Demian Brener is founder and CEO of Smart Contract Solutions, a firm working to provide tools to build businesses using blockchain-based software tokens. In this opinion piece, Brener discusses the different ways startups are seeking to leverage these new creations, and the various business models taking shape in the evolving space. Companies we’ve never heard of are launching IPOs before our very eyes. But instead of ringing the IPO bell after years of operations, they are going public on day one, and instead of raising money by selling their company stock, they are building distributed networks and selling their own tokens. This new way of building companies is what Fred Ehrsam , founder of Coinbase , described as the " decentralized business model ". Yet, many of the established rules about building and investing in businesses don’t apply to this new model. What can we learn from the companies going down this road? Tokens The mechanics of a token crowdsale are directly related to the kind of token issued. We identified three types of tokens: Debt Tokens Equity Tokens User Tokens. User tokens User tokens , or ‘appcoins’ as Naval Ravikant and Balaji Srinivasan have called them, are a form of digital currency needed to access the service provided by the distributed network. As Union Square Venture managing partner Albert Wenger explains, you can think of these as tokens you buy at a fair to get on a ride. In ethereum, for example, you need ether to build distributed apps on the platform. In the case of Sia , a distributed storage system, you need to own Siacoins to store files in the network. User tokens are earned by providing value to these networks. Contributions can take the form of mining , as in bitcoin, ethereum and Sia, or […]
