Filecoin is starting a new era of ICOs by only selling to accredited investors. This August 7th, Filecoin ICO will begin. This presents one of the largest profit (or loss, as explained later) opportunities to hit cryptocurrency as it raises the demand amongst the general public investors who haven’t been accredited yet.
Rather than making crypto tokens available to anyone, Coinlist is open only to accredited investors — those making over $200,000 a year or have a net worth of over $1 million — gating out the less sophisticated investors who tend to drive more volatility.
As quoted on Forbes, Juan Benet – founder of Protocol Labs, addresses the criticism that requiring investors to be accredited contravenes the democratizing aspect of ICOs thus: Describing how risky these projects are because they are attempting to build unproven technology, he says, “this isn’t a standard investment or something so certain you can take a bank loan for. Instead it’s something you go to VCs for to help assess the risk involved …. We think that a number of investments being created in the space have significant risk — and whether that risk means only accredited can participate is a jurisdiction question.”
Also, as this is being done from Coinlist ( an AngelList partner site), one can always expect a very large portion of the traditional Angel/VC investors to participate in the ICO. These investors are more used to holding up for long periods of time, hence there will be little supply on the exchanges and prices will drive up instantaneously when it is listed.
Additionally, Filecoin is built upon great foundation. “The amount of storage that is out there that is not in use is enormous,” says Juan Benet, “All that storage is getting depreciated and wasted and a lot of people are losing money every second. It storage could be put online and actually provide a valuable service to the world, and it could drop the price of storage significantly.” It also uses a new security protocol called SAFT (Simple Agreement for Future Tokens) that was designed to meet existing securities regulations.
Filecoin is entering a crowd dominated by Siacoin, MaidsafeCoin and Storj also tackling decentralized storage – and these have all done well. Yet, Filecoin will undoubtedly surpass both of them simply from the industry connections they have by being VC funded. Filecoin differs with the a new kind of technology it is offering. It runs on a system called “Proof Of Replication” instead of a traditional “Proof Of Work” or “Proof Of Stake.” Proof of replication asks computers on the network to prove that they are multiple independent copies of a file — replicates. Computers on the filecoin network which put more files on the storage will receive the Filecoin Block Reward.
Not only this, but the system will also reward computers that serve the data faster, thus increasing efficiency especially in crowded cities.
Having said all of this – Here are a few reasons as to why filecoin might not be for you:
1: According to this podcast at around 19:30 it states “you will get coins when the network launches.” Based on the size and scope of the Filecoin project, that could be anything fro, 3 months to 1 year. Given the volatility and uncertainity of the cryptocurrency industry, there is no way to predict where Filecoin will be in a year. This seems like a big gamble.
2: Since Filecoin is VC funded and is only allowing accredited investors who legally could have partaken in the Seed or A-Round, normal token purchasers will get less benefits than a normal investor.No profit from sales, no board seats, taking up on more risk, forced vesting on purchased tokes and guaranteed rights to invest in a future round. For all the VC’s, SAFT significantly derisks their investment on the dollars of token purchasers.
However, at ItsBlockchain we believe, the Filecoin still might be a good investment. The team is smart, the idea is brilliant and if the above issues are changed in due time , Filecoin might have an ICO of the likes of Tezos.