Crowdfunding Bitcoin startups is eating your own dog food – controversially

This is one of a series called Explorations down the Bitcoin rabbit hole.

When I first started looking at Bitcoin 2.0 startups (Altcoins and decentralized apps using Blockchain tech) I would see “IPO” mentioned. This had me thinking “WTF” as these are really early stage ventures, far removed from the financial metrics demanded by investors for an IPO.

These ventures realized they were in a branding and legal minefield and dropped the term. What they are doing is crowdfunding, in much the same way that Kickstarter does it – except of course using their own platform and using Bitcoin for payment.

They have to use crowdfunding because these are a) bleeding edge projects that very few investors understand b) open source with no obvious monetization play. So traditional Angel to VC route is not ideal; indeed some that go this route get flamed by the community and as community enthusiasm is mission # 1 that would be a huge mistake.

Also, for platforms that are designed to disrupt the financial services status quo, it would look bad if they did not “eat their own dog food”.

I don’t think this is a new paradigm yet. Speculators jumping into a proliferation of Altcoins will end in tears. A few developers buying with some spare Bitcoin in order to get in front of the next big tech wave is OK. What is extraordinary is to see something like Ethereum raise over $12m this way. That would be a chunky Series A for what is pre Angel by most accounts.

The takeaway for me is that there is big developer enthusiasm for these platforms. So, yes, I buy the theory that this is Internet c 1992 or PCs c 1974.

This is one of a series called Explorations down the Bitcoin rabbit hole.