How has blockchain changed the way people do business? To begin, it allows start-ups the opportunity to raise funds without the burdensome regulatory requirements, reporting obligations, and costs. Remember how start-ups accessed capital in the past? A start-up had to find an angel investor willing to invest capital in their business plan in exchange for some ownership interest or maybe they were lucky enough to have a venture capitalist back them. This was often necessary since individual investors would not typically invest in new companies right away. As soon as the company had enough capital, a strong business plan, and public interest, they launched an IPO. Yet IPOs are costly and the regulatory requirements—even if the company proceeds under a registration exemption—are extremely cumbersome. Blockchain transforms the equation. Start-up companies and entrepreneurs can use blockchain technology to raise capital through peer-to-peer networks in online offerings regardless of the size of their company, the capital raised, or the backing of angel investors/venture capitalists. Instead of the traditional IPOs, many companies are using ICOs—initial coin offerings. ICOs are basically IPOs that use online coins to raise money without the federal regulatory oversight and significant transaction fees. Thus, these global distributed share offerings through peer-to-peer mass collaboration are set to democratize participation in capital formation.
Tech giants have eagerly rolled out plans involving offering blockchain technology on its platforms. For instance, Amazon’s Managed Blockchain feature allows users to create their own private blockchain networks, build their own applications, invite other users, and so on by using open-source frameworks Hyperledger Fabric (private and permissioned) and Ethereum (public and permissionless). Twitter is allowing users with a mobile iOS device to accept tips in Bitcoin, with Android functionality to come soon. Twitter is also working on turning its payment company, Square, into a decentralized Bitcoin exchange platform. When major advances such as these occur, the value of various cryptocurrencies rises. For instance, Bitcoin’s price rose to over $60,000 on Friday, October 15th, 2021 for the first time in six months as traders heard the news that the SEC is now finally approving the first U.S. Bitcoin future exchange traded funds (ETFs).