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Will blockchain change the way we invest for impact?

Distributed-ledger technology is generating exuberance. The question is whether it’s irrational.

By some forecasts, 10 percent of the entire global GDP could be stored via blockchain by 2027. The market capitalization of all cryptocurrencies, such as bitcoin, has risen from $7 billion in January of 2016 to over $130 billion as of September 2017. ICOs (initial coin offerings) now provide more startup funding than venture capital for blockchain-based companies.

Nearly $2.3 billion has been raised to date in ICOs, with the large majority of that taking place in the first half of 2017. Beware the dangers of “over-exuberance,” said Shane Ninai of Day One Investments at this week’s SOCAP conference in San Francisco, citing general confusion around the technology, as well as the potential for fraud.

Despite these caveats, the excitement was palpable. “We need more cars, not faster horses,” said Ninai. “We believe that blockchain technology will best be used in completely new business models that will surface in maybe three or four years from now. For example, you can make money from the unbanked now.”

There are use-cases for each of the U.N. Sustainable Development Goals, according to Kavita Gupta, the head of the new $50 million venture fund from blockchain startup Consensys.

At SOCAP, some of the blockchain examples were so far-flung, they could’ve been lifted off a bottle of Dr. Bronner’s Soap. Secure voting. Land use rights. Tracing the provenance of organic goods. Identity verification. ICOs could level the playing field for startups around the world. “Access to finance is a big problem in emerging markets, and ICOs democratize access,” said Ninai.

“With blockchain, all you need is a good business plan and access to the internet to raise funding.”

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