Initial Coin Offering (ICO) is the next big thing in the world of fundraising. It combines the features of an IPO and crowdfunding allowing backers to support a startup via donations while generating massive returns on their investment. ICO is basically crowdfunding of a new cryptocurrency venture where a percentage of the cryptocurrency (and not the venture itself) is sold. This new cryptocurrency is usually sold for a fiat currency or other mainstream cryptocurrency like bitcoin.
For many decades, any startup looking for funding would have to go to a VC firm, the self-appointed gatekeepers to capital. Crowdfunding in general, and sites like Kickstarter in particular, democratized the funding process. It allowed young companies to get themselves directly in front of prospective consumers and raise funds from backers.
A world where any eBay shop can within 5 minutes receive $800 in their bank account as a loan from 30 random people on the internet. No transfer fees and instantaneous funds transfer. A world where if the shop does not pay back the loan their warehouse locks stop opening for them and their cell phone stops working. This can be achieved with Bitcoin lending using Ethereum smart contracts combined with the internet of things. This may be reality within 2 years.
Lending Times interviewed Radoslav Albrecht, Founder and CEO of Bitbond.
Bitbond is a Peer-to-Peer lender for Small and Medium Businesses (SMBs). They have originated to date $360,000 in 1100 loans at 20–23% per annum interest. By average 30 people from the US or Western Europe finance each loan . The borrowers are SMBs from all over the world, from Philippines to Brazil, via India and including US and Western Europe. Nearly all their loans are denominated in USD. Bitbond does the underwriting and fixes the loan interest. As a result, the yields end up in the 6–8% range. Subsequently, they are improving fast as Bitbond gathers more data and their systems improve.