Imagine that you could buy stocks from your uncle’s farm.
Yes, let’s assume that your uncle has a farm, a small farm, with some cows, and you
can buy stocks from his company.
On the stock market, just like you would do with big companies like Apple, Exxon or Chevron.
Do you think I’m crazy?
Not at all!
At the end of this video, you will see where I’m coming from.
Imagine that you wanna start a company.
A traditional company.
Let’s stick to the example of the cows farm to produce milk and Dairy products.
What is the first thing you need?
Of course, money!
You need money to buy the property, the facilities and the cows.
Where can you get that funding?
The first option would be, of course, the bank.
But this has many issues.
The first one is that, if it was not risky enough to start your own company, having a
loan makes it even more risky.
You can end up bankrupt and with debts.
Besides, the person in the bank might not want to give you that loan.
If you have ever tried to get a loan to start a company, you know what I’m talking about!
It is pretty hard to convince a banker to lend you money.
So we discard the bank option.
The next alternative is a venture capitalist.
You know, one of those guys in Silicon Valley.
People with lots of cash and willingness to invest in young talents like you.
Who knows!
Maybe your small farm might become the nigh industry behemoth!
But…
OK, do you know any of those venture capitalist?
Chances are you don’t.
Specially if you live somewhere in the middle of India.
OK, so no Banks, no venture capitalists…
Are your parents Rich?
No?
OK, so your parents cannot help you either…
Hum… wait a minute!
I think I have an idea… what if you could enter the stock market?
Yes, you know, something like Wall Street, where General Motors or McDonalds are…
The good thing about the stock market is that you don’t need to know a millionaire to
get funds.
There are thousands of small investors out there who buy stocks every day.
So let’s say that you divide your company in, say, 10,000 stocks.
Each of them have an initial price of 10 bucks.
And people, no matter where do they live, can buy those.
Maybe there is a guy in Kansas who buys one stock.
And there is a woman in France who buys 10.
This way, with no contacts and no bankers, you can get the funding you need.
You just need a good idea and hard work, right?
Well, don’t get too excited.
There is a big problema.
For instance, if you want to get in the New York stock exchange, your company should have
already made, at least, 10 million dollars in the last 3 years.
And this is just the beginning.
There are lots and lots of regulations that you should meet.
Well…
THIS is the situation where the guys from the Khokholskaya Agricultural Company were.
They lived in Russia, they wanted to start a cow farm and they had no money…
What do you think they did?
Well… check this out!
Russian-based Khokholskaya Agricultural Company plans to launch an ICO named MilkCoin to fund
a dairy farm.
Yes, you heard this right!
This farmers launched their own cryptocurrency!
This is something like their own version of Bitcoin.
They advertised it on their own website and they launched the offer of this new coins.
This is what we call an Initial Coin Offering or ICO.
And now you might wonder… but…
Why should I buy ANOTHER cryptocurrency?
Isn’t it enough with bitCoin?
Well… you might think you are just buying coins.
But in fact, you are buying stocks.
Without going through the tradicional stock markets.
At the end of this video, I will tell you what happened finally with this company.
But the truth is… they are not the only example…
Only 48% of ICOs were successful last year — but startups still managed to raise $5.6
billion
Yes, my dear viewers, there is already a brand new way of making Money to start a company.
And it is available for everybody.
But wait a minute because not everything is so beautiful!
As you can imagine, this idea of the ICOs seems like a scammer’s paradise.
So the question is… can we really trust this brand new way of starting companies?
And what does Switzerland have to do with all of this?
Today we are going to answer all of this questions but, before we do, let’s take a look back
at the history.
COINS VS TOKENS
In the year 2013, all the tech industry was already pretty aware of BITCOIN.
In Silicon Valley they were celebrating all kinds of events and talks about the future
of this currency.
In one of them, there was a man called J.R. WILLET.
This man had a very funny idea.
He said we could create other alternative currencies that, using the same tech as Bitcoin,
would have different rules.
And how are we supposed to pay to the IT people who would design all of that?
They asked him.
He said that, instead of looking for a venture capitalist, he could sell some notes, what
we call a TOKEN, that would be exchange for the coins once they are created.
And this is how the first Initial Coin Offering was created.
But before we continue, we must make a parenthesis.
Many of you might wonder…
What is a TOKEN?
Well…
Tokens are any kind of element that can be changed in a blockchain.
Cryptocurrencies are one kind of token.
But there are many more.
On one hand, we have those that give a right to its owner.
For instance, this would be the example of those notes that you could change by brand
new currencies once they are created.
On the other hand, we have the tokens that are based on an asset.
This would be the case of the stocks from the Russian farmers.
Having one of their tokens equals to have a share of their company.
This Initial Public Offering of Tokens became in fashion in the year 2014.
Why?
What happened in 2014?
Well that was the year when the second most famous cryptocurrency was created.
Ethereum: the decentralised platform that might displace today’s institutions
Unlike Bitcoin, we all know who is behind Ethereum.
This is a company that offers way more than a cryptocurrency.
They also offer a system so other people can create their own cryptocurrencies and tokens.
For example, do you remember this other video where I told you how a Spanish bank is using
blockchain to give corporate loans?
So well…
Ethereum is the platform they use.
And we are not talking only about Spanish banks!
Ethereum has made it really easy to lots of people to start creating different financial
products on blockchain.
The Ethereum rush has been unleashed: ICOs are on fashion in the tech investment world
Since then, lots of companies are getting finance this way.
For example, SIRINLABS is a Swiss company that is about to launch their own smartphone.
This company has gotten more than 118 million bucks thanks to one of the most successful
ICOs of history.
And, of course, there are all kinds of Internet companies that have been born with this system.
But hold on just a second because not everything is so beautiful!
ICOs have no regulation whatsoever.
So you can imagine the rest.
How to create an ICO Scam in 5 simple steps
So now you might wonder… what is the difference between and ICO and, for example, a website
like Kickstarter?
Easy!
If you support some Kickstarter project, you cannot sell any share.
On an ICO, you can buy a token or a coin and, if it goes higher on the market value, sell
it to another investor.
The only problem is that here, there is no financial police or SEC that running against
the bag guys.
So imagine how many people thought they would get rich in a matter of months and they lost
tons of money, instead.
For example, SAVEDROID was a German company who wanted to make a cryptocurrency based
credit card.
It had all the buzzwords to make speculators happy.
Everything seemed beautiful, technological and disruptive.
Specially disruptive.
They got 50 million dollars to launch it.
And once they got them…
what do you think it happened?
Well, they just disappeared.
And since there was not public register whatsoever, it is almost impossible to find the owner.
I’m sure all of you have already seen lots of ads about tokens, coins and lots of things
that promise a lot of profit.
For a better understanding, even the CEO of Ethereum, VITALIK BUTERIN, recognized that
most of the ICOs are scams.
As you can imagine, governments have already started to act.
China has banned ICOs.
America seems to follow a similar way.
Other countries like Estonia said that it’s OK to invest in ICOs for everyone except by
EStonian citizens.
This is something like…
‘Oh, yeah man, you can scam whoever you want but not my people!’.
Nonetheless there is ONE country that has found an intermediate solution.
They will not ban it but they will not let it go as it is today.
Which country am I talking about?
Here is a clue!
We talked about it in one of the most viewed videos here at VisualPolitik.
Do you already know it?
Of course, we are talking about…
SWITZERLAND, THE CRYPTO NATION
Do you remember that video we made about Switzerland?
There we talked about a canton called ZUG, which has the lowest taxes in the country.
So… guess where Ethereum has its headquarters!
Having the biggest crypto currency company in your country means that you also have the
biggest experts on the matter.
So most the of ICOs are done in Swiss servers.
And, of course, the Swiss Government soon realized that, with or without scams, this
was a millionaire industry.
Switzerland Wants to Be the World Capital of Cryptocurrency
Four of the 10 biggest initial coin offerings last year were in Switzerland, more than any
other country
This is why, some Swiss municipalities let their citizens pay taxes or even fines with
cryptocurrencies.
Zug, having less than 30,000 inhabitants, is already the home for 400 blockchain based
companies.
And their regional government is already doing trials to use this technology to organize
the referendums.
You already know that referendums and direct democracy are essential in the Swiss political
system.
So well… now they wanna do them with blockchain.
And, of course, Switzerland wants to become the pioneer in ICO regulations too.
Swiss Financial Authority Releases ICO-Specific Regulatory Guidelines
For example, any company who wants to make an ICO in Switzerland, will have to do it
with a Swiss company.
This means they will have to register, give their name and have a physical address.
This way, it will be easier to chase terrorist, narcos or scammers.
As you can imagine, this regulations are starting to work.
And many companies have already gone to other tax havens like CAIMAN islands, that offer
a complete dog-eat-dog scenario where you can do whatever you want.
This is the short term price you have to pay in order to have a stable environment.
We are talking about a world that still needs a lot to become a mature market.
But it has plenty of possibilities.
Many more than scams, money laundering or easy money.
So the Swiss way seems to be the smartest so far.
Yes, a new technology has come: it is risky but it has many possibilities too.
Instead of banning it or, let it completely free, the best is to regulate it.
This way we take the good and avoid the bad part.
By the way, going back to our Russian friends… those who wanted to finance their farm with
cryptocurrency… well…
I have bad news for you.
Unfortunately, since MilkCoin raised only 2% of the Softcap, we are giving back all
funds that we received.
We will start the return on the 21st of November.
Huge thanks to our backers!
Now the question is…
Do you think other countries will follow the Swiss example?
It is clear that we still need more time for the ICO market to grow and become mature but…
Do you think it can be that capitalist revolution that will open the entry barriers to start
a company?
Please, leave your answer on the comment section below.
And please, do visit our friends from reconsider media, the podcast that provided the vocals
on this episode that were not mine.
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