Initial Coin Offerings (ICOs) are the digital equivalent of Initial Public Offerings (IPOs). Blockchain technology is widely considered the most cost effective, efficient and secure way to process transactions.
The banking industry is scrambling to catch up with the innovative smart contracts solutions being offered by FinTech organizations, and it’s telling. Already major FinTech companies have raised hundreds of millions of dollars, and the numbers keep on growing. Digital currency processing has significant appeal with traders and investors as a highly effective peer to peer transfer system.
BTC, Ethereum, Dash and Litecoin Ignite Blockchain Storm
The revolution began with Bitcoin, but it certainly didn’t end there. Multiple other digital currencies and blockchain-style systems are cropping up, Ethereum foremost among them. These new age financial instruments act as an alternative to fiat currency, and they run on an entirely new platform that the traditional banking industry is racing to adopt.
Cryptocurrency trading and investing is quickly becoming the next big thing, with e-commerce, lenders, and borrowers’ eager to see the value inherent in it. The enormous costs – hidden and apparent – of traditional currency transfers are prohibitive. Not so with blockchain technology and the range of digital currency options currently available. Many new ICO companies are attempting to break into the mainstream market, notably in areas that are under banked or un-banked.
Tokens Issued at ICOs
Mobile wallets and online payment systems using blockchain technology are filling a void in a largely untapped market. Financial services such as affordable micro financing, and microloans are readily available in the marketplace. The constraints placed upon traditional banking services, vis-à-vis fiat currency movements can result in transactions taking several days to process.
Not so with blockchain technology which typically allows for free transfers across borders. Many popular ICOs have recently launched, hoping to cash in on the runaway train that is digital currency and blockchain technology. These companies are examples of token startups which generate investor interest through their initial coin offerings. Many of the financing-related issues are still being sorted out, such as how best to exchange digital currency into fiat currency.
Solving Real-World Problems with Blockchain Technology
On the proviso that affordable Internet is available to the masses, blockchain technology has the potential to radically reshape the financial landscape. Of course, the changes would need to take place in emerging markets throughout Africa, Latin America and Asia. Since 2015, digital currencies have enjoyed phenomenal success, particularly with the rise of Ethereum for smart contracts.
The World Bank estimates that some 750 million people live on less than $2 per day. According to official stats, approximately 2 billion adults remain un-banked in many developing parts of the world. Since traditional banking services require the customer to live within close proximity to the bank, blockchain technology can eliminate these issues and offer banking services at next to no cost at all.
Peer to peer technology on a decentralized online system with a full range of banking and investment options is clearly a viable proposition for many folks. Plus, blockchain technology acts as a transparent and credible alternative to the bureaucratic centralized systems inherent with traditional banks.
Blockchain is being used for everything from land registry to financial transactions processing and more. It is tamperproof, transparent and corruption free. While blockchain may not be the ideal poverty alleviation solution, just yet, it can significantly lower costs, expedite transactions and allow for greater transparency in all parts of the world. This of course depends upon its adoption by the unbanked populations of the world.