Venture capitalists and investors nowadays have been announcing publicly and loudly that they are eager to invest in blockchain yet they dismiss ICO, cryptocurrency or bitcoin related startups.
This misconception represents a fundamental failure to understand that the real value proposition is a decentralized system and a decentralized system only works if the control on it is decentralized.
This system requires a mechanism by which the network can be secured.
That mechanism is a competition based on game theory involving miners or stakers competing to stake digital currency and use it to guarantee compliance to security rules which will get them rewarded again in currency of the network.
This mechanism is at the heart of making the system secure. Without a currency you can't handle security, you need a central authority to decide if a transaction should be included or not. At that moment it's no longer open, borderless or censorship resistant. It becomes completely useless.
Without proof of work, is there anything really new about blockchain?
More informed VC consultants are using the private blockchain term. Private blockchain is just a confusing name for a shared database. The word blockchain is meaningless.
The truth is that VCs are dominated by the banking sector to limit innovation.
The banks have very little use today for open global blockchain because open global blockchain essentially means the replacement of banking as an institution with banking as a network protocol and an application witch takes away all the power of control that the banks have. To use a blockchain is to give up all control.
The best practice of blockchain is money. Smart contracts are still in progress and have a serious oracle issue.
Outside cryptocurrency, the blockchain tech is obsolete. The light bulb did not come from the continuous improvement of candles.
The banking and monetary system cant be improved, it should be replaced.
Fraud scam and shitcoins are an old school argument. You cannot escape the responsibility of tomorrow by evading it today (Benjamin Franklin).
Such discussions are used to mislead the evolutionary revolution behind bitcoin and cryptocurrency.
Awareness and education are the remedy.
ICOs have attracted more money in the past half decade than VC fundraisers, and this likely has to do with the ICO’s inclusive low-barrier to financial entry. As the industry evolves, though, we’ll likely see more venture capital gravitate towards cryptocurrency and blockchain companies, so we’ll see if this old dog can keep up with the budding industry’s new fundraising tricks.
The new age of digital currency will create a new type of freedom so it's up to the children of tomorrow to lead a revolution to a new evolution.
Simon Tadros
Twitter: @conversionpoint
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