We recently reported that Kevin O’Leary, a well known Irish Canadian businessman, stated for CNBC that he’s going to be part of the first hotel asset-backed ICO. Unfortunately, the hotel name wasn’t disclosed – but the cryptocurrency offering will have a value of $400 million dollars.
How Could This Influence The Cryptocurrency Market?
It’s important to notice that Mr. Wonderful’s decision was to create an ICO, not an IPO. Moreover, he declared that he’s going to make everything what he is able to do for the smart contract to be approved by the SEC. If his plan works, this will probably be the best thing that happened to the cryptocurrency market this year. You’re probably asking why, so we prepared a few reasons that makes this a huge deal :
1.It’s the first of its kind
We had ICOs before – but not one like this. It’s offering a real business with something tangible. Instead of investing in a company that is actually a startup and trying to raise funds to solve a problem – you’re actually investing in an established business with years of experience behind.
2.It will be made trough an ICO, not a stock IPO
Usually, these type of businesses are carried out through an Initial Public Offering (IPO) to raise funds in order to expand or be publicly traded. Instead of doing that, they eliminated the middle-man and chosen to offer the coins directly to the would-be stakeholders.
Another important thing to mention is that a smart contract would be the one to prove the stakeholder’s ownership. It wasn’t mentioned yet which blockchain will be used for issuing the smart contract, but it might be Ethereum – as it’s already used governments and possibly in electoral systems also.
3. Regulated by SEC
A lot of people are probably seeing this as a bad thing. But actually, it isn’t. A smart contract regulated by SEC would prove its possible and may convince a lot of serious investors that the cryptocurrency industry is not a bubble. This could bring a new wave of people interested in investing in ideas like this.
4. Changing the industry
If this ICO becomes a success, it could be the example that would change the industry. More and more people would use this method and as Kevin declared: “I’m a believer that asset-based coins will replace small-cap stocks,”.
Assuming you build a coffee shop that had a huge success. Afterwards, you build 20 more. But now you want to reach the global market – but you don’t have the funding. This new way would help you get the funding you want while offering a certain ownership of your business. An ownership that you can afterwards buy back way easily than from a venture capitalist or an angel investor. It’s a simple operation managed by a smart contract.
If until now we’ve heard of cryptocurrencies that want to disrupt an industry or want to change an economic sector – we may now find a new type of ICO. An established business offering a share of their profits to the investors for the funding they need to grow.
This might be the example that the cryptocurrency market need. It might lead to a new wave of cryptocurrency adopters which are looking to invest in quality ICO projects with established business behind that can bring a great return of income over time.