Archives for November 6, 2017

Alex Tapscott, CEO of NextBlock Global, a venture capital company investing in blockchain technologies, announced in a press release yesterday that he is canceling their plans to go public through a reverse takeover (RTO) of Nobelium Tech Corp., a company listed on the Toronto Stock Exchange (TSX).

Tapscott said the young company had “stumbled” in falsely listing some crypto and blockchain experts as members of the firm’s advisory board. He is currently talking to NextBlock investors to work out how to return their original investments and to “rebuild the trust of those [they] have disappointed.”

NextBlock Global raised $20 million in their initial oversubscribed fundraising in July 2017 and had hoped to raise $100 million in the public offering. They planned to invest in digital currencies, blockchain hosting platforms and blockchain-based applications.

CIBC and investment bank Canaccord Genuity (a former employer of Tapscott’s) were underwriters on the deal, but CIBC pulled its support from the young venture capital firm amid the allegations.

According to BNN, clients of CIBC received an email saying, “CIBC has withdrawn as an agent from the NextBlock Global Limited private placement.” CIBC was not available for comment.

Sources have told BNN that Canaccord Genuity remained in the deal.

An article in Forbes last week detailed complaints from Kathryn Haun, Vinny Lingham, Dmitry Buterin and Karen Gifford that Tapscott had circulated an investor deck that incorrectly listed them as members of the NextBlock advisory board.

Dmitry Buterin, co-founder of Blockgeeks and father of Ethereum co-founder Vitalik Buterin, was included in at least one draft of the investor deck. He told Bitcoin Magazine in a recent interview what had happened. He recounted:

“It’s pretty simple. Alex asked me to be an advisor, I declined. Then I got a deck forwarded to me which listed me as an advisor. It was forwarded to me by investors who received it from Alex.”

Buterin said he had met with Tapscott to let him know he wouldn’t be on the advisory board:

“We had a meeting and I was not convinced that they have the right resources to pull this off.”

When Is an Advisory Board Not an Advisory Board?

A thread on Twitter about NextBlock recently included some comments about how advisory boards have become routine and are often used as window dressing for making ICO pitches and, therefore, they aren’t really “advising” as such.

One user commented that likely only 50 to 60 percent of advisory boards are legitimate anymore, and put the NextBlock situation in a different light, implying that it’s become common practice to dress up a proposal with photos of known experts.

Amber D. Scott, CEO of Outlier Solutions, told Bitcoin Magazine that she gets several requests a week to sit on ICO advisory boards. Scott explained that the conversation often goes like this:

ICO rep: “We saw you speak at an event and would love to add you as an advisor.”

Scott: “I’ve looked at your website/white paper and I’m not sure where you need compliance advice. Could you please elaborate on that?”

ICO rep: “You don’t actually have to do anything. We’ll just put your picture and bio on the website. You have a great name in the community.”

Andreas Antonopoulos, well-known author of “Mastering Bitcoin,” says on his website that he does not accept invitations to sit on advisory boards and that he will not discuss projects publicly if he does work as an advisor.

Vitalik Buterin has also had to make it clear several times on Twitter that he is not an advisor for a number of firms that have touted his advice.

What could have been a major scandal for both the Tapscotts (father Don and son Alex) has been averted by this move, but how much long-term damage both NextBlock and the Blockchain Research Institute will sustain to their reputation remains to be seen.

The father-son Tapscott team co-founded the Toronto-based think tank Blockchain Research Institute, and co-authored the book “Blockchain Revolution: How the Technology Behind Bitcoin Is Changing Money, Business and the World,” which has been translated into more than 20 languages.

The Blockchain Research Institute is holding a Members Summit this week in Toronto. Members of the think tank include CIBC, Microsoft, IBM, Fujitsu, Accenture, Tencent, Bell, Nasdaq, FedEx, Interac and the Governments of Canada and Ontario.

In October 2017, LendEDU, a marketplace for financing loans, credit cards and other financial products, polled 1,000 Americans asking a series of questions related to Ethereum, Ripple and initial coin offerings (ICOs). They did this to gain insight into the average American’s perception of cryptocurrency. The poll was conducted by online polling company OnePoll, which acted as a third party and was able to provide an age and gender breakdown of respondents. The poll was answered by 1,000 Americans ages 18 and up over two days, from October 27 to 30.

Ethereum:

At the time of writing, with a market capitalization of $28.49 billion, Ethereum is the second-largest cryptocurrency, about one-fourth the market capitalization of Bitcoin. Since the start of 2017, the price of ether has grown from $7.98 to $298.

• 31.60 percent of Americans have heard of Ethereum and 18.20 percent of Americans are planning to invest in ether (ETH)

The survey showed that American awareness of Ethereum trends toward a younger (millennial) demographic with 58.49 percent of Americans between the ages of 18 and 24 having heard of the cryptocurrency and 32.08 percent of the same demographic planning to invest in Ethereum as an asset for the future.

47 percent less Americans have heard of Ethereum compared to Bitcoin based on a LendEDU survey conducted a month prior on Bitcoin. When asked whether or not they would invest in either cryptocurrency as an asset for the future, Americans 25–34 showed the most interest. The number of these respondents saying they would invest in Bitcoin was only 6.68 percent greater than those saying they would invest in Ethereum.  

On the opposite end of the spectrum, only about 1.34 percent of Americans 55 and older plan to invest in Ethereum as an asset for the future. Across all age groups, 37.80 percent of respondents were unsure about investing in Ethereum, which could indicate a lack of knowledge about cryptocurrency as much as general uncertainty about future investing.

Ripple:

• 22.20 percent of Americans have heard of Ripple and 14.80 percent of Americans are planning to invest in Ripple (XRP)

At the time of writing, with a market capitalization of approximately $8 billion, Ripple is the third-largest cryptocurrency (depending on whether or not you count Bitcoin Cash). That’s one-fifteenth the size of Bitcoin’s market capitalization. Since the start of 2017, the price of Ripple has grown from $0.006 to $0.201.

As can be seen by these numbers, LendEDU’s survey respondents showed awareness and investment interest in Ripple at similar levels to those for Ethereum.

In a recent interview, the CEO of Ripple, Brad Garlinghouse, made the point to elaborate on the differentiating value propositions for each of the three largest cryptocurrencies:

“In 2017, people have realized there isn’t going to be one crypto to rule them all. You’re seeing vertical solutions where XRP is focused on payment problems, Ethereum is focused on smart contracts, and increasingly Bitcoin is a store of value. Those aren’t competitive. In fact, I want Bitcoin and Ethereum to be successful.”

ICOs

It’s no secret that initial coin offerings (ICOs) have risen in popularity this year as much for their innovative investment opportunity as their regulatory controversy and scams. In September 2017, China declared ICOs to be illegal, while the United States Securities and Exchange Commission (SEC) exposed two different ICOs claiming to be backed by real estate and diamonds to be frauds. 

• 24.90 percent of Americans have heard of ICOs and 15.10 percent of Americans are planning to invest in startups via ICOs

As seen in this chart, almost two-thirds of the American population polled are not sure whether or not ICOs are illegal, while 21 percent believe that investing in them is illegal. As a comparison, in the Bitcoin survey from September, only 10.69 percent of respondents incorrectly believed it was illegal to own bitcoin in the U.S. 

Summary

Across all questions, LendEDU found a group of respondents who have yet to hear about these specific cryptocurrencies but are open to the idea, or at least unsure, about investing in them. All this to say, in the U.S., cryptocurrency cannot be considered mainstream: Ethereum is not quite as well-known as Bitcoin, most are unsure about whether or not ICOs break the law, and Ripple’s market capitalization is not a strong indicator of its success as a currency.