The Rise of Branded Cryptocurrencies (and what it means for regulators)
Industry-specific coins present opportunities on both sides – but there are some challenges ahead for those who happen to look at cryptocurrency through a regulatory lens.
Cryptocurrency has had a dramatic storyline so far, to say the least. First came Bitcoin, the breakthrough concept that quickly gained itself a bad name. Characters from the underworld were drawn to its “anonymity”, behind which they could conduct a myriad of shady dealings on the Silk Road. It’s now making headway against its former reputation and gaining acceptance in the mainstream world of digital payments.
In the meantime, other currency developers came forward with alternatives, each claiming certain advantages over Bitcoin. Ethereum, for example, is known for its smart contract abilities and Dash is known to have excellent anonymity and extra speed. These so-called “Altcoin” competitors now have familiar names, too (Ethereum, Dash, Litecoin, Tether) as they challenge Bitcoin for market share. But there are thousands of other cryptos out there, too.
Among them is an emerging wave of cryptocurrencies that aren’t looking to steal the spotlight from Bitcoin, Ethereum, and the other stars of the cryptocurrency world. With names like Namecoin, KodakCoin, and MovieBloc, they’re far more interested in serving the needs of specific industries and users.
Industry-Specific Cryptocurrencies are Bidding for a Spot in a Saturated Market of Generalists The rise in the number of cryptocurrencies is staggering. Just two years ago, in August 2017, there were 1,037, with more than half boasting a market cap of more than USD $100,000. Now, as of this writing, there are 2,475 cryptocurrencies! But among the list, we can see growth in specialized currencies meant to carve out just a small portion of the market. Many have lofty goals – especially those serving the medical and dental space. Dentacoin, for example, lists the following goals:
· Lower costs for patients
· Improve health habits with a corresponding app
· Facilitate data collection for research
· Provide a platform for patient feedback
Obviously, as far as targeted audiences and market share, these new digital upstarts aren’t aiming to top the massive, growing list of cryptos. Their developers are simply looking to carve out a small corner of the crypto world, unlike Altcoins Tether and Ethereum, each of whom boasts tens of millions of US dollars in purchase volume.
By offering a digital currency solution to smaller, specialized populations, they offer benefits that general-purpose coins simply cannot provide. In the niche coin examples given above (Namecoin, KodakCoin, and MovieBloc), these populations would be domain name owners, photographers, and filmmakers/viewers, in that order. Call them boutique cryptocurrencies, which aim to serve the needs of particular groups by offering coin attributes developed just for their industry.
It’s a fascinating prospect and these coin developers hold noble intent for serving their participants. Among them is Innovative Bioresearch Coin, INNBC.
Specialized Cryptocurrencies: Focus on Innovative Bioresearch Coin, INNBC
Innovative Bioresearch Coin (INNBC) is a good example of a coin that was created with noble goals in mind. The parent company, Innovative Research, supports medical initiatives such as the following: · Conduct HIV cure research: SupT1 cell infusion therapy for HIV · Conduct cancer and regeneration research: Salamander regeneration as a model for anticancer therapies
· Create a supportive community for the HIV seropositive population. People who are battling AIDS can often feel alone in their struggle. The soon-to-be-developed app will help bring them together and, as such, is called “You’re Not Alone”.
The “You’re Not Alone” app will be a critical component of the Innovative Bioresearch Coin. This will provide a decentralized database (blockchain), from which clinical data can be processed. The developers foresee a better process for conducting clinical research. In addition, it will serve as a social platform for people who are HIV seropositive. Through the app, they will be able to follow research, find support, and connect with others who have shared circumstances. INNBC tokens can be earned by making useful contributions to the discussion through the app.
INNBC is intended to support the company’s important humanitarian goals, which can be summarized as supporting and carrying out progressive, novel, biomedical research. As stated by their CEO Jonathan Fior:
“We are working on solving a real global issue such as developing a low cost cure solution for AIDS.”
~Jonathan Fior, CEO of Innovative Bioresearch
Mr. Fior’s remarks about his company show that today’s cryptos are far from the nefarious and infamous Silk Road currencies of a decade ago. And there are others, with equally focused areas of interest…
Niche Coins for Industry-Specific Users
Dentacoin was mentioned earlier. There are industry-specific coins for other audiences, too.
· BitTorrent. For file sharing, to allow content creators to sell directly to their fans.
· Dogecoin. For tipping on Twitter and Reddit as a reward for posting great content.
· Rentberry. Based on the Ethereum platform (Rentberry makes use of smart contracts, a specialty of Ethereum blockchain technology), this cryptocurrency offers transparency in the rental market, from the rental application to the price negotiation.
· PreSearch. For users of search engines.
· Authorship. For people who want to publish e-books.
· SolarCoin. For solar energy producers.
Maybe you’ve noticed that some of these, like BitTorrent, might allow users to circumvent rules and regulations. Indeed, many Altcoins sprung up for this very reason, whether they were designed for a niche market or not. That brings us to a critical question: how is this incredible multiplicity of cryptocurrencies going to be regulated?
Regulation? A Brewing Storm?
As cryptocurrencies continue to develop and make their presence known to a growing body of consumers, the legal considerations are mounting. Understanding the technology that cryptos depend on – blockchain – is key, as is knowledge of how ICOs work. But regulators have had trouble from the beginning, in this highly complex area. Now, with niche currencies, their challenges will become massive.
For starters, there’s the question of the tax burden. Then there are the reporting requirements for anyone who markets a cryptocurrency (as well as for people who own tokens). It was just three years ago, in 2016, that the ICO marketplace exploded as a new method of crowdfunding. Already, the entire ICO ecosystem is massively out of control, with only band-aid solutions in place to regulate these “wildfires”.
And the chaos is spreading… there are scams, volatility, and forks to deal with. Governments are seriously late to the table on all of these regulatory issues, making it difficult to even gain visibility into the problems, much less devise solutions and then get them approved by lawmakers.
Regulators also need to expand their vision beyond simply curtailing the dark web, accepting that in light of the current state of crypto currencies: they are not going away. They are growing in number, they are evolving (becoming industry-specific), and capturing more attention every day. This is not the time for regulators to take a laissez-faire approach.
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