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ILPs May Replace ICOs as a New Form of Fundraising

ILPs May Replace ICOs as
a New Form of Fundraising

Although initial coin offerings (ICOs) are seen as a legitimate means

of raising capital, there are no clear legal and technical controls. Initial Loan Procurements (ILP), are, however, an alternative to the risky ICO model. ILPs enable decentralized crowdfunding opportunities by creating a contractually bound agreement which minimizes the risk of ICOs.

According to Carey Olsen’s senior associate Luke Sayer, instead of coin acquisitions, borrowers and creditors “enter into a loan agreement through legally binding smart contract. With an ILP, a creditor’s investment is contractually tied to the performance of the company.” Therefore, if the company is profitable, the creditor receives annual returns.

Estonia-based startups Blockhive and Agrello have partnered to launch the first ILP called ‘Blockhive.’ Instead of issuance tokens, borrowers have a “contractual entitlement to 20 percent of their annual operating profits.” The goal is to continue decentralized crowdfunding with greater protection for borrowers, improved functionality without the interferences of government regulations.

Problems with ICOs

According to a report by Fabric Ventures and Token Data, startup companies raised $5.6 billion in 2017 through ICOs. While the ICO model of raising capital has great potential for high returns, it has become significantly scrutinized. “I think a lot of what’s happening in the ICO market is actually fraud, and I think that will (eventually) stop,” said Brad Garlinghouse, CEO of Ripple to CNBC.

Unfortunately, many ICOs were scams that extorted money from unsophisticated investors. While they pretended to have a genuine and viable product, once the ICO finished, the website and product information disappeared. Investors, therefore, receive a token that has little to no value. While many ICOs back “high-quality projects… there have been a lot of copycat projects where people copy all the same materials (and) don’t intend to deliver any value to the people buying the tokens,” said Joseph Lubin, co-founder of Ethereum, as he told CNBC.

In response to the high level of ICO scams, the Government of Gibraltar, a British Overseas Territory on Spain’s South Coast, and Gibraltar Financial Services Commission (GFSC) on February 12, 2018, confirmed that they were developing legislation in regards to tokenized assets. “Token regulation is the natural progression following the regulation of DLT Providers, being vital to the protection of consumers,” said Sian Jones, Senior Advisor on distributed ledger technology (DLT) at the GFSC. “One of the key aspects of the token regulations is that we will be introducing the concept of regulation authorized sponsors who will be responsible for assuring compliance with disclosure and financial crime rules.”

ILPs: an alternative to ICOs

Agrello, a legal startup that builds legally-binding contracts on the blockchain, and Blockhive are currently working together to launch the first ILP called ‘Blockhive.’ Blockhive will use the Agrello ID that provides support for all legal requirements which include Know Your Customer (KYC) and anti-money laundering solutions.

Agrello’s agreement also ensures that creditors’ data is encrypted and stored on the blockchain network. Users must register to receive the protocol’s Future Loan Access Tokens (FLAT – transferable loans assigned to third parties) as soon as they lend their funds to Blockhive. Once registered with the tokens, users can access and transact on the Blockhive platform. Unlike ICOs, ILPs can reduce instances of fraud and money-laundering. With new functionalities that prevent scams, ILPs may enable decentralized crowdfunding opportunities without restrictions from regulatory bodies in the future, if it becomes widely adopted.

Authored by
Cindy Huynh

Cindy is a writer, digital marketer and content creator from Australia. She is currently a digital nomad fascinated by blockchain technology. Cindy believes blockchain technology and cryptocurrencies can disrupt existing industries and has the potential to revolutionize the world. In her spare time she enjoys learning new ideas and scuba diving with friends.

Tags – blockchain, cryptocurrency, finance, fintech, ICO, ILP, regulation, startups, technology

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Bitcoin: The True Democracy -Do you want the option to turn $50,000 into $3 million?

bcBitcoin: The True Democracy
Stefan Molyneux and Jeffrey Tucker

Do you want the option to turn $50,000 into $3 million? Wait, and also received $100,000 in private stock in a rising emerging state of the art Market Network, and that $3 million potentially turning into billions within a few years even within one year?

Visionaries, Internet Geniuses, and Network Wizards will be hosting the next webinar where you will understand what the Brexit effect, the Trump effect represent in the economies of 2017 and how you could make a modest investment today and become a multi-millionaire next year.

If you had invested $50,000 into Bitcoin at its beginning you would be worth $4.8 billion today. That was the first wave of what is to become a series of waves each one a bigger wave than the last one.

We are now staring at the next wave. It is right in front of us.

The True Democracy how the Blockchain not only brings wealth to the common man and woman, it also prevents war. Because the blockchain ends usury and usury is needed to finance war. So the blockchain architecture ends the ability to wage war.

Stefan Molyneux (A brilliant and very nice guy) discusses why war becomes obsolete in the decentralized world of the blockchain.

Make sure to join our conferences, you can find the calendar for our meetings in our calendar here.

 

Join our Cybercoin Group here:
https://markethive.com/group/cryptocoin

Thomas Prendergast
Founder and CEO
Markethive Inc.

Bitcoin: The True Democracy – Stefan Molyneux and Jeffrey Tucker

bcBitcoin: The True Democracy
Stefan Molyneux and Jeffrey Tucker

Do you want the option to turn $50,000 into $3 million? Wait, and also received $100,000 in private stock in a rising emerging state of the art Market Network, and that $3 million potentially turning into billions within a few years even within one year?

Visionaries, Internet Geniuses, and Network Wizards will be hosting the next webinar where you will understand what the Brexit effect, the Trump effect represent in the economies of 2017 and how you could make a modest investment today and become a multi-millionaire next year.

If you had invested $50,000 into Bitcoin at its beginning you would be worth $4.8 billion today. That was the first wave of what is to become a series of waves each one a bigger wave than the last one.

We are now staring at the next wave. It is right in front of us.

The True Democracy how the Blockchain not only brings wealth to the common man and woman, it also prevents war. Because the blockchain ends usury and usury is needed to finance war. So the blockchain architecture ends the ability to wage war.

Stefan Molyneux (A brilliant and very nice guy) discusses why war becomes obsolete in the decentralized world of the blockchain.

Make sure to join our conferences, you can find the calendar for our meetings in our calendar here.

 

Join our Cybercoin Group here:
https://markethive.com/group/cryptocoin

Thomas Prendergast
Founder and CEO
Markethive Inc.