Asset-Backed Tokens
If the funny notes in your hand or the virtual tokens in your electronic wallet function as a medium of exchange in both the real and virtual world, would you have faith in them as money? To safeguard the value of money, the conventional belief was to have it backed up by commodities such as gold. Should cryptocurrencies be backed up by tangible or intangible assets?
On December 12, 2017, I was speaking as a panelist on the hot topics of blockchain, cryptocurrencies and initial coin offerings (ICO) before a big crowd in a law firm in Hong Kong. Around 30% of the participants possess cryptocurrencies and a consultancy firm dealing with over a dozen of pipeline ICOs has already accepted Bitcoin as a medium of exchange. On December 11, 2017, trading of Bitcoin Futures has begun in Chicago.
While it is now relatively easy to raise from the crowd a lot of fiat money via high-performance ICOs, the risk that investors or speculators have to assume and manage is not low. Among the financial project participants, what are the respective rights and liabilities between the project promoters or office bearers and subscribers or share/token holders, and how to resolve disputes between them? Would they be subject to any jurisdictional control, from security and tax implications to civil wrongs to anti-money laundering laws?
I suggest that ICO projects may consider acquiring or using bundles of intellectual property rights to back up their cryptocurrencies. While it might require another ICO project offering value proposition to accumulate and aggregate the intellectual property asset, the ICO project may accept licensing or assignment of intellectual property rights in exchange for crytocurrencies. Although the financial and economic impact in interfacing ICOs with intellectual property might not be easily recognized, I believe their fusion would make the world go round smarter!