Will Tokens Replace Equity?

Perhaps rather than 10x better, the correct way to think of crypto is as 10x weirder. This is an entirely new financial paradigm with no historical precedent. We have no idea what all of this will do. Maybe, like the ICO boom, everything will be fraudulent garbage! Or maybe we will all get rich! 

This essay is my best attempt to figure out the dimensions that could make Crypto 10x better than equity for funding early-stage projects. It’s important because it is entirely possible that in a few years time we could be living in a world where traditional equity goes the way of the dinosaur (or, closer to home, the entrepreneurial bank loan). Bu... See more

When Marc Lore started Jet.com, it was with the audacious goal to destroy Amazon. To generate his initial buzz, he came up with a novel promotional idea: give away part of the company. He promised that whoever could get the most people to sign up for the waitlist would receive 100K shares in Jet. The competition was a wild success with over 250K pe... See more

Token Sales as a funding mechanism is sorta 10x better, sorta 10x worse. The ability to easily break stupid laws and take funding from non-accredited investors is a great example of the sorta/sorta dynamic of tokens. It is great that the layman can get involved. It is great that network participants can receive value for their early contributions. ... See more

Crypto has become a religion, and Web2 companies like Facebook have become so reviled, that there is a sizable contingent that believes decentralization is the answer to everything. Many crypto diehards truly believe that a decentralized ledger of record is better in every way for every problem.

The implications are exciting—and troubling. In the early stages of a startup, a company lives and dies on a daily basis. So much can go wrong, and if you don’t have a team that is long-term focused, it can be easy to get distracted. A company being liquid on day one is only good for those looking to sell.  

In contrast, crypto token sales can occur and you don’t know the name of a single person involved. Any investor can buy in—all they need is a wallet. To make it even weirder, the system of record is on the blockchain, so every single movement of value is publicly viewable—despite participants being entirely anonymous. Meaning that anyone with suffi... See more

In a regular stock sale, complex rules and scary 3-letter government agencies ensure that everybody involved is supposedly qualified to be on the cap table. There are entire multi-billion dollar companies devoted to tracking who owns what type of stock. Between the need for accreditation verification and the right signature at the right times, the ... See more