If you're in the startup scene, then you might have heard of Y Combinator. It's one of the oldest and most active startups accelerators. Many successful businesses were first nurtured there. But Y Combinator is also famous for a thing called SAFE: Simple Agreement for Future Equity. SAFE made investing in startups both easy and legal and it was one of the causes behind the accelerator's growth.

Now, why is this important for blockchains? Because we're witnessing a similar approach, this time for ICOs, in the form of SAFT: Simple Agreement for Future Tokens.

The Problem

I won't dive into details, because I'm lacking all the knowledge, but it seems to me that the biggest problem with ICOs is that we're creating some immediate value (tokens which can be freely sold on the secondary market) for some future asset (the actual blockchain for which the tokens are sold). Because of that, tokens sold directly and made available immediately are getting a "quantum" state: they're securities (and following securities laws) but at the same time they're not.

This inconsistency created a reaction from regulatory organisms: in USA ICOs are prohibited (at least to my knowledge) and the same happens in China and South Korea.

The Solution

SAFT aims to do, in short, what SAFE did for startups: to make investing in blockchain based businesses both easy and legal. How it does that?

Well, the key point of a SAFE is when the tokens are distributed. In a SAFE agreement (which is an actual contract, signed between the investors and the developers) tokens are distributed once the network in which those tokens are used is functional. So no tokens are distributed, and made available, immediately or before the network is up and running.

Apparently, from a legal point of view, this is a very important difference. It brings the ICO process from the grayish area where it is right now, in the white zone. It also slows down the process of token creation - which can be confusing and can lead to a lot of speculative operations.

If you want to know more about this, I encourage you to participate in the Saft Project.

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I'm a serial entrepreneur, blogger and ultrarunner. You can find me mainly on my blog at Dragos Roua where I write about productivity, business, relationships and running. Here on Steemit you may stay updated by following me @dragosroua.

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