The “Reverse ICO” and Tokenization of Real Businesses

Many of us are astounded by the staggering amount of money generated by Initial Coin Offerings (ICOs). In July alone, over $500 million was raised, bringing the all-time total to over $1.6 billion. That does not even include the August figure where FileCoin is closing in on $200 million by itself.

It’s impressive.

Yet, on the horizon is a potentially even greater wave of ICOs. Call it “the reverse ICO,” where existing businesses realize that the best way for them to compete is by decentralizing themselves.

The poster child for this move is Kik, the messenger service, which will introduce its Kin token in the next few quarters. Depending on the research, Kik is somewhere between #5 and #15 in terms of worldwide popularity and usage, but there was speculation as far back as a year ago that growth has stalled.

Most likely, Kik realized that Facebook was going to own the traditional messaging market due to the dominance of Messenger and WhatsApp. They needed a new, more compelling strategy.

That is EXACTLY what they have found by reverse ICOing themselves. In so doing, they are giving the users who generate the value on the platform an opportunity get compensated for it, in the form of Kik tokens.

It is as good an example of the future world that we will get.

In the first iteration of software, you paid for using an app. Today, you use an app “for free” (even though you pay with your personal data).

In the blockchain-based world of decentralized tokens, you get paid for the value you create.

Given a company that has 300 million users (give or take) I would not be surprised if the Kik ICO generated $750 million to north of $1 billion in its Initial Coin Offering or even more. (Not that I am expert, but I did predict Tezos would raise $250 million. I was off by only $18 million.)

Kik Will Kikstart a New Industry…the Reverse ICO

Following Kik’s successful ICO, we will start seeing a wave of existing companies following suit.

The most likely scenario involves the tokenization of “sharing economy” companies that are either not profitable or sitting in positions #3-7 in their industry (most likely both).

The web is already full of proposals for how SoundCloud, Twitter, Visa, Uber, Medium, Spotify and more could pull this off. Trent McConaghy has done a stellar job of walking through the process for how this might look, including how industry leaders like Amazon and Facebook might decentralize.

I think that is a bit further afield as insanely profitable companies or those with total market domination have more to risk by changing everything.

The secondary and tertiary players don’t. That is where Kik, SoundCloud, Twitter, and many others find themselves.

The Tokenized Future

In the years to come, as the trend toward “reverse ICOs” increases, we will see new jobs such as “Tokenization Consultant” and new industry practices “reverse ICO departments” at law firms and management consulting firms.

In the ongoing march of blockchain towards mainstream adoption, the trend that Kik begins is one to watch.

It has profound impact for the stock market, IPOs, regulation, and community ownership as well as the jobs necessary to transition existing companies from the centralized paradigm to the decentralized paradigm.