World Largest Reseller Of Virtual "Skins" Raises $40M With An ICO

ICO Investors are about to experience something that’s almost never happened in the brief history of the $3 billion market: An offering by a company with an actual product.

Bloomberg Businessweek has managed to find the one ICO being launched to solve the rare problem that could actually benefit from decentralized, monetized tokens. The company is called OPSkins, and it’s the largest skins site in the $50 billion market. The company has raised $41 million in an ICO it launched last month, and hopes to raise another $7 million before the sale ends on Nov. 28. For those readers who aren’t avid gamers, Bloomberg explains that a “skin” is a decoration for the virtual guns and knives found in video games like CounterStrike: Global Offensive. While the concept of building a company around these products might seem silly, some buyers will pay thousands of dollars for the rarest skins.

The two-year-old company has raised about $41 million by selling what it calls WAX tokens, a virtual currency that will become the default way to buy and sell skins on its intercompany skins exchange, the Worldwide Asset eXchange, which will allow buyers to connect to dozens of disparate marketplaces. The idea is to simplify purchases for gamers from different countries and give everyone a clearer sense of what a particular item is worth, using the same kind of digital-ledger system as the cryptocurrency bitcoin.

Previously, the market for these virtual items was highly fragmented, and wealthy buyers would often play intermediaries a premium to root out the best deals on their behalf.

The company bets that making its exchange accessible to rivals, who can then make a broader catalog available to customers, will expand its audience beyond the limitations of an individual website, says Chief Information Officer Malcolm CasSelle, who’s helping lead the WAX effort. In theory, there’s lots of room for new skins buyers, says Chris Grove, managing director at researcher Eilers & Krejcik Gaming LLC. About 200,000 new people buy virtual items through OPSkins each month, but the site sells gear for online games with more than 125 million regular players.

 

“This could be the perfect on-ramp,” says investor Scott Walker, who helped fund the “initial coin offering,” or ICO. Early investors are getting more WAX tokens for their money, but their value will become another variable once the exchange goes live in December.

 

OPSkins doesn’t disclose its financials, but its revenue is growing at double digits annually, says CasSelle, previously chief technology officer at Tronc Inc., the former Tribune Co. Partly, he says, the WAX token strategy is a way to stave off competitors. Over the past few months, rivals including DMarket, KyberNetwork, and SkinCoin have held ICOs to launch or expand their services. So far, though, no other trader has the muscle to create the kind of intercompany exchange OPSkins is building. Starting next year, websites that install the WAX widget will get as-yet-undetermined fees for resulting sales.

However, before you rush out and buy WAX tokens purely for the sake of speculating, It’s worth considering the fact that OPSkins entire business is essentially at the mercy of the giant video game studio that produces many of the games whose wares Skins sells on the secondary market.

The volatility of the WAX token price may make it a poor place to hold money not being used for short-term item buying and selling. But OPSkins’ biggest potential roadblock is the maker of the games. Industry leader Valve Corp., which publishes Counter-Strike: Global Offensive and the other big hits OPSkins exploits, has the power to ban sites from trading skins. Last year, Valve sent cease-and-desist letters to 23 online gambling sites to prevent them from using skins as collateral, a move aimed at reducing teenage gambling on professional video game matches. “Valve has certainly left the door open to an action in the future,” says Grove, the Eilers researcher.

However, the company’s technology chief says it doesn’t need Valve Corp.’s cooperation to build a successful business.

CasSelle says that the new exchange can work without Valve’s help, including as a way to acquire other virtual goods, and that OPSkins is looking to raise an additional $7 million in WAX tokens before it finishes its ICO on Nov. 28. (The company initially sought a total of $63 million but lowered that goal because the flurry of interest around bitcoin and its spiking value has diverted attention from ICOs.) Alexander, the personal shopper for virtual goods, says he thinks the exchange will be good for people like him in the short term, swelling the overall market for skins. “It makes the entire process effortless,” he says. “It is a massive pain dealing with the payment methods available at the moment.” But he’s hedging his bets, having returned to college to finish his degree in economics. He says he eventually wants to get a job in finance or start his own business.

OPSkins doesn’t disclose its financials, but its chief technology officer - who was previously the CTO at Tronc Inc. - explained that the WAX token strategy is a way to stave off competitors. Over the past few months, some of OPSkins rivals, including DMarket, KyberNetwork, and SkinCoin have held ICOs to launch or expand their services. So far, though, no other company has the muscle to create the kind of intercompany exchange OPSkins is building.

If it succeeds in being the first platform to capture a dedicated customer base, maybe - just maybe - the WAX token might have a future.

Unfortunately for investors, most of the other 799 tokens trading on one of hundreds of exchanges scattered across the Earth, probably won’t.
 

"Bitcoin Jesus" Is Trying To Create A Sovereign "Libertarian Utopia"

Roger Ver - a.k.a bitcoin Jesus - and Olivier Janssens are trying to transform a long-sought after libertarian ideal into a reality. As CoinTelegraph reports, the pair has announced that they’re in the process of creating the first independent state governed by libertarian values – and they’ve invited any like-minded individuals to join them.

The pair said Friday that they’re working with a team of lawyers to try and figure out how to legally create their own independent country. Ver is a longtime advocate of bitcoin who surrendered his US citizenship and became a citizen of St. Kitts and Nevis a few years back.

The pair have yet to disclose the location, nor has indicated what entry standards would be required.

The country, which would be reminiscent of Ayn Rand’s Galtian paradise, is intended to be a place where those who reject governmental controls and seek to maintain libertarian freedoms can gather and promote a truly free society.

CoinTelegraph reports that the locations being evaluated include areas that are safe and conflict-free, but also enjoy proximity to economic centers in the US, Europe, and Asia, while also being accessible by water. The team is hoping to offer a stable government with substantial national debt a way to eliminate some of that debt with a land lease to FreeSociety. On its website, the team says they’ve started preliminary talks with governments and interest “is much higher than initially expected.”

While Ver told CoinTelegraph that the country “isn’t an ICO”, it’s unclear how the FreeSociety team would acquire the money needed to purchase land upon which to build their sovereign nation.

Learn more at https://t.co/btZyCQzXlk https://t.co/wlUJedYE9V

— Roger Ver (@rogerkver) September 21, 2017

Of course, Ver & Co. aren’t the first to attempt this. In 2008, billionaire venture capitalist Peter Thiel launched an initiative to develop a floating city, called a seastead, that would serve as a permanent, politically autonomous settlement. He invested some $1.7 million in The Seasteading Institute, and resigned from its board in 2011. Back in February, he told the New York Times’s Maureen Dowd. However, it appears the Seasteading Institute plans to soldier on without Thiel.

According to Business Insider, the group recently met with officials in French Polynesia, an island chain located in the South Pacific, and discussed plans to develop a seastead off its coast. If things go as planned, the institute might break ground as early as 2017.

Will Estonia Be The First Country To Issue Its Own Digital Currency?

Nearly three years after Estonia introduced its “e-residency” program, becoming the first country on Earth to allow foreigners to become “digital citizens,” the tiny Baltic republic is considering another proposal that would further cement its reputation as a digital pioneer: Becoming the first country to launch its own Initial Coin Offering.

In a Medium post published Tuesday, Kaspar Korjus, managing director of Estonia’s e-residency program, explained how such a virtual token – which he has tentatively named Estcoin – would function as a new type of investment allowing investors a “pure play” investment in its development. In this case, the money raised from the IPO would be administered by a public-private trust, and used to improve the country’s already formidable digital infrastructure.

Depending on how quickly the country follows through with this proposal (assuming they do pursue it) Estonia would become the first country to publicly launch a digital currency. The Chinese are developing a prototype called “ChinaCoin,” or “DigitalRMB,” but central-bank authorities say it could be another 10 years before it’s finished and launched.

As Korjus explains, Estonia would have “a clear advantage” in launching a digital token because of its “advanced digital infrastructure” and its e-residency program.

“No other country has come close to developing both the technology and the legal frameworks that would enable them to introduce and securely manage tradable crypto assets globally.”

Korjus said the idea was workshopped with input from Ethereum creator Vitalik Buterin. Buterin, Korjus says, envisions the estcoin as a new way to directly invest in a country’s future, rather than buying stocks, bonds or businesses.

“Ethereum founder Vitalik Buterin has a keen interest in Estonia"s development as a digital nation and has provided valuable feedback for the estcoin proposal.

He believes estcoins could be used to incentivise investors to support the success of a country in a way that is not currently possible through existing means of raising international finance.

‘An ICO within the e-Residency ecosystem would create a strong incentive alignment between e-residents and this fund, and beyond the economic aspect makes the e-residents feel like more of a community since there are more things they can do together,’ says Buterin.”

The coins would give investors “a bigger stake in the future of our country,” Korjust said, something that he hopes would help Estonia crowdsource ideas to improve its digital infrastructure.

“We already know that many people become e-residents simply because they are fans of our country, our technology and our ideas, and being an e-resident enables them to show their support.

A government-supported ICO would give more people a bigger stake in the future of our country and provide not just investment, but also more expertise and ideas to help us grow exponentially.”

Aside from being purely an investment, the coins, if issued on top of a blockchain, could be used in smart contracts, or otherwise as a transfer of value. Meanwhile, the money raised in the offering would be managed by a public-private partnership tasked with helping to build a “new digital nation.”

“The funds raised through Estcoins could be managed through a Public Private Partnership (PPP) and only used as described in the agreement to actually help build the new digital nation. This would enable Estonia to invest in new technologies and innovations for the public sector, from smart contracts to Artificial Intelligence, as well as make it technically scalable to benefit more people around the world. Estonia would then serve a model for how societies of the future can be served in the digital era.

In addition, a large proportion of the funds could be used as a community-run VC fund on behalf of investors. The money could then be used to support Estonian companies, including those established by other e-residents.”

Right now, Estcoin is still just an idea. The next step would be fleshing out the project in greater detail with a White Paper, which means the ICO, if it happens, could still be a few months away. But it’s difficult to imagine an argument for not pursuing it. Even if the coins tank on the secondary market, Estonia will be left with a giant pile of crypto-capital to spend. ICOs have already raised $1.3 billion since the beginning of the year, and analysts at Pitchbook believe that the total for 2017 will be somewhere around $1.7 billion. Earlier this month, a company called Protocol Labs raised nearly $250 million in an exclusive “presale” followed by a public ICO for its Filecoin project – all without a viable product.

Surely, an ICO with a country behind it could make an equally attractive pitch.
 

Ex-Goldman HFT Trader Makes Blockchain History Raising $200 Million In Tezos ICO In 4 Days

Who needs IPOs when you have blockchain, and a lot of people willing to throw good money, or rather cryptocurrency, after bad something totally unknown.

Presenting the Initial Coin Offering (ICO) for Tezos, a blockchain startup which has tapped a virtually unlimited source of funding, and has raised over $200 million in just four days. Tezos is already the biggest ICO in history and with the sale scheduled to continue for another 8 days, may end up raising over half a billion dollars.

Recently, blockchain startup Block.One hit a record funding, raising around $185 million in the first five days of the crowdsale. Prior to that, another startup, called Bancor, netted nearly $150 million in contributions during the first three hours of its ICO.

What makes Tezos different from a recent surge in similar such offerings, is that this ICO is not based on Ethereum and instead operates on an entirely new blockchain, a "self-amending cryptoledger" that rewards developers who upgrade the network"s protocols and allows for "seamless," consensual upgrades of those protocols (read the white paper here for more detail). Which, as Mashable points out, makes it a competitor to Ethereum.

Established by a husband and wife team, Tezos is an independent smart contract system built as an alternative to Ethereum. The platform has been under development over the last three years. Arthur Breitman and Kathleen Breitman used their extensive experience to develop the new blockchain solution.  

And here is another striking fact: Arthur Breitman previously worked at the high frequency trading desk at Goldman Sachs and served as an options market maker at Morgan Stanley. Meanwhile, Kathleen Breitman is a former management associate at Bridgewater. The startup is focused on "transparency, security and governance by consensus as fundamental design goals."

The Tezos tokens, Tezzies or XTZs, can be purchased with both Bitcoin and Ethereum, and as of this morning, there is no scarcity of demand: Tezos has already raised 53,575 BTC and 273,838 ETH, for a total of approximately $210 million at current prices. This already makes the Tezos ICO the largest in history (overshadowing the recent Bancor ICO, which raised $153 million). It may also explain the ongoing drop in ETH prices observed in recent days.

Another important point: unlike many recent ICOs, the Tezos ICO is uncapped, meaning there"s no upper limit of funds the company can raise, what is likely to drive a widespread distribution of tokens. Initially the token sale was planned to start in the middle of May, but at the last minute was postponed to June.

The only limit is time, and with approximately 8 days and 14 hours to go, the ultimate amount Tezos will raise will likely be a lot bigger than it is now. 

As Reuters reported in May, Tezos received investment from venture capitalist Tim Draper, which attracted additional interest to the startup. Draper is also going to invest in the US-based Dynamic Ledger Solutions Inc, the developer of Tezos. The details of the investment were not disclosed. According to Coinspeaker, Draper first unveiled his desire to take part in Tezos’ token offering in May, thus becoming the first prominent VC investor to participate in an ICO. Some industry players are still concerned about the possible risks of token sales and the lack of regulatory control.

Draper believes that by investing in the startup he will set an example for other investors to embrace this new type of funding. Another well-known American entrepreneur, Mark Cuban, unveiled that he is going to participate in his first ICO.

Of course, the interest may wane in the coming days, and the ultimate amount Tezos will raise depends on the highly volatile Bitcoin and Ethereum cryptocurrencies. As Stan Schroeder points out, the price of both BTC and ETH has fallen considerably in the last several weeks; if they were anywhere near their all-time highs (which they were around the time of the Bancor ICO), Tezos would already be sitting on more than $250 million. It is unclear if the recent drop in cryptos is linked to the giant ICO.

Another notable similarity between Tezos and Bancor is that both startups are "incredibly ambitious, with intent to change the cryptocurrency landscape forever. Some hot names are on both companies" teams; for example, venture capitalist Tim Draper has invested in both companies. And both companies have been criticized in the cryptocurrency community for letting their fundraisers collect insane amounts of money."

It"s crazy how many worst practices Tezos has incorporated into its crowd sale yet people still give them money

— Evan Van Ness (@evan_van_ness) July 1, 2017

I will not be participating in the #tezos #ICO tomorrow. Most ridiculous ico I"ve ever seen. Think twice and do the research b4 investing

— Max Kaplan (@maxekaplan) June 30, 2017

Many have already warned about the easy and facility with which ICO can raise funds, and Tezos is no different: it is worrisome to see startups that have barely launched their first finished product raise hundreds of millions of dollars.

"Tezos (...) do have a solution that could mitigate some of the issues seen with other blockchain tokens through their governance model," Charles Hayter, CEO of CryptoCompare, told Mashable in an emailed statement. But he, like many others, warned that uncapped ICOs are problematic. 

"ICO"s which are uncapped are dangerous as they imply and show a complete disregard for corporate discipline - and to an extent an element of disrespect for the investor. The question that needs to be asked is can the job be done with less money (...) and that throws a spotlight on the fairness & truthfulness of the proposition being offered," he said.

Yet despite growing criticisms, Tezos" ICO is proof that token crowdsales are still incredibly hot, both for traders looking to earn a quick buck by flipping new tokens and for crypto-related startups looking to get funded. Over-the-roof valuations will make it increasingly hard for these crowdfunded startups to prove their worth, and as Schroeder warns, "it feels like some sort of crash is inevitable, but it hasn"t happened yet."