Blockchain Revolution: How the Technology Behind Bitcoin and Other Cryptocurrencies is Changing the World

by Don Tapscott

Amid the carnage, an enterprise called Augur launched one of the most successful crowdfunding campaigns in history. In the first week, more than 3,500 people from the United States, China, Japan, France, Germany, Spain, the United Kingdom, Korea, Brazil, South Africa, Kenya, and Uganda contributed a total of $4 million. There was no brokerage, no investment bank, no stock exchange, no mandatory filings, no regulator, and no lawyers. There wasn’t even a Kickstarter or Indiegogo. Ladies and gentlemen, welcome to the blockchain IPO. Matching investors with entrepreneurs is one of the eight functions of the financial services industry most likely to be disrupted. The process of raising equity capital—through private placements, initial public offerings, secondary offerings, and private investments in public equities (PIPEs)—has not changed significantly since the 1930s.78 Thanks to new crowdfunding platforms, small companies can access capital using the Internet. The Oculus Rift and the Pebble Watch were early successes of this model. Still, participants couldn’t buy equity directly. Today, the U.S. Jumpstart Our Business Startups Act allows small investors to make direct investments in crowdfunding campaigns, but investors and entrepreneurs still need intermediaries such as Kickstarter or Indiegogo, and a conventional payment method, typically credit cards and PayPal, to participate. The intermediary is the ultimate arbiter of everything, including who owns what.