Following the mind-blowing glut of ICO’s in mid-2017, the cryptocurrency market is now getting increasingly oversaturated, which results in a recession. The chaos, madness and gold rush seem to subside as less and less cryptoinvestors are willing to play by the old rules where they bear the whole financial responsibility while having only the word of the project’s team as a guarantee. Numerous exit scams and pyramid schemes only proved that the lack of regulations and guarantees are likely to scare potential contributors away.
This justifies the emergence of another wave of token offerings: they are brought by projects that seek to peg their tokens to the real economy and don’t promise to disrupt everything under the sun. Such projects are backed by thousands of users and a real product.
The Old Is Passing Away
Blockchain-based technologies empower people with yet unseen economic freedom and decentralization. However, even in Bitcoin the ecosystem is getting centralized as users require the freedom combined with some stability and, moreover, reliability. Everything else seems to eventually become a toy for bulls and bears. Such coins are tokens are nothing but fiat 2.0, a postmodernist superstructure over regular money that are, in their turn, not actually backed by anything but regulations.
In 2018 alone, there have been at least five notable ICO scams, one of which even mocked the investors by leaving nothing but “penis” on the project’s website. The whole cryptomarket seems to have fallen into the red abyss this year. However, it is maturing at a tremendous speed, and investors want to have some protection against scams and exchange rate fluctuations.
These days, a project has to show a successfully functioning internal economy, but, what is more important, it has to prove that the team is willing to be legally responsible and does not seek to run away with their contributors’ money the moment they look away.
This, however, brings up the question of whether it’s possible to successfully combine the reliability of a regulated market with the the wild decentralized freedom of blockchain-based ecosystem. Is it, after all, possible to disrupt the economy from the inside and remain well within the legislative realm?
There have been several attempts in this area. Some of them, like the recently announced Oilcoin, use a real physical commodity to back the token (in this case it’s oil as the name suggests). Others, like BioCoin, don’t focus on a commodity but rather use a whole economy sector as its backing.
In the future, cryptocurrencies are likely to move farther away from the wild west they’re currently in towards more regulated waters. What is more important, however, is that their capitalization will grow thanks to manufacturers, producers and customers, not market swings and endless speculations. While there are not too many projects to move to this new area, this emerging model is very likely to prevail over the get-richer-overnight model that underlay the last year’s ICO craze.
The New Is Emerging
BioCoin mentioned above might be one of the best examples of this new paradigm. It employs peer-to-peer value transfer without intermediaries, and, thanks to a series of partnerships, offers a decentralized loan infrastructure that significantly reduces interest rates and makes credits more accessible to small businesses.
At the same time, Biocoin claims that their ICO is the first legally compliant campaign of this kind in their homeland of Russia. It is coming to a close in a few days, and is one of only few such campaigns to deliberately move away from the grey area into completely legal realm.
The campaign itself is also different from thousands of other ICO’s. Tokens aren’t sold as utility tokens, securities, or a speculative tool. Instead, they have been in use for a while, and the expanding Biocoin ecosystem uses the tokens in their routine transactions. The coin itself was created by a well-established eco-farming network LavkaLavka, which connects thousands of farmers, cafes, restaurants and stores in several countries. In this case, investors are not backing something they may only hope will work someday, but are joining a living international community of eco-friendly businesses and their customers.
Biocoin has also partnered with RCN to offer a flexible credit policy; with acquiring service Robokassa to enable BioCoin payments with nearly 20,000 online stores; with BitWallet to issue a Biocoin plastic card. The value of the coin grows as more partners get onboard as it further reinforces the stability and reliability. According to the project’s website, the ICO campaign has so far raised about $16 million with the countdown still ticking until Sunday.
As the pipe dream of becoming a tycoon overnight by successfully investing in yet another ICO is gradually fading away, there will be more and more projects like Biocoin that focus on the economical development and making money from a real product, not out of thin air. And, even though the market is not fully mature yet, this outlines one of the most likely scenarios of the future development of cryptocurrencies.