Hybrid Online Investing: A Solution to the ICO Ban?
While ICO is being banned in China and cryptocurrencies are severely regulated in the USA, Canada, Singapore and Australia, it is inevitable that the global ICO market and its ecosystem in general will be undergoing major changes in the near future.
Companies trying to invite funds by selling their own coins or tokens would be better off moving to countries that do not impose such severe regulations on the crypto market, such as Switzerland or the UK.
Yet this does not solve the main issues with the topic: taxing and the defense of the investor’s rights.
A number of countries still do not have a clear position on regulating ICO campaigns, but this is only temporary, experts say. Measures will be taken as soon as governments work out possible scenarios and make up their minds on how they should treat the cryptocurrency market. Countries that still have not imposed any regulations on cryptocurrency and crowdfunding projects include Belgium, Sweden, Denmark, Estonia, South Korea and the Russian Federation.
In this situation, where governments try to regulate what was not meant to be regulated, there has been an influx of ideas on how to ensure the defense of investor’s rights and interests – for example, by embedding a centralized system into the decentralized one.
One elegant solution to this issue is hybrid online investing.
Hybridization of the ICO
IPOs have been a viable way of inviting investments since the 19th century, when the first public share sale took place. In online investing shares are replaced by tokens and coins.
The reasons for shifting from IPO to ICO are not only obvious but reasonable: it is the need to escape excessive regulation and centralization and reach out to a far bigger crowd of investors.
However, the escape into the world of anonymity and decentralization has had its consequences. The lack of regulation means that there is also no protection of the rights of investors.
But what if, instead of reinventing the wheel, we took a simple instrument that is well known around the world, and with its help create a safe and secure system for online investing?
A step backwards?
The cryptocurrency market is a far more democratic environment than the exchange. The difference between currencies and shares is often ephemeral. The idea of supporting tokens with promissory notes and demand drafts might look retrograde, but in fact it can be viewed as a successful use of proven good old techniques in modern times.
The promissory note is the oldest paper security. And even though most regulations regarding promissory notes have been created in the beginning of the 20th century, they are still recognized by many countries.
Promissory notes have been designed as an instrument that lets one invest idle money, and also as a lending tool. Promissory notes can even be transferred to another person through an endorsement. The main problem of promissory notes has always been the fact that they were quite easy to counterfeit, even easier than bank notes. Nowadays this issue can be resolved thanks to smart contracts and the blockchain technology.
It would seem that paper securities contradict the very idea of decentralization, but the contradiction is only illusory. In fact, paper securities add a completely new level of protection. The point of hybridization is to combine the best aspects of centralized and decentralized systems: transparency and reliability, bond market traditions and modern technology, virtual code and physical documents. All these aspects complement each other and ensure protection for all parties involved.
What is Hybrid Online Investing?
Hybrid investing is a system where tokens traded by companies are supported by paper securities, for example promissory notes. The notes are issued on paper and are kept in the safe of the arbiter company. Ownership rights to such notes, as well as transfer data are stored in the blockchain. Thus, the security cannot be stolen or forged. To receive the note one would have to order its delivery or visit the arbiter company.
Of course, the blockchain cannot guarantee payment on promissory notes, since notes themselves do not imply that the company owns any financial assets. A due diligence might be a solution to this problem. Expert evaluation of projects that intend to emit tokens is one more step towards a safe environment for investing.
Fraud is unlikely, since in the case of a successful fundraising campaign any company would prefer to invest those funds into its own development. In case a company does not wish to pay interest or the deposit to the investor, the latter could always seek help from a court, where notes, unlike smart contracts, are known and can be judicial matter.
The Electronic Bill System Platform
The EBS team is the pioneer of hybrid online investing. The team plans to work both online and offline. They have created and successfully tested the prototype for the Platform, which allows users to issue and trade promissory notes online. Now they are seeking to raise funds in order to take their project to an international level and make it favorable for investors and companies seeking investments.
In its capacity of an arbiter company, the Electronic Bill System intends to open a network of international offices, create an expert community, polish its online instruments and develop new ones – a Broker’s Board (a place for reselling notes on the holder’s terms) and an Exchange, where the Platform’s tokens (EVRTokens) can be exchanged for fiat money.
The company’s tokens are, of course, supported by promissory notes. Investors will be able to secure a 316% profit if they hold a promissory note for 3 years. Of course, one can easily sell EVRTokens right after the ICO’s end to profit 100%. Presale starts on 1st of November 2017. For further information you can visit EBS website – e-veksel.io