VC Fund Blockchain Capital Launching Initial Coin Offering

Digital currency investors should be on the lookout for a new token from venture capital fund Blockchain Capital. The firm will raise funds through the creation and sale of a blockchain-based token called “BCAP,” according to CoinDesk. The company plans to initiate the sale via an ICO, and tokens will represent shares of a new fund that is being created and which will be called Blockchain Capital III Digital Liquid Venture Fund, LP. This type of token sale is a first for venture capital funds and represents the latest in a trend among token creators. What is behind this trend and what does Blockchain Capital hope to gain from this venture?

Terms of the ICO
Blockchain Capital revealed to the public that it would sell the BCAP token via an ethereum-based contract. This constitutes the third effort to raise funds for Blockchain Capital, with the most recent attempt being a $13 million project to generate funds for a new project with a focus on bitcoin and blockchain startup efforts. The ICO will come alongside other traditional efforts to raise funds as well.

Aside from The DAO, the ICO by Blockchain Capital is the first project of its kind. It constitutes the latest in a number of token sales which have so far been highly controversial. Proponents of the token model believe that it can unlock new sources of capital, while detractors believe that it is especially prone to fraud, mismanagement, and other potential pitfalls.

Tokenizing a Security
Blockchain Capital managing partner Brock Pierce indicated to CoinDesk that his company’s ICO would assume a different approach from other recent token sales. “We’re a security just like someone doing a big crowdfunding campaign, but we’re tokenizing that security. The difference is everyone else is trying to circumvent these regulations,” he said. Blockchain’s token will be registered in Singapore and U.S. regulations. To Pierce, the critical distinction is that many ICOs attempt to avoid characterizing themselves as securities, as this can bypass certain types of regulation. Pierce and his firm are readily agreeing that their ICO is a security and willing to abide by regulatory measures. In addressing legal questions head-on, Blockchain Capital believes that its token sale will give potential investors better access to information about risk, providing a more transparent process and, hopefully, better access to capital.

The token fund will also aim to contribute higher levels to liquidity to the venture capital world. In this area, funds are often able to create solid returns, but those returns often require a long-term investment of five to 10 years. Tokens allow for easy buys and sells and can thus open the door to a variety of other asset classes.

Upcoming ICOs Worth Your Attention

Initial Coin Offerings (ICOs) have been making news for reasons both good and bad. An Initial Coin Offering can be considered a counterpart of an Initial Public Offering (IPO). Basically, it’s crowdfunding in the cryptocurrency market. The exponential rise in the number of ICO launches and money raised has brought them under the microscope with regulators issuing public notices, warning investors about ICOs being a ‘pump and dump’ scheme and some other form of scam. While there is some once of truth in this claim, it would be unfair to put all projects under the same head.

There are several good projects being launched which have merit to them. Here’s a look at four such upcoming ICOs (in no particular order).

Energi Mine (ETK)
Energi Mine is a Manchester, UK-based technology company founded in 2016 that uses advanced technologies such as Artificial Intelligence (AI) and blockchain to trade and manage energy on behalf of blue-chip clients. The company is now looking to revolutionize the $2 trillion global electricity market by bringing in a change in the way energy is both traded and consumed.

By launching a tokenized platform for energy, Energi Mine plans to decentralize the global energy markets. This will facilitate peer-to-peer trading of electricity between users while offering rewards in the form of tokens to users (Energi Tokens – ETK) for energy-saving behavior. Attaching incentives to energy-efficient behavior can reduce the wasteful energy demand and promote buying of efficient energy appliances.

Overall, the platform can help resolve basic issues in the existing energy marketplace such as opaqueness, centralized mechanism, limited players and lack of incentives for consumers. The ICO is just about to enter pre-sale, with a target ICO date towards the end of the year.

Crypto20 (C20)
While cryptocurrencies have garnered a lot of interest, factors such as limited knowledge, volatility and high risk are some of the reasons that have kept investors away from dipping their toes. This is where a structured product like the CRYPTO20 can be of use.

CRYPTO20 is the first cryptocurrency-only tokenized index fund that autonomously maintains (through regular rebalancing) a diverse portfolio of the top 20 cryptocurrencies by market capitalization. The product can replicate the style of Vanguard 500 that maintains a portfolio of top 500 publicly listed US companies based on market capitalization.

By cutting out the middleman, CRYPTO20 is looking offer the lowest fees in the industry. All that an investor needs to do is buy its token C20, which will represent the investor’s shareholding of the fund with its value linked directly to the 20 underlying cryptocurrencies. Currently eleven out of the top 20 cryptocurrenies have a market cap in billions, they are Bitcoin, Ethereum, Bitcoin Cash, Ripple, Litecoin, Dash, NEM, IOTA, Monero, NEO and Ethereum Classic. Pre-sale starts October 7, while main token sale starts October 16, 2017.

Sensay (SENSE)
In today’s times, users spend countless hours on messaging apps but these applications operate in isolated chambers with no common connect or scope for direct knowledge sharing. Opposite to the present structures, Sensay is a decentralized messaging platform which operates in a transparent manner by allowing interoperability messaging across centralized messaging applications.

Sensay is now launching the SENSE token to enable users earn rewards for their conversational contributions across the Sensay platform and other applications. The Sensay network has over 20 million Sensay Coins already in circulation among nearly 3 million users, exchangeable for SENSE. Sensay works on any SMS-enabled device with which it has a potential reach of 4.9 billion people globally. With SENSE, ‘monetization’ angle will be added for users and developers on an already existing, advanced and decentralized platform. Pre-Sale in September, followed by main token sale from October 3-10, 2017

Dether (DTR)
Ethereum, the second largest cryptocurrency in terms of market capitalization, is a decentralized software platform that enables SmartContracts and Distributed Applications (DApps) to be built and run without any downtime, fraud, control or interference from a third party. Since its launch in 2015, Ethereum has been a favorite with investors and developers alike but the process of buying and selling it remains centralized, which has hindered its mass adoption.

However, with Dether, the world’s first decentralized application, people can buy ether using cash and spend it at physical stores using a mobile phone. Dether allows any person who has ether to become a person teller machine (PTM). While buyers can buy ether anywhere, anytime with cash, merchants can accept payments in ETH. The process of buying and selling, in this case, is guided by Dether’s map. Dether is launching the DTR token (DTR) to use Dether’s map in the best possible way and to be able to become a part of its buyback program. Thus, Dether will lower the barriers which are inhibiting Ethereum’s mass adoption. Crowdsale will take place in November 2017.

SEC Warns Investors About Scam ICOs

For the U.S. Securities and Exchange Commission (SEC), ICOs have long been an area of caution. The SEC has remained skeptical of the initial coin offering craze since it began with ethereum.

As ICOs have expanded globally – raking in close to $2 billion in fundraising over the span of just a few months – government agencies like the SEC’s Office of Investor Education and Advocacy have debated how to approach this new phenomenon. In some cases, as in China, the government regulators determined it was in the best interest of the national economy to simply block ICOs altogether.

While the United States has not done that, the SEC has recently released a stern warning to potential ICO investors, cautioning them against buying up stakes in companies that assert that they are engaging in ICOs when in fact they are not.

Public Announcements of ICOs to Affect Stock Price
The warning by the SEC suggests that “while [ICOs] may provide fair and lawful investment opportunities, there may be situations in which companies are publicly announcing ICO or coin/token related events to affect the price of the company’s common stock.” In these cases, the letter suggests, the SEC may decide to suspend trading for those particular stocks.

When might the SEC decide to do this? If the company lacks “current, accurate, or adequate information,” for one. This may be a suggestion that the company is designed for market manipulation purposes only. The SEC may also take issue if publicly-available information on the company in question invites questions about that company’s activities, status, or structure, or if the agency has questions about trading in the stock or market manipulation more broadly.

What Does It Mean for Investors?
What should investors due in light of the SEC’s warning? The message goes on to say that “investors should be very cautious in considering an investment in a stock following a trading suspension.” Beyond that, though, investors should also take care to exercise due diligence before investing in any ICO. With a variety of types of ICO-related scams on the rise, malicious individuals and entities are hoping to capitalize on the braod interest in this new fundraising trend. (See more: Phishing Scams Have Cost ICO Investors $225M.)

Investors should be on guard to the possibility that any ICO is illegitimate. (See also: $232 Million ICO Has Some Worried About an Ethereum Sell-Off.) The best way to protect yourself from being the victim of a fraudulent ICO is to investigate as thoroughly as possible before you enter into the fundraising project.

The SEC suggests investors should always research companies before buying stock, looking carefully at finances, organization, business prospects, and more. Remember that information from sources like blogs, social network sites, and similar sources is not necessarily trustworthy. Companies involved with stock promotions suggest a particularly high level of scrutiny for potential investors.

ICOs – Beginning Of The End

In fundraising circles, it was the year of initial coin offerings (ICOs). The fundraising method, which offers mainstream investors the chance to invest in a startup using coin tokens, was a largely unknown entity at the start of 2017. Toward the end of the year, however, they have reportedly raised $3.25 billion.

But ICO enthusiasts might want to hold off before uncorking the bubbly. China’s government has already banned such offerings. In the United States, the Securities and Exchange Commission (SEC), which largely looked the other way as ICOs gained traction among investors, has increasingly become vocal about bringing them under its purview. (See also: How The SEC Is Regulating ICOs).

Last weekend, the agency took the unprecedented step of halting an ICO. Munchee, a blockchain-based app for posting restaurant reviews, intended to raise funds by distributing a coin called MUN.

According to a whitepaper issued by the startup, MUN was to be used as currency within the Munchee app to incentivize restaurants and reviewers to purchase services or earn rewards. The coin could also be moved to a cryptocurrency wallet and exchanged for bitcoin and ethereum, the world’s top two most-traded cryptocurrencies. That last bit transforms MUN from a utility token, which places it outside the SEC’s purview, to a security token that is tradeable with an existing currency.

The whitepaper also claimed erroneously that MUN was not subject to federal laws regarding securities. According to reports, the startup stopped the token sale “hours” after hearing from the SEC.

Given SEC Chairman Jay Clayton’s recent statement, it is quite likely that the SEC will actively monitor and flag offerings. (See also: SEC Chairman Warns Cryptocurrency Investors To Beware.) In fact, SEC officials recently discussed ways in which entrepreneurs can hold token sales compliant with federal securities laws.

In the meanwhile, numbers relating to ICO fundraising aren’t looking too good.

According to a report by research firm Smith + Crown, only 69 of the 169 ICOs in October 2017 managed to reach their fundraising goals. The rest ended up “either extending, postponing, or cancelling outright their own proposed sales.”

Architect Partners, a Palo Alto-based M&A firm, evaluated data from Smith + Crown and to calculate success rates for initial coin offerings. The firm found that the success rate of ICOs plunged to 34% in September from a high of 92% in June. Further, the median amount raised by ICOs declined from $4 million in July to $2 million by September.

How the SEC is Regulating Initial Coin Offerings

Throughout their short history, cryptocurrencies have treaded a fine line when it comes to the Securities and Exchange Commission (SEC). As decentralized currencies, they have not been automatically subjected to the rules and regulations of governmental agencies like the SEC. However, that might be changing: the SEC released a report last week suggesting that ICOs, the initial coin offering token sales that have fueled the launches of many new startups in the past several months, are, in fact, subject to securities laws. What’s more, the commission found that one particular multimillion-dollar ICO from 2016 has violated some portion of those laws.

Ethereum-Powered ICOs as the New Crowdfunding
The ICO craze has taken off in the past several months. These offerings make use of the Ethereum blockchain and its smart contracts to raise ether in exchange for specific “tokens” in a new company. ICOs have raised millions of dollars for new companies in seconds, even in some cases in which the companies don’t necessarily have a product or app on offer at the time of the ICO. There has already been concern among financial institutions and analysts that some companies might be taking advantage of customer interest in the new fundraising format, cashing out their ether for fiat currency without necessarily providing any return on investor funds.

SEC Steps in to Classify
The SEC’s new report classifies that tokens, at least in particular cases, are currencies, according to reporting by The Verge. The report points in particular to the Decentralized Autonomous Organization’s (DAO) ICO from last year, concluding that DAO tokens are, in fact, securities. Given this classification, the SEC found that the DAO violated section 5 of the Securities Act when it failed to register with the Commission. At this stage, the SEC has declined to pursue any action against the DAO or the startup behind the project,, although it does not offer any explanation for why it has avoided enforcement in the recent report.

Perhaps one reason why the SEC will not attempt to enforce action against the DAO is that the decentralized organization is a bit difficult to pin down. Who exactly would the SEC go after, anyway? The SEC report suggests a number of possible “intermediaries,” any of which could potentially be involved or incriminated.

The SEC’s report confirms that the tokens sold in the ICO in question do meet the legal definition of a security, indicating that “investors who purchased DAO Tokens were investing in a common enterprise and reasonably expected to earn profits through that enterprise when they set ETH to the DAO’s Ethereum blockchain address in exchange for DAO Tokens.” Beyond that, investors in the ICO were given limited voting and ownership rights over the company.

Reviews of ICO (Initial Coin Offerings)

What is the Definition of ICO?

Initial Coin Offering (ICO) is a crowdfunding method used by new cryptocurrency companies to raise capitals. In ICO, some percentages of the newly issued cryptocurrencies are sold to people who are interested in supporting the project. They are sold to exchange for other established cryptocurrencies such as Bitcoin, Fiat and Ether.

Backers purchase the new cryptocurrency with an intention to make a profit when it increases in value. It is similar to the principle of people making a profit when the share they bought at the stock market increases in value. ICO is different than purchasing shares at a stock market because you don’t get a share of the ownership right when you invest in the new tokens.

Brief History on ICOs

In the beginning stage, ICO was conducted by companies such as Mastercoin, Ethereum and Karmacoin. Ethereum conducted one of the biggest ICO in 2014 by raising a total of $18 millions in the early stage of 2014. They break the record by raising 3,700 Bitcoins which is equivalent to $2.3 million dollars within the first 12 hours of the campaign. Kik conducted the first mainstream ICO in September 2017 but the project was interrupted by a phishing scam via the circulation of a false URL in the social media. Ripple sold $1 billion worth of XRP tokens to investors in exchange for bitcoins and fiats in 2013.

Today, ICO sales have become increasingly popular with around 50 token sales being conducted every month. Starting from 2017, ICO has been growing at a fast pace with at least $2 billion worth of token sales successfully conducted. This proves that it is not going to be a temporary method used by new cryptocurrency company to raise funds but it is here to stay for long term.

Nowadays, ICO token sale is so popular that at least a few ICO begins every day. It has been predicted that over $4 billion worth of token sales will be conducted this year. Genesis Vision, a Russian based company, conducted an ICO campaign that runs from the 15th October 2017 to the 15th November 2017. They manage to raise a total of $2.3 million in the token presale.

How Does ICOs Fundraising Work?

A cryptocurrency company that wants to raise capitals through ICO must provide a few details including project description, project purpose, amount need to be raised, percentage of tokens the company will keep, types of virtual currencies accepted, and the timeframe of the ICO campaign. Backers who are interested can email the seller and ask for more details of the project before performing a transaction. If they successfully raise the amount for the campaign, they will carry out the scheme to complete the project. If not, they will return the money back to the backers.

How Scammers Use ICO to Carry Out Fraud?

ICO can be conducted to help raise funds for various types of businesses and charity organization. It has also been used as a tool by scammers to conduct frauds. Scammers would use means to increase the ICO value temporarily and abandon the project afterwards to make a quick profit. Scams happen because of the lack of regulation by the government. Just like any investment, there is a risk when coming to invest in the initial coin offering.

No statistic on the company that runs the ICO is given so it is hard to make a prediction. Backers usually would only check out data such as who will receive the collected money, and the social media profile. To make a successful investment in ICO, one needs to be patient and willing to spend time to conduct research on the company.

What is an ICO and How Does it Work

The rise in the price of Bitcoin grabbed most of the headlines in 2017, mostly because it is the first and best-known cryptocurrency.

Starting out at just over $1,000 in January, 2017, Bitcoin’s price surged to over $17,000 in December.

However, other cryptocurrencies have also shown significant gains during the same period.

These include Quark with a return of over 8,000 percent, Cryptonite with more than 75,000 percent, and DubaiCoin with an astounding gain of almost 824,000 percent.

These kinds of returns have attracted the attention of many investors and venture capitalists seeking a piece of the action.

They have also spawned an increase in the number of startups in the cryptocurrency space that intend to raise capital through Initial Coin Offerings (ICOs) to fund their ventures.

What are ICOs and how can they be Compared to IPOs?
An ICO is the cryptocurrency equivalent of a traditional Initial Public Offering (IPO).

With IPOs, investors exchange money for equity in a public company.

Cryptocurrency startups use ICOs to raise funds for their new ventures, selling their own cryptocurrency in exchange for legal tender or other cryptocurrencies, such as Bitcoin or Ether.

Whereas IPOs are tightly regulated by banks and the Securities and Exchange Commission (SEC), ICOs are currently unregulated, with no oversight by the SEC.

An ICO is like crowdfunding, except backers expect a return on their investment rather than donating money for a startup.

ICOs exchange virtual coins or tokens instead of shares to raise capital.

IPOs are normally only accessible to high net worth investors, while anyone can invest in an ICO.

How do ICOs Work?
Startups launch an ICO by publishing a white paper or website giving a detailed description of the project and key team members, the budget for the venture, the types of currency accepted for investment, and the timeline for the ICO campaign.

Early ICO investors are often given bonuses.

Most ICOs set a limit on the number of tokens or coins on offer prior to the campaign launch.

Early investors may be given preferential terms, which often include a lower price per coin or token.

While some ICOs may keep the price steady throughout the campaign, others adjust the price according to demand in order to raise as much capital as possible.

There have been valid concerns about the risks associated with ICO investment.

In order to mitigate the risk, ICOs may facilitate their offerings through an exchange or escrow service.

An escrow provides investors with some degree of security against scammers and a means of verifying how funds are spent after an ICO campaign has run its course.

Advantages of ICOs
ICOs offer a number of advantages for both entrepreneurs and investors:

They provide a platform for startups to raise money faster than conventional fundraising mechanisms. Unlike IPOs or regulated crowdfunding campaigns, ICOs don’t have to go through red tape and documentation to get started. All that is needed to launch an ICO and attract investors is a white paper or a website outlining the venture. This makes fundraising much cheaper
Investors are given early access to a potentially profitable venture. Some ICO projects can turn out to be highly profitable for early investors. The Ethereum ICO launch in 2014 is a case in point. Its offering of Ether cryptocurrency turned out to be the most successful ICO venture to date. Ether was offered at 35 to 40 cents at launch and is now priced at over $1,100
Heightened exposure for projects. The creation of a website to support an ICO gives startups the opportunity to showcase influential team members and early investors in the project. This helps to build credibility and trust, and attract further investment
They facilitate community building. ICOs give entrepreneurs the opportunity to build a strong community around their projects. They also give the community a valuable say in the direction of future projects, enabling investors to keep creators and team members accountable. A strong community also improves credibility and attracts more investors
Potential for high reward. Although high risk, ICO investments can offer high rewards. To a large extent, investments are not affected by changes in the stock market and the economy
Risks Associated with ICO Investments
Investors need to be aware of the potential risks and disadvantages of investing in ICOs:

They attract scammers. The unregulated nature of the cryptocurrency industry is something which attracts scammers. The creation of a white paper or website to launch an ICO is no guarantee that it is genuine. These can be full of untruths and inaccuracies which scammers may use to entice investors
ICOs are speculative by nature. When investing in an ICO project, investors are backing an idea or concept, with no guarantee of success. Statistics show that over 90 percent of startup enterprises in all industries fail, and cryptocurrency projects are no exception
Prone to investment by whales. Whales are people who have a lot of money to invest in an ICO. They invest early to buy up a large portion of tokens and then sell them later at a premium to get a short-term profit. They basically rig the game in their favor, leaving smaller investors to purchase coins or tokens at elevated prices
ICOs may not facilitate secure storage of tokens or coins. This will make wallets prone to hacking and fraud, or lead to tokens being lost
New cryptocurrencies may not be accepted by exchanges. Tokens or new digital currencies lose their liquidity if they are not accepted by cryptocurrency exchanges
How to Avoid an ICO Scam
Investors should look out for signs that an ICO may be a scam and take evasive action.

Check the signs that tell you an ICO may be a scam:

Weak ICO promotion. If a white paper or website promoting an ICO does not have detail on the project or information about the creators and team members behind the venture, it could be a scam. Investors should conduct a thorough research on all aspects of the project, as well as the company and team involved before committing to the investment
Unclear roadmap. An ICO launched without adequate detail on development and funding goals may be a scam. It could be an indication that the creators are just looking to make a quick profit
No cap on fundraising. Legitimate ICOs usually publish their fundraising goals before launching. An ICO without a funding cap may indicate that creators are only in it for short-term profit
Biased mining structure. A mining structure rewarding pre-launch investors with a significant number of pre-mined tokens may be evidence that the venture is driven by the prospect of short-term gain
ICO Affiliate Marketing
For ICO startups, affiliate marketing presents a way to generate capital faster and without the regulatory funding restrictions imposed by banks and venture capitalists.

Affiliates reach new customer bases and bring in more web traffic for exposure to the project.

ICOs may present an exciting opportunity for affiliate marketers to make money.

However, ICO scams have the capability of destroying a network and causing significant damage to an affiliate marketer’s credibility.

Affiliate marketers have an added responsibility to safeguard the investment of every member of their affiliate network.

This demands meticulous screening of ICOs to determine legitimacy.

Final Thoughts
It may be easy to be caught up in the emotion and hype surrounding cryptocurrency investment.

Make no mistake:

There are opportunities in ICO investments to make a lot of money.

However, investors and affiliate marketers need to conduct due diligence on ICOs to assess their legitimacy and potential for profit before committing to any project.

Blockchain Technology – Is It Changing Affiliate Marketing

In the past few years we’ve seen the rise of blockchain technology, which could potentially be one of the cornerstones of future IT, business, and marketing.

Needless to say, potential benefits for affiliate marketing should also be explored, hence this article. Enjoy!

Today’s global market is extremely dynamic, which can be partly attributed to a great deal of new technologies that find their way to us, almost on a daily basis.

Stuff like AI, big data, and the internet of things are only some of the potentially disruptive tech trends of the past decade – trends that can completely change our lifestyle and the way we go about the world.

One technology that could have the same effect, and which is making splashes in financial and IT circles is blockchain. More and more people see the potential there, and terms such as bitcoin and cryptocurrency are quickly becoming common household words.

Naturally, marketers that are always on the prowl for the shiniest new toy can ask themselves: how can this impact marketing in the long run?

There are actually two sides to this story. One is how blockchain can affect the underlying technology that we use for affiliate marketing to work, and the other is how we can do affiliate marketing in the cryptocurrency and blockchain niche.

But before we get to that, it would be prudent to understand the basic principles behind blockchain and how it all actually works.

The story behind cryptocurrency
It all started with bitcoin, when a mysterious entity called Satoshi Nakamoto created an encryption protocol which could be used in peer-2-peer trading in 2008. At first, this was of interest only to a small community of cryptographers and hackers, but it quickly found its way to the mainstream realm.

The best way to portray this change in opinion is to consider that bitcoins are worth over a thousand dollars at the time of writing this article. In contrast, in 2009, one cryptography fan tried to auction off 10,000 bitcoins for $50, and didn’t find a buyer.

Indeed, smart people who bought bitcoins by the thousands in their infancy are now effectively millionaires. Since the bitcoin market is getting saturated, numerous “knock-off” currencies are cropping up, called alt-coins (alternative bitcoins) with varying success, and often unfounded hope by the buyers that they might replicate the financial success of the bitcoin pioneers.

Where do bitcoins come from?
Like any currency, in order to have value, bitcoins have to be limited. They are created in a process that is conveniently called bitcoin mining, in which a bitcoin is awarded to people that use their computer’s processing power to encrypt certain data.

What this means is that cryptocurrency is a by-product of a much more revolutionary tech: the blockchain.

How does blockchain technology work?
Blockchain is a form of encrypted, decentralized database that is virtually unhackable. All the transactions that involve bitcoins (or other cryptocurrency in question) are stored in blocks that are chained together – hence blockchain.

Every block and all the information in it is verified by a large number of computers that are at the same time solving the same crypto logical problems, and comparing results. If all the computers in the network agree on the results, the information is considered verified and stored into blockchain.

For each block that is completed, bitcoins are awarded and shared among the miners, giving them incentive to actually do all this work.

The longer the chain, the more complicated the problems computers have to solve, which means that it takes more and more work to earn bitcoins, emulating the scarcity of real-word monetary units like gold.

Blockchain can store more than just transaction data. It can hold virtually any sort of information in it, but it is best used as an online ledger where transaction information is safely stored. This system eliminates the need for the middle-men, such as banks, which in turn makes all transactions faster, cheaper, and more secure.

The reason for the added security is simple: once one block is finished, a new one is started and it ties to the previous one.

This means that if you want to hack any of the blocks to get to the information that you might be looking for, you would need to decrypt EVERY block that is chained after the block in question, all while trying to break some of the most complicated encryption that is constantly verified by a huge number of independent computers.

In other words, cryptocurrency and a related blockchain are intertwined in a very complex way, but this technology allows us to create something we call smart contracts.

These smart contracts are automated digital contracts created by two parties. The smart contracts are stored and executed via blockchain.

Blockchain technology can be used for literally anything, from insurance policies, lending your camera to a friend, or any sort of purchase.

Every step of the contract is stored into a blockchain, all transactions are immutable, and there is a clear audit trail, which is of crucial importance to all the people in the financial sector.

From the user’s end-point, smart contracts are fairly straightforward: two persons (or parties) agree on the terms and sign the contract, after which they each get digital tokens so that they can look up the necessary information.

When the contract, or contract clauses are executed, it is also stored on blockchain with a timestamp, along with the contract’s end.

Where is blockchain used?
Of course, blockchain as described is far more complex than that. For one, the relationship between blockchain and cryptocurrency is a tenuous one. A new altcoin doesn’t necessarily need to have its own blockchain. In fact, it might have some other way of storing and encrypting data.

On the other hand, blockchain can be privately funded, without any sort of cryptocurrency tied to it – it would work as a super secure distributed database.

True enough, various cryptocurrencies have their own technology, both for verification, data storage and encryption.

The field is developing very quickly and new coins and ledgers are cropping up on a daily basis, with new models and usages in mind.

To muddy things up even further, sometimes companies and technologies feed off of each other.

For example, Ethereum, one of the biggest cryptocurrency names – along with bitcoin – is built on its own custom blockchain specifically designed for smart-contracts (the bitcoin blockchain doesn’t have this feature at the moment) and it has its own coin, called Ether.

However, Ether is not supposed to be used as a cryptocurrency on its own, but rather among the developers that work on various Ethereum applications.

If you want to trade it, you would need to convert it to bitcoin first, or create some other form of tradable currency based on smart contracts.

The possible usages are numerous, and there are hundreds of altcoins currently in circulation, almost all with a different purpose in mind.

Some are simply used as currency, while others are just a part of a bigger platform that is specially designed for a certain purpose.

A smart contract would also allow for microinsurance among people without any middle-men. Imagine you want to lend your car to someone, but you don’t really trust the person. You could create a smart contract where you both agree on the terms.

The contract is then stored on a public chain and both persons can look it up whenever they want, via digital tokens they receive in the process.

It could be used to create limited copies of digital assets, which would include art, music, and anything else that should be unique.

A person could own something, but it wouldn’t be copyable. Or rather, it could be copied but it would be clear that it’s not the original and proper legal action could be then taken.

With the rise of renewable and decentralized energy generation, blockchain could be used to guarantee that the selling and buying of electricity is error-free and that every household that produces electricity gets an appropriate amount of money for all the electricity they put into the power grid.

This requires a considerable amount of automation to avoid the bureaucratic nightmare – an area where smart contracts shine.

In addition, since the Internet of Things (IoT) has become a real thing, one of the biggest concerns is the array of potential security issues that could range from a nuisance of someone remotely operating your printer and printing memes all day, to outright dangerous crimes, if someone was to hack into your car.

Blockchain could be used to remotely command and monitor all these devices and systems in a much more secure environment. Plus: Blockchain could be used in fraud detection, Anti-money laundering (AML), identity management, data management, and so on.

People have started even more unusual projects, such as a blockchain-based social media platform and a decentralized supercomputer.

How blockchain can be used in affiliate marketing
The more tech-savvy among the readers might have already seen how this technology could be applied to make affiliate marketing easier and cheaper.

The most obvious one is that bitcoin could be used for transactions instead of standard money, making the verification process and the payment much simpler.

However, some of the biggest issues in digital marketing are tracking and fraud detection, where the true power of blockchain could be unlocked. How can you track where clicks come from, and how can you be sure these were actual people and not some sort of automated process?

Typically, you’d use a tracking pixel for this purpose, where you’d embed Javascript code into an invisible pixel right next to the ad (or referral) link that allows the advertiser to know which publishers are responsible for their customers, so they can make appropriate payouts.

Of course, this process is largely automated and typically done through affiliate programs, ad markets, and Demand and Supply-Side Platforms. Publishers and advertisers communicate through these channels and agree on their price per click, conversion, sale and so on.

This communication is far from perfect, and it can be manipulated, hacked, and abused. For one, all the information is stored in a central location, such as a server of the affiliate program, making it vulnerable to hacking, human error, and equipment malfunction.

In case the server goes down, the data on it is lost, which could make people lose tremendous amount of money and information.

When blockchain is used, this is impossible, as all the information is stored on all the computers in the network that communicate between each other. In addition, you can use smart contracts to make sure that all tracking is 100% accurate and fraud is avoided.

You can easily use a smart contract instead of a tracking pixel – every time someone clicks on the referral link, a smart contract is created with a unique id of that specific visitor, with the timestamp and the activity in question. This information would be available to both the advertiser and the publisher, and it couldn’t be manipulated in any way.

Ad verification and auditing could work in a similar way. Instead of using an auditing company, which are usually pretty costly, an advertiser could pull an ad from the server and run it through blockchain to check it for any tampering and verify that there are no irregularities (non-live browser seeing an ad, suspicious visitor behavior, and so on).

Smart contracts could potentially work really well with DSPs and SSPs, due to the parametric nature of both technologies.

Since Supply-Side Platforms allow the buying and bidding of individual impressions in real-time, parametric smart contracts could really simplify the whole transaction, while allowing you to track and store every single transaction.

Can affiliate marketing be done in the blockchain/cryptocurrency niche?
Short answer?

Sure, why not. It’s just a niche like any other.

Long answer?

Cryptocurrency and blockchain are two technologies on the rise. In the last few years they have seen much more exposure, and the interest is growing fast. This could potentially be the best time to get into the blockchain affiliate game, as the market is still not saturated.

You can even join an affiliate program where you invite miners, and gain a percentage of their profits, or gain a fixed amount of cryptocurrency in exchange.

Unfortunately, things are not so clear-cut. For one, the cryptocurrency market is pretty volatile, and the values of even the most stable ones, such as bitcoin, can fluctuate wildly from month to month.

In addition, there are very few established affiliate programs in this niche, so getting into it takes a bit of advanced knowledge at best, and can be a financial disaster at worst, if the affiliate program you join, or the currency you support turns out to be a dud.

There is a potential to earn a fortune if you play your cards right, but it is a risky endeavor, so be sure that you are well-informed and that you know what you’re doing.

Blockchain is seeing more and more real-time applications, particularly in financial, insurance, and health sectors.

Affiliate marketing can be another vertical where this technology could be neatly applied, so try to be on the lookout for the most recent developments.

How does an ICO work

Initial Coin Offerings can be considered as an alternative form of crowdfunding that has emerged outside of the traditional financial system. This model has helped a lot of successful projects and companies get the funding required to start their business. In 2013, over US$5.1 billion were raised via crowdfunding worldwide, which increased to US$16 billion in 2014 and was estimated at over US$34 billion in 2015.

Initial Coin Offerings, also known as ICOs is the cryptocurrency version of crowdfunding and are a part of the crypto world that is most likely here to stay. It’s one of the easiest and most efficient methods for companies and individuals to fund their projects and for regular users to invest in projects they see value in. An Initial Coin Offering is an event that usually extends over a period of one week or more and in which everyone is allowed to purchase newly issued tokens in exchange for established cryptocurrencies like Bitcoin (BTC) or Ether (ETH).

In an ICO, there can be a specific goal or limit for project funding, meaning that every token will have a pre-designated price that will not change during the Initial Coin Offering period, which also means that the token supply is static.

It is also possible to have a static supply with a dynamic funding goal, in which the distribution of tokens will be made according to the funds received, meaning that the more funds the project receives the higher the token price will be.

You can also have a dynamic token supply that will be determined by a number of funds that are received, meaning that the price for each token is static (e.g 1 ETH – 1 token) but every time one Ether is sent a new token is created. A limit can be set in terms of goals or time frame.

ICO List

Analyzing examples of relevant ICOs, one can piece together what are the main characteristics or factors for a successful ICO, both in fund gathering and in post-ICO valuation. Websites like Top ICO List aggregate and analyze all the upcoming ICOs.

Nxt is a complete economic system platform that allows users to issue assets and cryptocurrencies that can be exchanged in a decentralized manner through the Nxt exchange. Users can also add plugins and access the Nxt Platform through APIs. The NXT ICO started on the 28th of September 2013 and it lasted until 18 November 2013 with 21 Bitcoin collected, worth roughly $14k. The ICO was held in an “unofficial” way, through an anonymous bitcoin talk forum account, with funds being sent to the funder’s personal Bitcoin address with a special message attached. The genesis block revealed that only 73 people participated in the ICO which makes for a poor distribution, one of the biggest setbacks in early adoption and distribution.

ICO Period: 28 September 2013 – 18 November 2013
Funds gathered (BTC): 21 BTC
Tokens distributed: 1,000,000,000 NXT
Profit percentage (In BTC): 199900%
Ethereum ICO
Ethereum is a smart contract and decentralized applications platform that has gained a lot of traction over time. Ethereum’s native value token, Ether, is mined through a Proof of Work protocol that is set to change to Proof of Stake. The Ethereum ICO was held from the 20th of July, 2014 to the 2nd of September, 2014 (42 days). 31.5k BTC ($18.4 million at the time) were collected during the Initial Coin Offering period making it the second most successful ICO held and the 6th highest funded crowdfunding project so far. The fact that the development team held the funds in BTC lead to it losing a big portion of its funding due to volatility. Ethereum has risen x% in value since it’s released and several projects have been and are being built on the Ethereum Virtual Machine, like DigixDAO, Ardor, Singular-DTV, and Iconomi.

ICO Period: 20 July 2014 – 2 September 2014
Funds gathered (USD): $18,439,086
Funds gathered (BTC): 31,529.49
Tokens distributed: 60,000,000
Profit percentage (In BTC): 3900%

Lisk ICO
Lisk is a modular Smart Contract and Dapp platform that aims to make their deployment accessible to all developers by allowing them to be coded in Javascript, one of the most popular programming languages. The Lisk cryptocurrency uses a Delegated Proof of Stake (dPoS) consensus mechanism. The Lisk ICO was held from the 22 of February until the 21st of March, 2016. During this period users were allowed to send Bitcoin, Crypty and any other cryptocurrency supported by the ShapeShift automatic exchange.

ICO Period: 22nd February 2016 – 21st March 2016
Funds gathered (USD): $5,700,000
Funds gathered (BTC equivalent): 15,480.52871205 BTC
Tokens distributed: 85,000,000 LSK
Profit percentage (In BTC): 138%

DAO Creation Period
The DAO stands for Decentralized Autonomous Organization and it was a smart contract system built on Ethereum meant to function as a community managed venture fund. The DAO was the most successful crowdfunding project ever held as it gathered roughly $150 millions in a 28 day period.

The DAO Creation period started on May 28, 2016 and ended on the 25th of June, during this period users were allowed to purchase newly created DAO tokens with Ether (ETH). During the first 15 days, the conversion rate for DAO tokens to ETH was 100-1, and it rose gradually by 0.05 ETH per day after until it reached the 100-1.5 scale.

Since The DAO had no owner, no one was in control of the funds meaning that during the ICO or Creation period, users sent Ether to a smart contract address that would, in turn, create DAO tokens and send them to the address from which the Ether came from.

One of the unique aspects about the DAO Initial Coin Offering was the risk-free investment option, in which a user could always recover the Ether sent on a 1-100 scale, by splitting these DAO tokens, regardless of their market price.

The DAO was hacked and the project has come to an end after an hard-fork was executed to retrieve the funds stolen. DAO holders can now withdraw ETH from the DAO on a 1-100 exchange rate.

Learn more about the DAO Hack and the Hard Fork.

ICO Period: 1 May 2016 – 28 May 2016
Funds gathered (USD): $160,000,000
Funds gathered (ETH): 12,700,000 ETH
Tokens distributed: 1,153,816,598.7 DAO
Profit percentage (In ETH): 0%

Waves ICO
The Waves Platform is a custom token and asset platform focused on business applications with features like custom token and asset issuance and exchange, fiat gateways and crowdfunding tools. The Waves Platform is currently unfinished and most of these features are still in development. The Waves ICO started on the 12th of April and lasted until the 31st of May. During the first day, users received a 20% bonus. The Waves ICO is an example of an “overbought” ICO (despite Waves being a promising project), with 29636 BTC and 460 BTC in NXT asset swaps being exchanged for Waves. The token has been trading under ICO value since the beginning of its release on exchanges, which can also be attributed to delays in the Roadmap.

ICO Period: April 12, 2016 – May 31, 2016
Funds gathered (USD): $16,436,095
Funds gathered (BTC equivalent): 30096.7 BTC
Tokens distributed: 85,000,000 WAVES
Profit percentage (In BTC): -25%

Stratis ICO
Stratis is a blockchain as a service (BaaS) platform that allows corporations to create their own custom private or public sidechains for their business needs. Stratis allows users to combine various features from other blockchains and to test various variations of blockchain specifications and features. The Stratis ICO took place from the 21st of July to the 26 and it gathered 915 BTC, a relatively small amount compared to other ICOs since its release Stratis has increased in value +400%. Users received a 20% bonus during the first five days, which was then reduced to 10% for the next ten days, and then 5% for the ten days.

ICO Period: June 21, 2016 – July 26, 2016
Funds gathered (USD): $598,684.5
Funds gathered (BTC): 915 BTC
Tokens distributed: 84,000,000 STRAT
Profit percentage (In BTC): 450%


By analyzing these and other Initial Coin Offerings we have come to a simple conclusion, smaller ICOs usually have more room to grow (like NXT and Stratis), but all that truly matters is the underline technology, as Ethereum has proven.

The new age of ICOs is here, and it’s not based on Ethereum

ICOs are said to be the new way to raise money. We’ve seen companies raising $100 million, $156 million, $185 million and even $232 million by selling tokens that will be used in the protocol that these companies have promised to build using this money.

Against the money raised, the tokens they gave were created and sold on the Ethereum blockchain — meaning that all the trade that took place happened on the Ethereum blockchain and the tokens created are tracked on the Ethereum blockchain. But that is changing.

Smart contracts
Ethereum’s mission of making blockchain more than a calculator has allowed them to invent the concept of smart contracts. You can think of smart contracts as a set of rules governing something, which cannot be modified ever in the future. They allow a developer to write anything in the form of a smart contract that gets executed by the network. Consider the example:

If A and B place a bet about the next day’s weather, the bet can be carried out in a trustless manner using a smart contract. Both of them can submit their betting amounts to the smart contract. At a predefined time on the next day, the contract will make an API call to the Open Weather API to see if the weather is sunny or rainy. Depending on the weather, the total amount will be sent to either of the two.

Because this contract is no more than a software program and gets executed on a stranger’s computer, it had to be made sure that the programmer cannot exploit the stranger’s computer or the whole network. To fix the problem, Ethereum came up with its native programming language — Solidity. Although the language is Turing-complete, which means any program can be written in it, there’s still a steep learning curve — and the developer community is in its infancy.

These two limitations have made Ethereum be perceived as merely an ICO platform, rather than a world computer.

Besides these Ethereum-specific disadvantages, it also faces the problems of the blockchain in general — slow speed and no native identity on the blockchain. But blockchains are evolving — we are living in the first few years when the internet was invented. It’s slow, expensive, clunky; but hey, it’s the future!

Is the future anywhere near?
As a huge advocate of blockchain in general, I am quite excited by the research and development happening in the space. With recent developments, we are seeing new blockchains coming up in the industry that offer so much more: They make developers move to using these newer blockchains for building their decentralized apps and ICOs.

I am particularly excited by development in the blockchains that allow general computations to happen in a decentralized manner. The newer generation of such blockchains offers much more than the ability to write smart contracts.

Support for programming language
When it comes to writing a smart contract, the biggest obstacle that I hear from the Ethereum developer community is the requirement to learn a new programming language. I agree that the syntax looks very similar to JavaScript, but it still is a different language and requires you to think of a problem with a different mindset.

Tezos blockchain decided to go with a functional programming language for the smart contracts. Most developers are alien to functional programming and might find the learning curve steeper than Ethereum’s Solidity.

Another blockchain, NEO, promises to offer support for .Net and Java to begin with, and eventually will allow programs written in Python and Go on its platform. With these four languages supported by NEO, it will already serve about 90 percent of the developer community from the get-go.

Qtum is another blockchain that allows developers to write Ethereum-like smart contracts, but using Bitcoin’s UTXO format. In bitcoin, there’s no concept of an account and balance. Instead of tracking every account’s balance, the unspent transactions are tracked (the transactions that were sent to your wallet and are not spent yet). The sum of those transactions make up your balance. It is very efficient and lightweight to maintain these records as compared to accounts on an Ethereum-based model. Qtum thus allows for very lightweight smart contracts.

It’s interesting to see how different blockchains are adopting various programming paradigms for their blockchains. Some are targeted toward consumers and some toward large enterprises.

Native blockchain identity
On the Ethereum blockchain, your identity is the public key whose private key you own. Every smart contract you deploy gets its own public address (identity).

Unlike the pseudonymous model of Ethereum, blockchains like NEO offer users a native identity that can be used across the apps on the blockchain. Imagine if the internet had allowed every user to have a native identity, then you’d have never been required to create a separate one for every service you use on the internet.

Some say blockchain is the new internet. There are several mental models in which to fit blockchain, and I, too, believe considering it as the new internet is not a bad analogy. A native identity on the blockchain will have a native identity that can be used to access anything that gets built on the blockchain.

There are several teams working to solve the identity problem on blockchains. For instance, on Ethereum, Civic allows a user to record his/her identity that he/she can later use for other apps on the blockchain.

I find blockchain-level native identity a worthy proposition because if there’s no native identity, the teams that are solving the identity problem will make the ecosystem fragmented.

Consensus protocol
The current generation of blockchains gets criticized for how much energy it consumes to power the network. The costs are high because of the consensus method Bitcoin or Ethereum blockchain uses.

In any blockchain, periodically all the nodes in the network will have to agree to the updated state of the system. Because the nodes are geographically distributed and are not always keeping track of every other node in the network, they would be required to sync themselves and agree upon the new state of the network.

Currently, the most popular consensus method is proof of work, where every node tries to claim the updated state of the network by solving a cryptographic puzzle. Whoever solves it first gets to tell the network what the updated state is. Everyone agrees to it and proceeds ahead.

The disadvantages of this method are that it is slow and expensive. There are several solutions to this problem, with their own pros and cons. While Ethereum is on its way to move consensus to proof of stake, Qtum and Tezos launched with a version of a proof of stake consensus protocol from the start. Interesting is that Tezos goes a step ahead and offers a decentralized way of governance to adopt any major upgrades to the protocol. Every major upgrade is proposed and voted upon, making the hard forks theoretically rare.

On the other hand, NEO uses a delegated Byzantine Fault Tolerance (dBFT) consensus mechanism that makes it possible to sync up the network a lot quicker without spending a lot of energy. It supports up to 10,000 transactions per second as compared to Ethereum’s 15 transactions per second.

Blockchain is the future — but how does the future look?
Google wasn’t the first search engine, and Facebook wasn’t the first social network — they were the best ones. We might see a similar trend when it comes to the blockchain world. Bitcoin and Ethereum have shown us something that we considered impossible before. But they are far from being perfect.

While blockchain is the future, I do not believe the future is what we are living today. We are living among the experiments. What we see around us might be in ruins tomorrow. What we get as our future might not have been invented yet.

With hopes still high and a sharp eye on the industry, I am waiting for the ultimate blockchain. Will it be Ethereum? Or NEO? Or Qtum? Or Tezos? Or something else? I don’t know. For now, I am excited to witness one of the largest shifts a human life can live through. Even if the future does not appear to be near, the future is not far either.