Why 3 April Is A Cyber Economy Spring For ‘Old Economy’ Concepts

April 3rd is marked for investors as music streaming service Spotify makes its public debut on the New York Stock Exchange. But another promising cyber-economy venture will go live too.

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April 3rd is marked for investors as music streaming service Spotify makes its public debut on the New York Stock Exchange. But another promising cyber-economy venture will go live too.


Why 3 April Is A Cyber Economy Spring For ‘Old Economy’ Concepts

April 3rd is marked for investors as music streaming service Spotify makes its public debut on the New York Stock Exchange. But another promising cyber-economy venture will go live too.

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Spotify is currently valued at $20 billion, potentially making the streaming service company the fifth largest IPO in IT history, after Alibaba, Facebook, Snapchat, and Google.

Investors feel positive about the upcoming IPO, despite the fact that Spotify faces significant challenges, having posted a $1.5 billion loss as of 2017. But these challenges are of a financial nature, while there is no doubt about the uniqueness of Spotify’s role as the leading marketplace in the growing e-music segment, with global significance.

“Marketplace” may sound rather traditional after the world has seen so many self-proclaimed “disruptive” technologies. But nowadays, as Spotify’s valuations clearly indicate, investors’ focus have shifted from “disruptive” to “mirror” technologies.

Mirror technologies take a market segment that have existed for decades, if not for longer, and redress it in an innovative way. By doing so, they take a safe bet on the proven market’s propensity to pay and augment it with the most cost-effective operating model that new technologies can provide.

Secure and predictable revenue streams combined with a low-cost and scalable delivery model result in hefty profits and, hence, high valuations. That is what we will see on April 3.

But April 3 is a big day for more than the music marketplace. Another promising company - a European fintech infrastructure startup called Fund Platform – is also going for an unconventional public sale on April 3, through an ICO.

Just like Spotify, this startup is a marketplace, i.e. a two-sided platform. While the music streaming service brings together musicians and their fans, and the assets that change hands (or ears) are songs and money, Fund Platform creates an ecosystem for investors and projects operating with digital assets: crypto-currency.

The startup’s aspirations for valuation aren’t a patch on Spotify - they plan to raise $30 million - but the goals are truly ambitious.

This company follows the pattern of Spotify: take a proven business concept from the old economy and implement it in the cyber-world. For Fund Platform, the prototype is eBay, which was valued at $47.12 billion as of March 2018.

The rise of digital

The concept of a digital marketplace appeared in the ’90s, when the world was captivated by the Internet and dotcom boom. The web became a part of the everyday lives of millions, radically changing their consumer behaviour. Suddenly, all goods and services, from Tetris to capital goods, became available online.

The year 1995 marked a new dawn. It was then that the giants of the new retail industry - AuctionWeb (the future eBay) and Amazon - were founded. In just a couple of years, it became clear: it is not just that this business model works well, but it grows at a phenomenal pace.

In 1997, Benchmark Capital, a venture whale from Silicon Valley, invested $6.7 million in eBay. When the company went public in 1998, its stock price jumped from $1.87 to $53.50 on the first day of trading.

Why did it happen? Was it a miracle or a balanced and timely move? The macro-economic data gives the answer.

eBay came at the right time in the right place, addressing the demand for an efficient marketplace by users whose numbers grew exponentially, as internet access became the norm in almost each and every household.

It is a strikingly similar picture today, as cyber (or crypto) assets rapidly gain in importance in the global economy. In 2012, cumulative capitalisation of the cyber-assets was only 0.002% of the global GDP, while in 2017 this figure skyrocketed to 1.053% - an increase of more than 52 times!

This looks pretty familiar to what many of us saw in mid-90s, in what was then called ‘e-commerce’. Every day, dozens of blockchain projects enter the market attracting funds via ICO and issuing their coins. According to the statistics, 382 tokensales were successfully completed in 2017, raising more than $6 billion in total.

Today, ICOs raising millions of dollars are no longer newsworthy. But only a few of them share how much money the founders have invested to raise such funds. In some cases, it is a “money for money” situation - you need big money to attract much more money.

That’s why today we face not a competitions of ideas, but a competition of the founders’ and VC capitalists’ purses.

On the other hand, by analysing in-depth and honestly the so-called “under-performed ICOs”, one would arrive at a surprising conclusion for how many innovative ideas haven’t been implemented, because the founders didn’t have money to promote them, and often lacked in skills.

Those cyber-economy entrepreneurs would be much better off, if an affordable and efficient marketplace, like eBay, existed for them.

Fund Platform solves literally the same problem that eBay has effectively solved 20 years ago – providing a reliable, secure, and affordable platform where the new cyber-economy supply (both retail supply and wholesale supply) will be meeting demand (investors).

The assortment of goods that change hands on Fund Platform are cyber-assets, that will keep on growing, the same as the demand for the virtual marketplace that eBay met 20 years ago.

The question remains of how to build a bridge that links both sides, the same way eBay has connected thousands of vendors and private individual with the buyers worldwide?

Demand breeds supply

According to a Reuters report, there are 110 hedge funds that invest in digital currencies. In total, they manage about $2 billion. Alongside this, every day dozens of new ICO projects come to the market every day.

To build the picture, let’s not forget the 500 thousand funds that exist in the “real” economy today, many of whom are thinking seriously about “going cyber”.

And – to make the picture complete, at least for the next couple of years, before new use cases surface – there are millions of retail sellers that have cyber-assets to sell and are waiting for the marketplace to make it happen.

People come to marketplaces to find whatever they want: a book, a cab or a job. Today, the goods for sale include free disk space, minutes of watching the TV, Mflops of a CPU chip, let alone tokens.

Depending on the marketplace the assets and payment methods may change, but the mechanism and behaviour stay the same. Simply put, if the model has already been proved for B2C (Amazon), B2B (Alibaba), C2C (eBay) businesses, why not use it for the crypto-assets trade?

As the Fund Platform founder, 18-year old entrepreneur Nick Shevchenko, says, “There is no need to reinvent the wheel when it’s possible to play safe by identifying the proven demand zone and fencing it with the new technology – to the benefit of the users and investors.

We are uniquely innovative technology-wise, but aren’t doing anything futuristic from the ‘old economy’ perspective. We just bring together investors and cyber-assets in one place and give them all opportunities to grow, invest and get profits.

We do not ‘grab land’ in wild West style, we build roads in the cyber-economy Great Plains that open up opportunities for many. Our roads are the infrastructure that will serve the ‘gold rush’ of today, but will be in place and, importantly, in use long after the gold rush is over.”

Having adapted the eBay lesson to the new cyber-economy realities, Fund Platform represents a C2C service whereby two parties can communicate directly and conveniently with each other, share information and transact without any intermediaries.

Fortune favours the brave

eBay started the new era in e-retail. Then Uber followed its example in e-commuting and transformed taxi services globally. They were the pioneers opening new opportunities to both providers and customers.

When the demand is real and, historically proven, then the business model that meets it first is likely to gain the laurels, no matter how small the company is. That’s statistically proven and fundamental.

So, April 3rd is a date to mark in the calendars with 2 tick-marks: Spotify will steal the show, no doubt. Mind the newcomer Fund Platform, though: an eBay-like startup for the cyber-economy. Soon enough, we will see if the newcomer will become clear evidence of the emergence of the “mirror” business modelling approach.

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Why 3 April Is A Cyber Economy Spring For ‘Old Economy’ Concepts

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