Accepts Bitcoin Cash

Dish Network Now Accepts Bitcoin Cash

US satellite service provider Dish Network announced it is now accepting bitcoin cash as another payment method.

Dish Network, one of the first companies to accept bitcoin as an alternative mode of payment, said its customers can now use both digital currencies to pay for monthly subscriptions and pay-per-view movies. To do so, customers must send the exact amount of bitcoin or bitcoin cash needed to make a one-time payment either on its website or set-top box.

“We’ve added Bitcoin Cash just as we chose to accept Bitcoin to serve customers who have adopted a new way of doing business. We have a steady volume of customers paying with cryptocurrency each month, and Bitpay will allow us to continue offering more choice and convenience to our customers,” John Swieringa, Dish executive vice president and chief operating officer, said in a statement.

Swieringa said the reason for accepting bitcoin cash is for the same reason they adopted bitcoin in 2014.

Aside from that, Dish Network said it is migrating from its previous payment processor to BitPay as this will deliver greater “choice and convenience” to users.

“Our goal for DISH Network is a seamless transition to BitPay so all customers who are currently paying for services with Bitcoin continue to have the option to pay with Bitcoin or Bitcoin Cash. Cryptocurrency is an increasingly popular way for consumers to make purchases online as it reduces credit card fraud and is cheaper for the merchants,” Sonny Singh, BitPay chief commercial officer, said.

Bitcoin is one of the biggest cryptocurrency payment providers. In April, the firm earned $40 million in a Series B funding round with participation by venture capital companies Aquiline Technology Growth (ATG) and Menlo Ventures. ATG headlined the fundraising activity, according to Stephen Pair, BitPay CEO.

“Bitpay CEO Stephen Pair disputed that the company had any trouble fundraising, saying that it had to ‘expand’ the round from a planned $30 million to the final $40 million total due to high demand,” a report by Recode said at that time.

“We wanted to make sure that anybody who wanted to participate could, and announcing it serves that purpose,” Pair added.

The company has been looking at different investments in several blockchain startups for the last 18 months, Tyler Sosin, a partner who is leading Menlo’s crypto network, had said. But he did not divulge the amount Menlo contributed to the funding round.

Earlier, Dish Network said in a filing that Steven Swain, its chief financial officer, would step down on August 22 to become the finance chief of Brookdale Senior Living. Swain also resigned as the CFO of unit Dish DBS Corp.

The company did not provide more information on the resignation. But Swain is expected to assume his new role at Brookdale Senior next month.

Swain joined the Dish Network family in 2011 as vice president of corporate financial planning and analysis. Prior to that, he spent more than 15 years in the telecommunications sector.

Recent PressSee All

+Recent NewsSee All

Crypto Bourses

7 Crypto Bourses Licensed in Japan

Only seven out of 23 cryptocurrency exchanges operating in Japan are fully licensed, based on the on-site inspections by the Financial Services Agency (FSA).

The remaining 16 crypto bourses are “deemed dealers,” the FSA said. These are entities which have been given a go signal to operate while their applications are being reviewed by the agency. It also unveiled an interim report outlining the problems discovered after inspecting and monitoring these exchanges.

“The inspection reveals a sloppy reality that the maintenance of the internal control system has not kept up with the rapid expansion of transactions. The risk was not evaluated for each virtual currency…and it was judged that securing necessary personnel for countermeasures such as money laundering was insufficient at multiple vendors,” a report by Nikkei said.

Furthermore, “the total assets of the exchanges rapidly expanded to more than 6 times in one year,” the report said, adding the agency is also concerned that less than 20 executives and employees hold assets worth 3.3 billion Japanese yen ($30 million) per person on an average.

Moving forward, the FSA, which inspected these exchanges following the Coincheck hacking incident in January, said it will utilize the findings to review new applicants. It has not given a green light to any crypto exchanges since the beginning of the year but three companies are being reviewed.

More than 100 companies are seeking to be registered in Japan. A Business Insider Japan report said these firms include megabanks, major IT companies, and major securities companies. Although some have already filed their applications, many have only gone through one consultation with the FSA.

“It is expected that exchange registration that had virtually stopped after the Coincheck incident will be resumed. In the future the examination will be tightened, such as evaluating the effectiveness of the business plan…and the internal control system on-site,” Nikkei said.

Those wanting to be licensed should study the inspection report and “first compare [the findings] with the situation of their company,” an FSA official told Nikkei.

It can be recalled that Coincheck admitted that about 523 million tokens had been stolen. This amounted to 58 billion yen or $542 million). Based on its compensation plan, users will expect a combined payout of $420 million.

“The finding suggests someone hacked into the Coincheck system via employee email and stole a ‘private key’ necessary to transfer NEM,” Nikkei reported. It said many Coincheck employees received emails appearing to be an internal message from a colleague. Once the sender’s address was clicked, the user’s computer was penetrated by a virus capable of operating that computer outside the company’s premises. Afterwards, it started contacting external services in Europe and the United States. This lasted until the midnight of January 25.

“We know where the funds were sent. We are tracing them and if we’re able to continue tracking, it may be possible to recover them. But it is something we are investigating at the moment,” Yusuke Otsuka, Coincheck co-founder, had said during a late-night press conference at the Tokyo Stock Exchange, as reported by Bloomberg.

In March, Coincheck stated refunding users at the rate of 88.549 yen ($0.83) per NEM token stolen. Also, it resumed withdrawals and trading of various digital currencies.

Recent PressSee All

+Recent NewsSee All

Bettergram Wants to Outdo Telegram

Bettergram Wants to Outdo Telegram

Bettergram, the Mac counterpart of Telegram, a cloud-based instant messaging and voice over IP service for desktop, was rolled out this week.

In essence, Bettergram is akin to Telegram that keeps the functionality of the desktop version but can respond to requests for new features faster that its facsimile. Bettergram can pin up to 50 chats and has four tabs (favorites, DMs, groups, and announcements) which can help a user segregate conversations based on his preference. Telegram can do only 5 chats.

Aside from displaying the uploaded images in-line, Bettergram can view current prices for the top 10 digital currencies worldwide. It can be viewed by pressing the emoji button in the bottom right of a chat. It will then lead the user to four tabs namely prices, emoji, GIFs, and stickers. Live Coin Watch provides the data; specifically, a quick market snapshot.

Its source code, which has been independently audited, can be inspected by anyone since it is an open source project. “Bettergram uses the Telegram API and open source code with a few modifications to provide users with a more organized interface. Just like Telegram, you can use your existing account or create a new account through their servers,” Bettergram said on its website.

“Telegram is an essential part of our lives as tech entrepreneurs. Over 200+ million monthly active users love the app, but we believed it could be better. Thankfully, Telegram is 100% open source which allowed us build an improved UI/UX on top of their API,” it added.

Telegram is a messaging app focusing on speed and security. It enables any person to send files, messages, photos, and videos as well as create groups for up to 100,000 people or channels. Asserting itself as an SMS and email combined, it is also capable of handling personal or business messaging needs.

For more than a year, Telegram has catered to the cryptocurrency community. It serves as the crypto industry’s hangout platform through which a huge chunk of the initial coin offering (ICOs) and trading groups flow. It has remained the best messaging application for group conversations despite the frequent downtime, limited configuration, and inability to temporarily disable noisy groups.

Telegram reported in March that over 200 million are using their app on a monthly basis. “If Telegram were a country, it would have been the sixth largest country in the world,” the company had said in a blog post.

“We owe reaching this milestone to you alone – our users. We have never promoted Telegram with ads, so all these 200 million people are on Telegram because you invited them to join. This is why you – our users – have been and will always be our only priority. Unlike other popular apps, Telegram doesn’t have shareholders or advertisers to report to,” the company said.

Telegram stressed it is not operating as if it is an organization since the platform is an idea in which everyone has a right to be free. “Above all, we at Telegram believe in people. We believe that humans are inherently intelligent and benevolent beings that deserve to be trusted; trusted with freedom to share their thoughts, freedom to communicate privately, freedom to create tools. This philosophy defines everything we do,” it added.

Recent PressSee All

+Recent NewsSee All

Crypto Loan Now Available in 35 US States

Crypto Loan Now Available in 35 US States

A cryptocurrency-backed loan is now available in 35 US states, loan provider SALT Lending said in a move to expand its customer base.

The membership-based lending and borrowing network, which allows more than 700,000 users to borrow cash against their cryptocurrency holdings, announced it has expanded its reach to 20 new US states namely Connecticut, Washington D.C. Florida, Illinois, Kansas, New Hampshire, North Carolina, Ohio, Oklahoma, Alabama, Idaho, Indiana, Iowa, Louisiana, Maine, Maryland, Michigan, Nebraska, Rhode Island, Tennessee, Texas, Vermont, Virginia, West Virginia, and Wisconsin.

SALT Lending’s move to offer its services to other areas is complicated, according to Bill Sinclair, the company’s chief executive. The legal team, according to Sinclair, has been coordinating with regulatory experts to ensure the loans being provided adhere to the laws of each state. “SALT loans are and will be structured within the laws, regulations, and guidelines provided by each jurisdiction in which the loan is offered,” he added.

“This news effectively gives our platform a 60 percent increase in lendable areas. It is our goal to operate in all 50 states by the end of 2019, barring any regulatory challenges,” Sinclair said in a separate statement.

Aside from widening its reach, SALT Lending also rolled out its new tech platform for its clients that includes improved tools for borrowing funds and faster transactions, as well as new member loyalty program which allows customers to revise their loan conditions using the company’s own token.

“With the launch of SALT Lending’s Proof of Access (POA) program, where available, members can secure more favorable borrowing interest rates as low as 12 percent by staking higher quantities of SALT Membership Units on the platform. The value of SALT will change from the initial promotional price to an industry norm in line with an aggregate market value, allowing current members the option to extend terms, lower monthly payments and/or prepay in USD,” SALT Lending said in a statement.

“With our operating advancements and technological enhancements, we have made yet another sizeableleap to grant more banked and unbanked people access to leverage their blockchain assets to accommodate the need for traditional fiat-based transactional living,” Sinclair said in the same statement.

SALT Lending is moving its current clients to the new platform which began with certain key community leaders. “The first borrowers to get loans in the new system were those who previously applied in areas in which we were not approved to lend and were still interested in a SALT loan,” he added.

Moving forward, SALT Lending is looking at incorporating new blockchain tokens for collateral. Aside from that, it is continuously developing its platform and planning to unveil micro-loans and qualified custody products as part of its international expansion plans.

“As blockchain assets continue to grow in abundance and popularity, technology will need to pivot accordingly. … Opening doors for our potential borrowers who may have selected different investments than bitcoin and ethereum will be a key differentiator for SALT in the future,” Sinclair said.

Recent PressSee All

+Recent NewsSee All

Japan Bourses to Make Trading More Rigid

Japan Bourses to Make Trading More Rigid

A league of authorized bitcoin exchanges in Japan is supposedly working on several measures to toughen trading in the country, a local report said.

The Virtual Currency Exchange Association (Jvcea) is planning to impose numerous limits for its cryptocurrency exchange members, according to Jiji Press News Agency. “The association will decide on the issue soon. It will then file with the Financial Services Agency (FSA), for approval “to be recognized as a self-regulatory body under the payment services law,” the sources privy to the matter disclosed.

The association has not issued an official statement regarding the matter.

However, sources explained the proposed rule is aiming to avert crypto traders with relatively small assets from incurring significant losses and dealing with challenges with daily expenses. “The industry group plans to allow exchange operators to choose from two options: A blanket ceiling that is low enough for the safety of customers with limited assets or setting different limits for different customers based on their age, assets, investment experience and income levels,” sources added.

The self-regulatory rules were expected to be issued in the previous month. However, the report said Jvcea faced a setback when the FSA released business improvement orders to six of the group’s members, prompting two of its vice presidents to step down. Since its inception in May this year, Jvcea has been working on such measures. Nikkei reported last month it is seeking to outline rules prohibiting insider trading and privacy coins.

The move comes as a separate report stated that Jvcea is intendingn to curtail margin trading, lowering leverage by four times. At present, Japanese crypto bouses offer 25 times leverage.

“The proposed rules explicitly ban insider trading. Word has leaked previously that a major exchange would start handling a new currency, which led to a surge in the currency’s value and left many suspecting market manipulation. Such activity would represent a clear violation of the new rules,” the report said, citing people familiar with the matter.

“The group also plans to require minors to get permission from parents or other guardians before trading, prohibit margin trading in principle, and demand regular checks on the decision-making ability of elderly customers. It will also restrict large-lot orders as a measure against money laundering,” sources divulged.

Earlier, the FSA pressed exchanges to ditch privacy coins. Jvcea, meanwhile, had said it introduced its own guidelines on privacy coins.

“The association also wants to prohibit exchanges from accepting new currencies that cannot be traced to previous sellers, since such currencies could easily be used for money laundering and are hard to monitor. Highly anonymous coins like Monero, Dash and Zcash could be forced out of the mainstream,” Jvcea said at that time.

To avoid another Coincheck incident, crypto bourses were encouraged to heighten protection for client assets and report audit results to the group.

“Customers’ private keys, which are needed to complete transactions, must also be managed offline to minimize hacking risk.” Moreover, exchanges will be required to keep their quoted rates from widely deviating from the prevailing market rates. Exchanges would also need to introduce circuit breakers to halt trading should a currency’s value suddenly surge or plunge.”

Recent PressSee All

+Recent NewsSee All

Singapore Airlines Starts Blockchain Reward System

Singapore Airlines Starts Blockchain Reward System

Singapore Airlines has formally rolled out its blockchain-based frequent-flyer program which aims to reward all its loyal customers, the world’s first airline reward system driven by the technology.

KrisPay is the group’s miles-based digital wallet allowing members to change their KrisFlyer miles into KrisPay miles for everyday spending at partner merchants in Singapore. Customers can download the mobile application on App Store and Google Play. Then, they will be able to convert these miles and pay with them by scanning the KrisPay QR code at the merchant.

Initially, KrisPay miles will be accepted at 18 stores covering various categories including beauty services, food and beverage, gas stations, and retailers. “More merchants will be progressively added to the platform, and members can expect frequent in-app promotions and more app features to be delivered in the coming months,” the airline said in a statement.

“We are excited to be introducing KrisPay, a novel way for our KrisFlyer members to digitally access their miles at their fingertips, at any time. By creating a miles-based digital wallet which integrates the use of miles into their daily lives, KrisFlyer members have yet another way to use miles instantly on everyday transactions,” Goh Choon Phong, Singapore Airlines’ chief executive officer, said.

Singapore Airlines first unveiled its blockchain initiative in February in a move to bolster spending of its loyalty program miles.

“A new KrisFlyer digital wallet app utilising this innovative technology is expected to be rolled out in about six months. It will allow the extensive KrisFlyer membership base to use ‘digital KrisFlyer miles’ for point-of-sale transactions at participating retail merchants,” the company said at that time.

The project came following a proof-of-concept trial with KPMG Digital Village and Microsoft. Singapore Airlines had said it would be partnering with retailers, primarily those within the country.

“Innovation has been a key contributor to the success of Singapore Airlines since Day 1 and we are very excited about this world-first initiative, which will bring even more benefits to members of our KrisFlyer programme,” Goh earlier said in a statement.

“This groundbreaking development in which we will be using blockchain technology to ‘digitalise’ KrisFlyer miles is a demonstration of the investment we are making to significantly enhance the digital side of our business for the benefit of our customers. It is in line with our recently unveiled Digital Innovation Blueprint, under which we aim to be the world’s leading digital airline,” he added.

The announcement comes after Singapore Airlines was named the World Airline Awards by Skytrax in London, outpacing Qatar Airlines that bagged the best airline in the world award last year.

Previously, Australia’s Brisbane airport has launched its cryptocurrency payments within its shopping areas. The payment system, provided by cryptocurrency travel firm TravelbyBit, enables customers to use virtual currencies to shop and dine at different stores and restaurants within the air terminals.

America’s Surf Air announced its plan to accept digital currencies for ticket payments, while Russia’s S7 is said to be exploring the issuance of flight tickets using the blockchain technology.

Recent PressSee All

+Recent NewsSee All

G20 to Scrutinize Crypto Anti-Money Laundering Rules

G20 to Scrutinize Crypto Anti-Money Laundering Rules

G20 member countries are scheduled to delving into a global anti-money laundering (AML) regulations on cryptocurrency in October this year, the group said in a statement.

“We reiterated our March commitments related to the implementation of the FATF [Financial Action Task Force] standards and we ask the FATF to clarify in October 2018 how its standards apply to crypto-assets,” the G20 said in its communique.

“While crypto-assets do not at this point pose a global financial stability risk, we remain vigilant. We welcome updates provided by the FSB [Financial Stability Board] and the SSBs [standard-setting bodies] and look forward to their further work to monitor the potential risks of crypto-assets, and to assess multilateral responses as needed,” it said, adding these assets “lack the key attributes of sovereign currencies.”

The group recognized that technological innovations including the underlying crypto-assets can provide significant benefits to the financial system and the broader economy. However, such virtual assets raise issues related to consumer and investor protection, market integrity, tax evasion, money laundering, and terrorist financing.

Over the weekend, G20’s finance ministers and central bank governors held a meeting in Buenos Aires, Argentina to discuss various issues concerning the group such as global economic growth, policy tools, emerging technologies, and financial system, among others.

The FSB had submitted to the G20 countries’ finance ministers and central bank governors a framework for the oversight of cryptocurrency assets along with a report. The board said in the report it would keep an eye on the developing crypto marekts and “should help to identify and mitigate risks to consumer and investor protection, market integrity, and potentially to financial stability.”

“While the FSB believes that crypto-assets do not pose a material risk to global financial stability at this time it recognizes the need for vigilant monitoring in light of the speed of market developments,” the organization said, adding it would regularly collate reports to ensure market confidence.

Earlier this year, the G20 asked the FATF for an AML standard on virtual currencies as part of its greater push for global regulatory recommendations on the matter. It had set a July deadline to complete the task.

“In July we have to offer very concrete, very specific recommendations on, not ‘what do we regulate?’ but ‘what is the data we need?’” Argentina Central Bank chair Frederico Sturzenegger said at that time.

“We commit to implement the FATF standards as they apply to crypto-assets, look forward to the FATF review of those standards, and call on the FATF to advance global implementation. We call on international standard-setting bodies (SSBs) to continue their monitoring of crypto-assets and their risks, according to their mandates, and assess multilateral responses as needed,” the G20 said in a statement in March.

Previously, an unidentified Japanese official disclosed the task force had said it is planning to draft rules for monitoring cryptocurrency exchanges around the globe. This was initiated by calls for a globally coordinated regulations on crypto bourses. The official said the discussions, which began on June 24, would determine whether the rules are still applicable, how they could be enforced, and how to collaborate with nations that have already prohibited currency trading.

Recent PressSee All

+Recent NewsSee All

Malta Lives Up to its Promise

Malta Lives Up to its Promise

Malta seems to fulfill its promise of giving a “lovely sanctuary” for cryptocurrency firms and exchanges with its arguably the “most forward-thinking regulatory agenda.” 

The island country in the Mediterranean, through MSX, the recently unveiled financial technology unit of the Malta Stock Exchange, has sealed several new deals seeking to establish new marketplaces for tokenized securities which include a partnership with Neufund, a platform designed for securities tokenization and issuance. 

Both parties shall create a “regulated and decentralized, global stock exchange for listing and trading tokenized securities alongside crypto-assets.” However, they did not provide additional details about their collaboration. 

This undertaking is a “pioneer in digital finance,” Joseph Portelli, chairman of the Malta Stock Exchange, said. “We are delighted to welcome Neufund as our key partner in building a blockchain-based exchange that is fully integrated with established financial markets.” 

Silvio Schembri, a parliament member and the parliamentary secretary responsible for financial services, digital economy and innovation, said in a separate interview this development continues to affirm the country’s progress in the crypto arena. 

“These are ongoing announcements that continue to reinforce our ecosystem to make Malta the blockchain island. These two new memoranda of understanding will provide the groundwork for the Malta Stock Exchange to operate with the private sector in both the primary market with operators such as Neufund and in the secondary market with operators such as OKEx. Eventually these platforms will continue to expand further to allow other operators to plug in and be part our our blockchain island,” he added. 

But the MSX and Neufund are already planning a pilot project later this year including a public offering of tokenized equity on the latter’s primary market. 

Upon securing a regulatory approval, the same project will become available on Binance through a separate agreement with Neufund, which it said would become “the first end-to-end primary issuance platform for security tokens.” 

Prior to the deal, Malta passed in June three bills related to blockchain, cryptocurrencies, and distributed ledger technology, marking a significant step towards making the nation a “blockchain island.” 

“Today Maltese Parliament unanimously approved 3 bills on DLT/blockchain, a 1st in the World. Honored to have driven these bills. Announced that Mr Stephen McCarthy will be the CEO of the new #Malta Digital Innovation Authority. #BlockchainIsland -SS,” Schemberi had said in his Twitter post. 

The bills, entitled “The Innovative Technology Arrangements and Services Act,” “The Virtual Financial Assets Act,” “The Malta Digital Innovation Authority Act” are expected to guide the government on maximizing the potential of blockchain and attaining its goal of becoming a global crypto business hub. 

The European state has managed to attract numerous blockchain businesses including cryptocurrency exchange Binance and equity fundraising platform Neufund, according to Marlene Ronstedt, who used to work as a writer and journalist.  

“Malta has achieved this in part by removing regulatory uncertainty. Also, in contrast to other jurisdictions, Maltese legislators understand that blockchain is much more than just cryptocurrencies. And Malta is not simply being lenient to attract business, which could be said of Zug, Switzerland – whose loose interpretation of what constitutes a non-profit attracted many crypto companies, which fundraised in the name of the social good to skirt U.S. securities law,” Ronstedt said.  

At present, the European Union has no legal framework governing activities driven by the blockchain technology even though European authorities are considering to institute such a regulation.

Recent PressSee All

+Recent NewsSee All

Over 50% of ICOs Miss the Boat

Over 50% of ICOs Miss the Boat

More than 50 percent of the initial coin offerings (ICOs) have died in the process months after staging their respective token offerings, a study has found. 

Some 44.2 percent of ICO projects are active into the fifth month and/or beyond, using their social footprint via Twitter as their gauge, based on a research conducted by a team from Boston College in Massachusetts. This, despite over 4,000 ICOs have generated a total of approximately $12 billion as of writing, mostly made in January last year. 

“Breaking it down by category, 83 percent of the 694 ICOs that don’t report capital and don’t list on an exchange are inactive after 120 days. For the 420 ICOs that raise some capital but don’t list, this figure falls to 52 percent, and for the 440 ICOs that list on an exchange, only 16% are inactive in the fifth month,” the study stated. 

Unlike initial public offerings (IPOs), crypto-tokens continue to generate unusually positive average returns following the ICO, with token values continuing its surge half a year after its launching. 

“We find evidence of significant ICO underpricing, with average returns of 179 percent from the ICO price to the first day’s opening market price, over a holding period that averages just 16 days. Even after imputing returns of -100 percent to ICOs that don’t list their tokens within 60 days and adjusting for the returns of the asset class, the representative ICO investor earns 82 percent,” the research stated. 

Prices of tokens keep on rising as it earns “average buy-and-hold abnormal returns of 48 percent in the first 30 trading days,” it added. 

“Startups sell their tokens during the ICO at a significant discount to the opening market price, generating an average return for ICO investors of 179%, accrued over an average holding period of 16 days from the ICO end date to the listing date,” researchers said. 

Leonard Kostovetsky, one of the researchers, told Bloomberg that “once you go beyond three months, at most six months, they don’t outperform other cryptocurrencies. The strongest return is actually in the first month.” 

In general, the paper stated that ICOs can change the way how startup firms raise money, giving more control to entities, greater liquidity to investors, and giving more investment opportunities to others. 

“Our paper shows that ICOs investors are compensated handsomely for investing in new unproven platforms through unregulated offerings… It also shows how ICOs are both similar to and different from IPOs,” it added. 

For their study, Kostovetsky and Hugo Benedetti used the intensity of Twitter posts to look into the lifespan of ICO projects. The group presumed that no tweets saying the project had died would surface in the fifth month. Moreover, it left a legroom for ICOs to exist beyond the 120-day timeframe. About 2,390 ICOs were examined for the study. 

“While our results could be an indication of bubbles, they are also consistent with high compensation for risk for investing in unproven pre-revenue platforms through unregulated offerings,” the study explained.

Recent PressSee All

+Recent NewsSee All