Token funding success reaches Korea

The revolution is underway

The cryptocurrency revolution is spreading to Korea. On August 28th, an unknown Korean startup received $1 million in crowdfunding in just under two weeks. The startup, Proof Suite, Inc. was founded by three expats from the US and Belgium. Proof continues to receive just under $100,000 USD per day in a cryptocurrency called Ether. Ether is a token, or coin, similar to Bitcoin. Bitcoin was the first and most famous decentralized cryptocurrency. However, Ether is gaining broader adoption because its underlying Ethereum platform enables financial technology (fintech) startups like Proof to provide services traditionally offered by incumbents of the financial industry.

Token trading

Proof started as a platform and marketplace for trading property titles. Property owners could turn the title to their assets into tokens using the Proof platform. This process of turning property titles into tokens is called tokenization. The token could be exchanged later on when the owner wants to sell the property. The receiver of the token would then be the new owner to the title of the property.

As the number of participants in their marketplace expanded, Proof increased the number of financial services provided. Participants in the Proof Marketplace may now also trade company equity, community currencies, and securitized debt instruments.

Financial freedom

Proof is attracting the attention of investors because decentralized cryptocurrencies are becoming more popular. This is because decentralized modes of exchange are beyond the control of governments and allow peer-to-peer transactions that bypass existing financial structures. There is huge demand for this kind of financial freedom.

There has been some criticism of this new financial freedom as some of the early adopters of Bitcoin were using the cryptocurrency for illegal activities in online black markets. These online black markets are known as darknets. The most notorious darknet was called the Silk Road. Although authorities shut down the original Silk Road in October 2013, others have sprung up in its place. This does not bother the team at Proof though. Their mission is to decentralize financial structures even more.

White papers

In early July, Proof’s cofounders produced a technical document that the industry calls a white paper. In that white paper they outlined how they would enhance their platform to mitigate the power of sanctions and even bypass capital flight limitations imposed by some countries. In spite of the concerns about malicious activity, Proof is audaciously implementing its plan. In August, they launched a peer-to-peer networked desktop application in which government website blocks have limited effect.

When asked if some parties might use these capabilities for malicious intent, like funding terrorism or upholding regimes with human rights violations, CEO Mike De’Shazer said: “We believe capital should be truly free and that sanctions and other mechanisms controlled by central authorities, are the wrong kinds of methods for preventing malicious activity. Without the ability to control people's personal, private capital, governments then actually have to think about and solve the roots of these problems. And this is a very good thing, in my humble opinion”.

Proof claims to offer “irrevocable financial sovereignty” via its platform. To differentiate its platform from other fintech companies in its space, Proof is pioneering decentralized investment certainty leveraging prediction and insurance markets. In addition to this, Proof is attempting to solve the price volatility problem that hampers the mainstream adoption of cryptocurrencies.

Token funding

The revolution must be financed. Proof has forgone more the more traditional angel investor / venture capital route in favor of crowdfunding. Proof’s present crowdfunding activities are called a pre-sale. Limited contributions from interested parties are received during this phase. The pre-sale ends in mid-September or as soon as Proof reaches its US 3 million dollar funding limit.

In mid-October, Proof will enter a second round of funding that the industry calls an initial coin offering (ICO) or token sale. At that time there is no limit to the amount that any individual or organization may contribute. The ICO phenomena is changing the ways startups raise funding around the world and that phenomena has definitely come to Korea. This year, more funding was contributed by the crowd via token sales than contributed by venture capitalists.

Emerging markets

Proof differs from many other projects that have raised millions this year by having an active community of thousands of users and running a platform that is already making revenue. Proof’s original investor was TaaS. Taas is a crypto-hedge fund headquartered in Singapore. Although Proof is based in Korea, Proof believes its technology best serves the large emerging markets in Southeast Asia where Taas is located. Mike De’Shazer said: “Our platform is continually evolving but presently it is more geared towards crypto funds, like TaaS. As our users launch more and more cryptocurrencies backed by real-world assets, we will see more of the traditional hedge funds follow TaaS' trailblazing path of trading tokenized assets.”

It remains to be seen whether the cryptocurrencies will replace traditional currencies. However, it is clear that cryptocurrencies won’t triumph unless fintech startups like Proof build user experiences that surpass traditional services offered by incumbents in the financial industry. Proof's success in fundraising indicates that its supporters think that they will.