The Digital Currencies of Energy
I imagine you're tired of hearing about Bitcoin.
If you are, I have good news for you
Today we aren’t going to talk about Bitcoin. Instead, I want to take this opportunity to talk about other ways digital currencies are making waves.
You see, when most people think about digital currency, they tend to put on what I call "Bitcoin Blinders."
By that I mean there is so much buzz about the world's first digital token that many people forget there are over 1,000 digital tokens on the market — many possessing powerful and disruptive technologies that could potentially rival Bitcoin.
These tokens are revolutionizing multiple industries, but one industry where they are making the biggest impact is the energy industry.
Early-stage energy startups are using digital tokens to both raise capital and facilitate growth.
In fact, a bulk of the digital tokens on the market today are the result of a new venture capitalism method called an "initial coin offering," or ICO.
Put simply, ICOs allow small companies to bypass some of the regulatory hurdles that often slow down the process. That considered, initial coin offerings are still in the early stages of being regulated and should be approached with caution.
The Securities and Exchange Commission (SEC) is figuring out ways to protect investors in this sector. In the coming years, it is very likely that we will see improved regulation in the ICO space.
And with that regulation comes a great opportunity for investors. Now is the right time to learn about initial coin offerings and the role they can play in the energy market.
In just a moment, I am going to highlight a few other ways digital currencies are making a change outside of fundraising. But, before we get to that, let’s take a second and look at how an initial coin offering actually works.
An Introduction to Initial Coin Offerings
In the United States, the SEC often acts as the wall between investors and investment scams. Its overarching mission is to protect investors and facilitate fair market trade.
In recent years, the SEC was forced to modify its rules a bit, rewriting policy to allow investors with smaller sums of capital to participate in venture capitalism. This act was called the JOBS Act.
Put simply, the JOBS Act "expanded options for entrepreneurs to seek out everyday investors to raise capital and grow their companies via online crowdfunding platforms," according to the American Association of Private Lenders.
It turns out this was just the first step in a revolution. Initial coin offerings took the new freedom of the JOBS Act and offered even more freedom.
In fact, ICOs flip traditional investing completely on its head.
Instead of jumping through regulatory hoops, young companies at the start of 2017 could simply launch a digital token.
The process is simple: The early-stage company offers the token, and then investors purchase those tokens using bitcoins or ether.
Through this process, the company gets funding, and the investor gets a token that operates like a stock. If the company is successful, the token will likely increase in value as more investors jump onto the project.
This form of unregulated investment is novel, and investors flocked to it. But many also got burned in the process.
Over the course of 2017, initial coin offerings raked in huge sums of venture capitalism. You can see just a few examples of the top-ranking initial coin offerings below:
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But the success of ICOs as an investment platform did not mean ICO investors were equally successful.
As I said above, many investors without knowledge of digital tokens ended up shooting themselves in the foot (or wallet).
They sent bitcoins or ether (the two tokens most commonly accepted by initial coin offerings) to incorrect addresses or scam ICOs.
At the time, the SEC hadn't stepped in to act as the sheriff of this "Wild West" investment world, and many investors watched their money slip down the drain.
Of course, there are dozens of companies in this ocean of scams with true potential. But many investors can't find those gems because they are easily wooed by snappy marketing schemes.
The SEC has finally recognized this. In July, the government entity declared that most tokens offered in initial coin offerings would be considered "securities."
Companies that want to do an initial coin offering now have to abide by the rules set by the SEC before launching an ICO.
This caused some investor grumbling, but in reality, regulation in a highly volatile space is a good thing. Hopefully, in the coming years, investors will have easier access to ICOs with potential, while being protected from scams.
For now, there are a handful of tokens in the energy space that have already passed the initial coin offering phase.
And, using them as examples, investors can start to see how energy investing can change radically through digital currency.
Other Bright Ideas
Excuse the pun, but there are other bright ways digital currencies are being used outside of the ICO space.
One such idea is SolarCoin, a digital currency focused on helping users monetize self-generated solar power.
This particular token couples blockchain and energy to help you monetize the solar panels on your roof. It is a digital token that literally pays you to go green.
Stefan Grosjean, founder of Smappee, a Belgian company offering energy meters for the home, introduced the cryptocurrency to help users get the most out of their solar.
Unlike many digital currencies, mining isn't the only way to get SolarCoins. People actively generating solar energy can earn SolarCoins by feeding a megawatt-hour of electricity back into the grid.
This is a bit of a twist on the traditional digital currency model, but that doesn't change the fact that it is an example of how digital currency can be applied in new and useful ways. In this case, the SolarCoin can facilitate increased energy adoption, further incentivizing individuals to jump on the solar energy boat.
We cover emerging technologies like SolarCoin in our digital currency education service, which we are offering for FREE for a limited time.
This service will help investors tackle many of the technical aspects of the digital currency space, from initial coin offerings to taxes. The service comes with a video vault, helping investors navigate and set up accounts on some of the top digital currency exchanges.
It also comes with a FREE 44-page book aimed at dissecting the top digital currencies on the market.
Best of luck with your investments,
@AlexandraPerryC on Twitter
Alexandra Perry is a contributing analyst for Wealth Daily and Energy and Capital. She has multiple years of experience working with startup companies, primarily focusing on artificial intelligence, cybersecurity, alternative energy, and biotech. Her take on investing is simple: a new age of investor can make monumental returns by investing in emerging industries and foundational startup ventures.
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