In the world of crypto-currencies—the most famous of which is bitcoin—

the hottest trend is what's called an "initial coin offering," in which companies sell crypto-currency tokens to their supporters as a method of crowdfunding. How hot is it? On Wednesday, a startup called Brave launched a coin offering to fund a new web browser and raised the equivalent of $35 million in about 30 seconds, according to CoinDesk. Brave is the brainchild of Brendan Eich, the co-founder of the Mozilla Foundation, maker of the original Mozilla browser. Eich's new web browser is designed so that users can make micropayments to web publishers they like using crypto-currency, based on how many articles they read.

"We are pleased with the sale, and we're looking forward to disrupting digital advertising and building a user-centric platform for supporting the Web," Eich told CoinDesk. The Brave browser's payment system uses what are called Basic Attention Tokens, whose value is based on the crypto-currency known as Ethereum, a popular alternative to bitcoin. Eich has said his company plans to release the code behind the tokens as open source so that anyone can build publishing systems or services that use them for payment.

Although the use of crypto-currencies puts a new spin on it, the history of micropayments for content is littered with failures, including a litany of strange-sounding digital would-be payment systems such as Beenz and Flooz. That said, however, some appear to be extremely interested in Brave's tokens. The coin offering was so popular that some would-be investors complained they had no chance to even make a bid. A single investor bought almost $5 million worth in a single trade, CoinDesk said.

Only about 130 people were able to buy tokens in the offering, and five buyers got close to half of all the available supply, according to a Bitcoin exchange that analyzed the sale. Initial coin offerings are seen by some as an alternative to traditional share offerings. Instead of equity, backers get tokens that can be converted into units of a crypto-currency like bitcoin or Ethereum. Crypto-currencies generate value through a process called "mining," which involves the computation of complex mathematical formulas. Regulators have said they are looking into initial coin offerings to see if they should be treated the same as equity offerings, but for now they are largely unregulated.

Investor Balaji Srinivasan said in a recent essay that he believes crypto-currency tokens could eventually generate more money for the technology industry than all of the Internet-related equity offerings that have taken place to date. He called the token economy "a Kickstarter on steroids," referring to the popular crowdfunding platform. Kik, a Canadian company that makes a popular messaging app, said recently that it would launch its own crypto-currency called Kin with an initial coin offering within the next few months. Like the tokens that Brave sold, Kik's currency will be based on Ethereum.

Chuck Reynolds
Contributor
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