The problem of trust in the blockchain investment market and how will a decentralized escrow help here?
The problem of trust, or rather, its absence between market participants is not new. However, due to certain reasons, today it has become especially relevant, as is the request for its solution. The point is not that people have become less honest - it is likely that a certain percentage of fraudsters at all times fluctuate within the same limits. The peculiarity of our time is that in the process of communication, digital personalities are increasingly involved in interaction. When people call themselves nicknames, abbreviations or long rows of numbers, the question of trust arises especially sharply.
In many advanced e-commerce systems, for example, the giant AliExpress, the issue of trust between the parties to the transaction has been resolved through the inclusion of an escrow service in the purchase and sale process. Escrow plays the role of a kind of buffer, with the help of which the buyer is insured against receiving inappropriate to the description of the goods or not receiving it at all. The mechanism of the escrow service is extremely simple: the money for a product or service will be received by the counterparty only when a certain third party playing the role of an intermediary does not confirm that the terms of the transaction have been fulfilled. Then the money deposited in a neutral account goes to the account of the contractor, everyone is satisfied and ready for further cooperation. However, this mechanism has its drawbacks: for example, the closing date of the order is forgotten very often, and cases where the goods did not arrive, and the seller received the money, are not uncommon: if you wait for the order for more than a month, it is easy to miss the specified period.
A huge step forward in the question of a radical solution to the problem of lack of confidence was the blockchain technology that appeared 9 years ago. The possibility of business communication between the parties outside the sphere of influence of the trust factor is one of the principal properties of the blockchain technology. The blockchain replaces the intermediary between the parties: everything that ever gets into it remains there forever, and fakes and all sorts of manipulations with the information recorded in the blockchain are impossible directly due to its design itself. The technology, introduced to the blockchain market by a team led by Vitalik Buterin, supplemented this property of the blockchain with an ingeniously simple tool of the smart contract - a programmable and passionless, self-fulfilling solution, thanks to which Ethereum conquered the whole world overnight.
ICO market in terms of mutual trust of its participants
The popularity of Ethereum is largely due to the fact that it was on this platform that a new, revolutionary business construction became possible. As the Internet once became a platform for hundreds and thousands of innovative ideas, Ethereum was chosen by those who needed space to develop their business. The incredible increase in the value of the coin network, the ether, is explained precisely by this factor. It sounds like an excerpt from a fantastic story, but even at the beginning of this year, the broadcast was worth less than $ 9 - today its rate fluctuates around three hundred! And this is not the maximum value for the current year: in the first five months of 2017, the increase in the cost of broadcasting was 2839%. The main driver of this growth was the phenomenon of the ubiquitous spread of a new mechanism for attracting capital - the primary distribution of tokens, or ICO.
Talking about the pros and cons of this method of collecting money can be a long time - this topic is very extensive. We only note that never before has science, technology and capital come together as much as in this unique space. ICO made it possible for those projects that could never have been able to declare themselves to enter the scene, due to the lack of primary capital, geographical location and other factors important for their launch. However, ICO gave them such a chance, and it is quite likely that among the projects that “shot” this year are the following Google, Facebook and their ilk.
However, it is precisely in the simplicity and accessibility of the very possibility of collecting millions and a bomb is laid, which, according to the fears of many, having exploded, can bury most of the young growing blockchain market with scam projects.
Fraudsters were, are and will be, it is a fact. And such rich opportunities cannot fail to attract their attention. However, methods of dealing with potential ICO-fraud, chosen by a number of countries, look sad and counter-progressive.
The future, as always, is the middle way. In the form in which we see the ICO market now, the mechanism is really a time bomb. However, this phenomenon will not work “to give birth back”, this way of investing is very convenient for all. So, you need to come up with something new that will not allow the market to finally turn into the Wild West, but, on the contrary, will adjust it, forcing lovers of easy money to do it without burdening themselves with obligations to others.
By the way, this is not just about scammers and villains. Not everyone, for example, can adequately assess their capabilities, and some products for which funds are raised cannot be done in a given space and time, in principle, because there are no technical means for this yet - and this can also often be heard openly. How does an investor determine with whom he is dealing? Who is in front of him - the Facebook of our time, a scoundrel rogue or maybe an inadequate dreamer? With the help of ICO, after all, they are raising money for fantastically daring, innovative projects, the property of ICO is. And here we come to an elegant solution that is proposed on this issue today.
DESCrow Solution
The solution, which will be discussed, combines all three technologies mentioned above, with the help of which the problem of lack of trust in the transaction is being solved today: escrow, blockchain and smart contracts.
DES is a decentralized blockchain platform built on Ethereum smart contracts, which is a launching pad for launching ICO. The site provides its users with the ability to control the spending of the collected funds using the blockchain, eXrow, and voting mechanisms.
The idea behind DES is designed to minimize the investment risks associated with ICO, raising the overall status of this progressive fundraising mechanism, as well as reducing the costs of participants in the investment process.
However, DES is not directly a platform for an ICO, or rather, is not limited to this function only. The capabilities of the platform are much more extensive. DES infrastructure is applicable to all areas in the blockchain sphere, where trust between the parties plays a significant role.
DES allows investors to remain confident that the startup will indeed create the product in question at the start, and if force majeure arises, they will be saved from losses: if the startup fails to comply with obligations, all funds reserved for it will be returned to investors.
Work with ICO is as follows. A start-up attracting investment through this mechanism integrates with the DES platform. After passing the examination and approval, DES extracts the following parameters from the project roadmap: deadline, work schedule with deadline and the size of the required tranche. Further, as the plan is completed, the checklist records information about the amount of work done by the startup. Provided that the information is confirmed by the majority, the next tranche can be made in favor of the startup. Thus, at each stage of the project, a thorough check of the compliance of the team’s promises with its real actions is carried out.
In confirmation of the fact that the idea underlying the platform is viable, DES plans to conduct its own ICO in just this way.
“We are part of the common market and obey its laws, therefore, using our own ICO campaign as an example, we will demonstrate how our escrow platform will work. Such experience will make sure that the market is ready to accept our idea. By voting “for” DES, participants will be able to contribute to the development of a solution that will make the market safer, more honest and better, ”says project founder Sergei Besedin.
The DES project recently completed the pre-ICO phase, during which 958 ethers were attracted from more than 50 investors. This means that the community trusts the project, its goals and ideas. Ahead of DES directly ICO, which will last from November 29 to December 27. The total number of tokens issued will be limited by the number of coins sold during the ICO: all unsold tokens will be destroyed.
In many advanced e-commerce systems, for example, the giant AliExpress, the issue of trust between the parties to the transaction has been resolved through the inclusion of an escrow service in the purchase and sale process. Escrow plays the role of a kind of buffer, with the help of which the buyer is insured against receiving inappropriate to the description of the goods or not receiving it at all. The mechanism of the escrow service is extremely simple: the money for a product or service will be received by the counterparty only when a certain third party playing the role of an intermediary does not confirm that the terms of the transaction have been fulfilled. Then the money deposited in a neutral account goes to the account of the contractor, everyone is satisfied and ready for further cooperation. However, this mechanism has its drawbacks: for example, the closing date of the order is forgotten very often, and cases where the goods did not arrive, and the seller received the money, are not uncommon: if you wait for the order for more than a month, it is easy to miss the specified period.
A huge step forward in the question of a radical solution to the problem of lack of confidence was the blockchain technology that appeared 9 years ago. The possibility of business communication between the parties outside the sphere of influence of the trust factor is one of the principal properties of the blockchain technology. The blockchain replaces the intermediary between the parties: everything that ever gets into it remains there forever, and fakes and all sorts of manipulations with the information recorded in the blockchain are impossible directly due to its design itself. The technology, introduced to the blockchain market by a team led by Vitalik Buterin, supplemented this property of the blockchain with an ingeniously simple tool of the smart contract - a programmable and passionless, self-fulfilling solution, thanks to which Ethereum conquered the whole world overnight.
ICO market in terms of mutual trust of its participants
The popularity of Ethereum is largely due to the fact that it was on this platform that a new, revolutionary business construction became possible. As the Internet once became a platform for hundreds and thousands of innovative ideas, Ethereum was chosen by those who needed space to develop their business. The incredible increase in the value of the coin network, the ether, is explained precisely by this factor. It sounds like an excerpt from a fantastic story, but even at the beginning of this year, the broadcast was worth less than $ 9 - today its rate fluctuates around three hundred! And this is not the maximum value for the current year: in the first five months of 2017, the increase in the cost of broadcasting was 2839%. The main driver of this growth was the phenomenon of the ubiquitous spread of a new mechanism for attracting capital - the primary distribution of tokens, or ICO.
Talking about the pros and cons of this method of collecting money can be a long time - this topic is very extensive. We only note that never before has science, technology and capital come together as much as in this unique space. ICO made it possible for those projects that could never have been able to declare themselves to enter the scene, due to the lack of primary capital, geographical location and other factors important for their launch. However, ICO gave them such a chance, and it is quite likely that among the projects that “shot” this year are the following Google, Facebook and their ilk.
However, it is precisely in the simplicity and accessibility of the very possibility of collecting millions and a bomb is laid, which, according to the fears of many, having exploded, can bury most of the young growing blockchain market with scam projects.
Fraudsters were, are and will be, it is a fact. And such rich opportunities cannot fail to attract their attention. However, methods of dealing with potential ICO-fraud, chosen by a number of countries, look sad and counter-progressive.
The future, as always, is the middle way. In the form in which we see the ICO market now, the mechanism is really a time bomb. However, this phenomenon will not work “to give birth back”, this way of investing is very convenient for all. So, you need to come up with something new that will not allow the market to finally turn into the Wild West, but, on the contrary, will adjust it, forcing lovers of easy money to do it without burdening themselves with obligations to others.
By the way, this is not just about scammers and villains. Not everyone, for example, can adequately assess their capabilities, and some products for which funds are raised cannot be done in a given space and time, in principle, because there are no technical means for this yet - and this can also often be heard openly. How does an investor determine with whom he is dealing? Who is in front of him - the Facebook of our time, a scoundrel rogue or maybe an inadequate dreamer? With the help of ICO, after all, they are raising money for fantastically daring, innovative projects, the property of ICO is. And here we come to an elegant solution that is proposed on this issue today.
DESCrow Solution
The solution, which will be discussed, combines all three technologies mentioned above, with the help of which the problem of lack of trust in the transaction is being solved today: escrow, blockchain and smart contracts.
DES is a decentralized blockchain platform built on Ethereum smart contracts, which is a launching pad for launching ICO. The site provides its users with the ability to control the spending of the collected funds using the blockchain, eXrow, and voting mechanisms.
The idea behind DES is designed to minimize the investment risks associated with ICO, raising the overall status of this progressive fundraising mechanism, as well as reducing the costs of participants in the investment process.
However, DES is not directly a platform for an ICO, or rather, is not limited to this function only. The capabilities of the platform are much more extensive. DES infrastructure is applicable to all areas in the blockchain sphere, where trust between the parties plays a significant role.
DES allows investors to remain confident that the startup will indeed create the product in question at the start, and if force majeure arises, they will be saved from losses: if the startup fails to comply with obligations, all funds reserved for it will be returned to investors.
Work with ICO is as follows. A start-up attracting investment through this mechanism integrates with the DES platform. After passing the examination and approval, DES extracts the following parameters from the project roadmap: deadline, work schedule with deadline and the size of the required tranche. Further, as the plan is completed, the checklist records information about the amount of work done by the startup. Provided that the information is confirmed by the majority, the next tranche can be made in favor of the startup. Thus, at each stage of the project, a thorough check of the compliance of the team’s promises with its real actions is carried out.
In confirmation of the fact that the idea underlying the platform is viable, DES plans to conduct its own ICO in just this way.
“We are part of the common market and obey its laws, therefore, using our own ICO campaign as an example, we will demonstrate how our escrow platform will work. Such experience will make sure that the market is ready to accept our idea. By voting “for” DES, participants will be able to contribute to the development of a solution that will make the market safer, more honest and better, ”says project founder Sergei Besedin.
The DES project recently completed the pre-ICO phase, during which 958 ethers were attracted from more than 50 investors. This means that the community trusts the project, its goals and ideas. Ahead of DES directly ICO, which will last from November 29 to December 27. The total number of tokens issued will be limited by the number of coins sold during the ICO: all unsold tokens will be destroyed.
All Articles