by Kenneth Schortgen, The Daily Economist:

With the blockchain suddenly becoming much more than simply a platform able to run the over 700 different cryptocurrencies, there is growing talk that the technology may also be the catalyst to replace how companies receive funding in the future.

Today most startup companies rely upon venture capitalists and brokers to grow to the point where they can apply for an Initial Public Offering (IPO) on a given market exchange. And in exchange for cash, investors receive stock shares in that company.

But a few recent events are providing a conduit for businesses that may no longer require stock exchanges at all to receive capital, and the rewards to investors may come in the way of cryptocurrency tokens rather than in the old form of shares and stock certificates.

Ever since Bitcoin first appeared on the scene several years ago, fans of the cryptocurrency have been searching for a way to apply the idea that might capture the public imagination and broaden the use of the technology beyond just geeks and programmers.

Now, some believe that application has appeared with the rise of the “token” economy, in which companies or startup ventures fund their operations by handing out units of cryptocurrencies. Some companies have even done what are known as “initial coin offerings” or ICOs, in which they distribute tokens instead of shares to investors.

The cryptocurrency market is seen by some as a bubble with hugely inflated prices. Some observers say bitcoin and other similar ventures are similar to Linux, an open-source alternative to Microsoft’s Windows operating system that has never really achieved mainstream success.

But entrepreneur and investor Balaji Srinivasan, a partner at Silicon Valley venture capital firm Andreessen Horowitz, believes that token-based systems “may eventually create and capture more value than the last generation of Internet companies.” – Fortune

Ironically it may have been actions taken by the banks themselves following the 2008 finance crisis that could see the demise of the traditional way in which companies receive capital to expand and grow. This is because most commercial banks have shut off lending to small businesses and projects that would have otherwise been their bread and butter in the past, and this has led to the creation of capital sourcing through mechanisms such as Crowdfunding over the past eight years.

With the advent of Initial Coin Offerings (ICO’s) being used in place of Initial Public Offerings (IPO’s) to fund new enterprises, markets could be seeing the beginning of a new paradigm shift, where stocks no longer hold the same value as they did in the past, and where cryptocurrency tokens replace them as the asset for short and long-term investment.

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