The Origins of Blockchain

It’s been a little over a decade since Blockchain technology was first introduced, but it’s already revolutionizing the way we do business. By eliminating the need for a central authority in transactions, Blockchain enables secure and tamper-proof data exchanges between parties. This has allowed companies to improve productivity, reduce costs, and ensure accuracy in payments or copyright verification. Let’s explore how the Blockchain came to be.

 

A Brief History

 

  • 1979: Ralph Merkle, a computer scientist and Stanford University Ph.D. student, described a public key distribution and digital signatures in his doctoral thesis, an idea he eventually patented. This came to be known as the Merkle tree.
  • 1982: David Chaum, a Ph.D. student at the Univerity of California, Berkeley, described a system for maintaining and trusting computer systems.
  • 1991: Stuart Haber and W. Scott Stornetta proposed a cryptographically secured chain of blocks that would enable timestamping of documents, then proceeded to upgrade their system the following year to incorporate Merkle trees for more efficient document collection.
  • 2008: Someone under the pseudonym Satoshi Nakamoto conceptualized the first Blockchain, from which the technology has evolved and found its way into many applications, from cryptocurrencies to others.
  • 2009: Satoshi Nakamoto released the first whitepaper about Blockchain technology and Bitcoin, detailing how it was well equipped to enhance digital trust due to its decentralization aspect.
  • 2009: The first Bitcoin block was mined by Nakamoto, validating the blockchain concept.
  • 2011: Litecoin is released, becoming the second-ever cryptocurrency to be based on Blockchain technology.
  • 2013: Ethereum launches, introducing a whole new concept of smart contracts and dApps, ushering in the era of Blockchain 2.0.
  • 2015: The world’s first Blockchain-based stock exchange is launched in Estonia.
  • 2016: Hyperledger project begins to take shape with IBM leading the charge for private enterprises to adopt Blockchain technology for internal use.
  • 2017: Bitcoin experiences a monumental rise in price as the cryptocurrency market cap surpasses $100 billion.

 

The Benefits of Blockchain

 

Blockchain technology has a lot to offer from scalability and cost savings. Here’s how it’s been adopted in various sectors over the last decade:

 

Decentralization: A significant benefit of Blockchain technology is its ability to remove the need for a third-party authority. This means that transactions can be carried out securely with much faster processing times and lower costs. Utilizing Blockchain technology for payments and data storage ensures that the exchange of information is accurate, secure, and immutable.

 

Energy: Blockchain is being used to create decentralized energy systems that enable users to buy and sell electricity directly with each other without relying on any central authority. This helps reduce costs while providing more transparent financial transactions.

 

Finance: Banks, payment companies, and other financial institutions are embracing Blockchain technology to reduce costs while increasing the speed of transactions. Blockchain is also being used to enhance security in stock exchanges by providing an immutable ledger to track ownership of stocks and bonds.

 

Media & Entertainment: Companies like Spotify and Facebook are leveraging blockchain technology to explore emerging trends like NFTs. 

 

Supply Chain Management: By eliminating intermediaries, Blockchain technology makes it easier to track shipments and trace products in the supply chain. This not only enhances transparency but also reduces costs while improving customer service.

 

Healthcare: Blockchain technology can play a significant role in streamlining the healthcare industry by providing an immutable ledger to store and share patient records. This will help reduce costs and improve security as sensitive health data is securely stored on the Blockchain.

 

Blockchain technology has come a long way since its introduction over 10 years ago. What started as a revolutionary concept for cryptocurrency has now been widely adopted across various industries. The possibilities are endless and the future looks bright for Blockchain technology.  With its scalability, cost savings, transparency, and security advancements, Blockchain is set to revolutionize many aspects of our lives in the years ahead.

A $30 Trillion Market in 8 Years: Shari Noonan Speaks with Crowdfund Insider

The private securities market is predicted to grow exponentially in the next decade, with a total value of $30 trillion by 2030. Recently, Shari Noonan, CEO of Rialto Markets spoke to Crowdfund Insider about this remarkable trajectory.

 

There are several reasons we can anticipate this tremendous growth. First, the JOBS Act introduced powerful exemptions to SEC registration, removing or easing many of the administrative barriers that had stood in the way of capital formation. As well, new tools have emerged to help companies seek capital in online capital markets.

 

Plus, these online tools mean that companies now have access to a wider pool of potential investors that had been traditionally unavailable to the private market. On this subject, Shari Noonan said, “Rialto Markets enables not only venture and institutional investing but also retail investing. This diversity can help private companies seeking capital find a wider range of investors, which might mitigate some of the shakiness in the economy.” With traditional forms of investment, reaching niche investors used to be nearly impossible. It’s a different story online because finding niches is a huge part of what the online world is all about. So whether a company is in real estate, ice cream, or electric vehicles, online platforms make it easier to find the right investors who support unique, innovative companies.

 

So far, the interest in investment through JOBS Act exemptions has not slowed down. “We saw a 1,021% increase in equity crowdfunding in 2021 to $113.52 billion, so that level of growth may be difficult to sustain, but it will still be a strong 2022 for the Reg CF and RegA+ investment markets,” added Shari.

 

So, what does this all mean for investors? Well, the private securities market is set to continue growing at a rapid pace, and with the help of companies like Rialto Markets, it’s easier than ever to get involved. And if it’s easier for investors to get involved, then it’s easier for companies to find investors.

 

For players in the private capital market, like Rialto, the mission is to create a fully democratized ecosystem. Shari believes that “​​this enables private companies looking to raise capital to expand their net and reach a much wider and more diverse investor base, providing investors with access to investments at an earlier stage than previously.” 

 

Continued growth will require a robust infrastructure. “We will continue to expand services to bring greater efficiency and scale to the private markets,” said Noonan when asked about Rialto’s plans for the future. This will also include support for new types of securities, and Rialto is already prepared for the expansion of digital securities. Shari points out that “many NFTs are securities that also live natively on a blockchain. The right way forward is to wrap NFTs into the regulatory framework by registering them as Reg CFs or Reg As, then approving and tracking ownership on a next-gen SEC-registered Transfer Agent.” This would allow the industry to test new technologies while adhering to securities laws that protect issuers and investors alike.

 

The private capital market is growing at an incredible rate as issuers increasingly turn to private capital sources for their funding needs and investors explore new types of investments. With so much growth potential ahead, the private capital market is poised to introduce new technologies, efficiencies, and opportunities to the financial world.

 

What is an NFT?

A non-fungible token, more commonly known as NFTs, is a unique cryptographic asset that cannot be replicated and stored on a blockchain. By definition, fungibility is when an asset can be exchanged with more of the same good or asset–think of a dollar that can be easily exchanged into pennies or nickels and retain the same value. This means that by being non-fungible, NFTs cannot be traded or exchanged for an identical asset; one NFT cannot be exchanged for another NFT.

Throughout 2021, we have seen the meteoric rise in popularity of NFT, which can represent assets from artwork to videos and even real estate. In the case of artwork, it may be hard for someone to understand the value of buying a digital asset. The importance is ownership; the blockchain on which the NFT is stored verifies the identity of the asset’s owner in an immutable ledger. 

In the discussion on NFTs, it is essential to consider that not all digital assets are classified as securities. Based on the Supreme Court’s Howey case, the Howey Test helps determine whether an investment contract exists and is used to classify digital assets. With this test, an investment contract typically exists “there is the investment of money in a common enterprise with a reasonable expectation of profits to be derived from the efforts of others.” If a digital asset meets these requirements and is classified as a digital security, it must be registered with the SEC or exempt from registration. With registration, issuers are required to disclose certain complete, non-misleading information to investors. 

If an NFT can meet the digital security requirements, they can be offered through raises that happen under exemptions like Regulation A+. NFTs are not bound by federal securities laws and pose a potential investment risk without meeting these requirements. 

What makes an NFT a good investment is its resale potential. If there is no market for the asset and it cannot be resold, it loses its value. It is not like other digital attests like cryptocurrencies, where one bitcoin is always equal in value to another. As the landscape of cryptocurrencies, NFTs, and digital securities continue to evolve, it will be interesting to see their role in the future private capital markets.