As cryptocurrency mania continues at the end of 2017, with bitcoin up 160%, ether up 115%, and litecoin up 440% in the past 30 days, Tuesday brought two more signs of cryptocurrency going corporate.
David Marcus, the current head of Facebook Messenger, has joined the board of Coinbase. And Indiegogo, one of the world’s leading crowdfunding platforms, has opened its site to initial coin offerings.
The moves are significant. Here are two established tech companies, neither of which currently has any involvement in crypto, dipping a toe into crypto.
Marcus bridges Facebook to Coinbase
Facebook Messenger has more than 1.2 billion users, and David Marcus is the face of the product, recognizable to anyone who has watched Facebook’s annual F8 developer conference. Coinbase is the No. 1 mainstream brokerage for buying bitcoin, with more than 13 million customers. It is so popular right now that last week it briefly became the No. 1 app in the US App Store.
Facebook has yet to dive into cryptocurrencies in any real way, and while this is just Marcus joining Coinbase’s board, a top exec like him certainly has to get permission from Facebook to make a move like this. It’s easy to imagine this as step one in an eventual Facebook-Coinbase partnership.
Coinbase already has an existing partnership with PayPal, where Marcus was president until he left for Facebook in 2014. Marcus, in a Coinbase blog post, says, “I’ve been involved with, and fascinated by cryptocurrencies since 2012, and I’ve witnessed how Coinbase has started democratizing access to this new asset class.”
It’s generally known that Facebook wants to get more into banking. Last year it launched Marketplace, a Craigslist-like platform for selling things, though it has not taken off yet. Might Facebook want to add a plug-in that allows its members to buy bitcoin without leaving Facebook? It could be done through Coinbase. Square, after all, is testing a bitcoin-buying button in its app.
Indiegogo takes a risk with ICOs
Indiegogo is one of the leading crowdfunding platforms online, founded in 2008 and typically mentioned in the same breath as its competitor Kickstarter. Both companies are credited with igniting a boom in the crowdfunding space, where regular people can contribute money to a cause they like (anything from a small theater production to a new tech device), often for a reward if the project meets its funding goal.
On Tuesday, Indiegogo opened up its site to initial coin offerings (ICOs), also called “token sales,” in which an internet company raises money by selling its own token, for use on its own ecosystem, in exchange for dollars or a different cryptocurrency, like bitcoin or ether. (Most ICOs are carried out over the blockchain network Ethereum.)
From one perspective, an ICO is simply a new type of business project, and Indiegogo will now allow this type of project to seek funds on its site. Indiegogo allowing ICOs is the result of a partnership it struck a year ago with a third-party firm called MicroVentures. And ICOs have rapidly become extremely popular and lucrative: $3.7 billion in funding has been raised in ICOs to date, according to a CoinDesk tracker.
The first ICO project Indiegogo is hosting: a company called the Fan-Controlled Football League, looking to raise $5 million.
Slava Rubin, one of Indiegogo’s three cofounders and its CEO until he changed roles recently, told the New York Times, “We want to bring a brand of trust to the entire industry, which we think will bring ICOs to the mainstream.”
Indiegogo is hardly the only one that wants to bring ICOs mainstream. CoinList, recently spun out of AngelList, is a compliance-services company for ICOs and is selectively listing some ICOs on its own site that it has vetted carefully. Its idea is to “add safety,” its CEO told Yahoo Finance, to investing in ICOs.
But take heed: investing in a token sale is extremely risky. There’s no guarantee that the tokens you’re buying will ever be worth anything, since their value is dependent on the success of the company offering them. Many of the companies doing ICOs haven’t yet shipped any product or built anything consumer-facing, but have merely released a white paper detailing what they plan to build.
Nonetheless, Facebook and Indiegogo both got a little bit cozier with crypto this week.
Disclosure: The author owns less than 1 bitcoin, purchased in 2015 for reporting purposes.
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Daniel Roberts covers bitcoin and blockchain at Yahoo Finance. Follow him on Twitter at @readDanwrite.
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