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CoinTelegraph had a conversation with迈克•格洛普, chief compliance officer of the UK Bitcoin trading platform BitBays, about BitBays's digital currency "initial public offering (IPO)" (hereinafter referred to as "digital currency IPO") open to users, the benefits of digital currency crowdfunding, and the latest developments in the industry. The Internet and digital currencies have spawned a whole new industry: online crowdfunding. There is a lot of room for growth in this space, and competition is heating up for market share from emerging companies that compete with today’s incumbents ( Kickstarter , Indiegogo ). These emerging companies are breaking down the boundaries between online crowdfunding and the financial world, such as IPOs, by using their own unique methods to achieve crowdfunding. Gropp told CoinTelegraph: “By looking at how people earn, spend, save and invest, we are seeing a seismic shift in the global economy where digital currencies are removing the barriers to currency exchange and capital movement that first-generation crowdfunding platforms faced.”
Whereas previously people needed to go through middlemen or secret negotiations to invest in a new company, Bitcoin is breaking down these barriers, allowing private individuals to participate in the increasingly inclusive world of fintech and investing.
CoinTelegraph (CT): Could you please introduce BitBays? Why did you set up such a company? Why did you choose to register the company in the UK? Mike Gropp (MG): BitBays is a global Bitcoin trading platform. We started arbitrage in 2013 and opened USD/BTC and RMB/BTC trading in July 2014. A global IPO platform can eliminate borders and bureaucracy, giving individual Bitcoin holders the opportunity to invest in small and medium-sized enterprises. We recently saw the need for this and launched a new IPO feature. We registered in the UK because there is a good rule of law and regulatory environment there, which helps us achieve our goal of becoming a true分布式自治组织(DAO).
CT: How does the ADO (ActiveX Data Objects) framework assist your business? MG: The DAO structure helps maintain one of our five security priorities: geography. We minimize the risk of regional events affecting the company by locating human resources and servers on different continents. We build the company on the same principles that underpin blockchain technology, one of which is “distribution.”
CT: How did you come up with the idea of launching IPO功能? MG: The reason is at a basic level, we see a real market need, and we are able to meet that need. The deeper reason is that we see a huge shift in the global economy by observing how people earn, consume, save and invest. Two generations ago, people's consumption mentality was to clip coupons and save money in order to have enough money for retirement.
The previous generation believed that you should go to school, work hard, invest your money with a broker, and have enough money for retirement. Recently, this concept has changed to learning practical skills and starting your own company. Many startups need development capital. This is the role of our company. In short, we see more and more entrepreneurs and investors, and what we do is to bring them together and build connections.
CT: What is the difference between this platform and Bnktothefuture or other public equity funding platforms? MG: Our approach is very different. First, we do our own due diligence and vet projects, and these companies must be profitable to be eligible to go public. We provide a more customized and thoughtful approach to looking at these companies. This is very different from some platforms that treat IPOs like Craigslist (simply post an ad).
Secondly, our partner is BitCapital, and the purchase of the company's equity is done by BitBays (Bibei.com) and BitCapital . When we cannot guarantee the company's performance, we will put our own funds online to attract potential investors. Finally, after the subscription period, the shares can be bought or sold on our exchange, and the price is determined by the market. Company performance, dividends, market conditions, etc. will affect the stock price.
CT: Could you please give us a brief overview of the process? What fees do you charge for this? MG: After the required due diligence and public announcements, the company's shares will be listed on our exchange and available for public subscription within a specified period. OKDice, which was recently listed on our exchange, had a 7-day subscription period. Their shares were fully subscribed within 72 hours. During this period, BitBays users can purchase shares at a fixed price. After the subscription period, the shares can be traded freely and the price is determined by the market.
There are no direct costs for companies to go public or for investors to purchase shares. When trading shares after the subscription period, we charge both parties a transaction fee (0.1%-0.25%). In addition, we purchase the shares of the listed company at a discount. There is also a small fee for converting to fiat currency. These are the fees involved in our IPO function, and they are all very reasonable.
CT: Does BitBays always buy a portion of the total issued? MG: We do not charge any direct fees to these companies to help them with their IPOs, and we do this to show our confidence in them, so we will hold a certain equity in these companies. Yes, OKDice offered 10% of its shares to the public, and we agreed to buy 30% of them (3% of the total share capital). Because each company is different, the total number of shares and discounts will be discussed and decided by the company according to their respective circumstances. This can be regarded as a small non-controlling interest when investing in companies we believe in very much. We believe this is good, both for BitBays and our users.
CT: Does your platform comply with relevant regulations? MG: The rules vary by regulation. Governments have seen the value of crowdfunding and other new forms of public equity financing. They have proposed measures to allow ordinary investors to invest in private transactions. One example is the JOBS Regulation (Titles III and IV), which is a big win for crowdfunding platforms. We comply with the primary jurisdictions in which we operate and continue to monitor the evolving regulatory environment.
CT: Does BitBays offer a discount to regular investors when buying company shares, or is it the same? MG: BitBays does have a small discount. However, when it comes to dividends, voting rights, etc., BitBays and its users are equal when it comes to shares purchased. Anyone who wants to subscribe to shares in a company listed on the BitBays exchange can register on BitBays.com.
CT: Do you think companies that don’t use cryptocurrencies would be interested in BitBays? What would motivate them to move away from traditional platforms or even Kickstarter and turn to BitBays? MG: Most other platforms are limited by region. The benefit of cryptocurrency crowdfunding is that it is global, but the downside is that cryptocurrency is still not widely known and accepted. In the future, all major crowdfunding platforms will support at least one major cryptocurrency. We see the future and are working on it. When other platforms catch up, we will have already moved to the next frontier, providing the most convenient and innovative funding solutions.
CT: How do you see public crowdfunding in the next 5-10 years? What role will digital currency and blockchain technology play in it? MG: Crowdfunding empowers everyday investors to make their own decisions with minimal fees and a transparent process. Entrepreneur Magazine claims that crowdfunding added 250,000 jobs and added $65 billion to the global economy in 2014. So it’s here to stay, and digital currencies are removing the barriers to currency exchange and capital movement that the first generation of crowdfunding platforms faced.
In short, ordinary investors are becoming more and more savvy. They realize that they can no longer blindly invest their hard-earned money in the stock market, real estate market or some other asset bubble caused by artificially low interest rates. Private transactions are going mainstream. If crowdfunding is a car, then cryptocurrencies are the doors that open to welcome more passengers (drivers).
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