CEDGAR solves the biggest problem with ICOs and the token economy
The problem with the current crypto media landscape
There are currently too many sources of crypto related price sensitive information and no one has the ability to monitor all of them all the time. This creates confusing and chaotic market conditions, where fake news can do incredible damage.
Many unofficial crypto news outlets on Twitter, Facebook and YouTube have massive followings, which gives them the ability to manipulate the markets either intentionally or unintentionally. They can drown out the voice of even the major token issuing companies, who can’t match them by audience size.
We have seen this before in other areas, where fake/incorrect/inaccurate news, once widely disseminated, can persist over the truth for a very long time, sometimes in perpetuity.
This is where CEDGAR will provide a unique advantage to token issuers by enabling them to publish their official information in a blockchain verifiable format, against which all other information will be judged by.
ICOs are not IPOs
Unlike IPOs, ICOs bestow no reporting obligations on the token issuing companies. After crypto companies raise capital via ICOs, you as the purchaser of their token or currency have no say and little to no visibility into what happens to it.
ICO investors are not Venture Capitalists
When VCs invest into start-up companies they negotiate preferential terms with both downside and upside protection and appoint board members, monitors, consultants etc. When token purchasers participate in an ICO, all they receive in return are company tokens. If the ICO company gets into trouble or is subject to FUD, their tokens will plummet in value and token holders will have little chance of recovering their investments.
CEDGAR is not PR
It’s important to note that CEDGAR will not be an extension of company’s PR department. The information published on CEDGAR will be entered via a structured form, which will allow only certain type of information to be included. The form will enable for publishing of raw financial and price sensitive information without the spin, hype or hyperbole that is typical of PR departments.
By joining CEDGAR token issuers will have the ability to reach an audience many times bigger than any other influencer and therefore ensure the official truth will always stay on top of unofficial and unreliable news sources.
Because ICOs give token issuers the ability to raise high risk early stage capital without the obligations that VCs would normally bestow on them.
ICOs are full of promises, but generally have little to offer beyond their white paper. This means that investing in ICOs is a high risk VC type investment disguised as an IPO, without the obligations of either. ICOs are highly biased towards the token issuers but offer no protection to token purchasers.
In traditional markets, regulation provides protection for investors, by requiring companies to comply with stringent regulations before allowing them to list publicly. In the US the U.S. Securities and Exchange Commission (SEC) has established a reporting database for publicly listed companies called EDGAR (Electronic Data Gathering, Analysis, and Retrieval system). All publicly listed companies are required to report their financial information into EDGAR at regular intervals. This way small investors, who unlike VCs, don’t have members on the company’s board to look after their interests, have clear visibility into company activities.
This has been the inspiration behind CEDGAR, or Cryptocurrencies Electronic Data Gathering, Analysis, and Retrieval system. The function of CEDGAR will be the same as EDGAR in that they will both perform automated collection, validation, indexing, acceptance, and forwarding of company submissions. The difference is that the latter one is mandatory for all publicly listed companies in the US, while the former one will be a voluntary option for cryptocurrency companies who have tokens on sale to the public either via ICOs or virtual currency exchange listings.
By reporting their financial and other price sensitive information on CEDGAR, the token issuing companies will show their commitment to honesty and transparency. With an official channel for price sensitive information, companies and investors will be protected from FOMO and FUD, which are currently both major market drivers.
Why would crypto-companies want to utilise CEDGAR?
Since CEDGAR will be completely voluntary, the incentive to use it will have to come from within the crypto-companies themselves. They will either want to use it to show their commitment to honesty and transparency towards their token owners or the token owners will apply pressure on the company if they feel their funds are not being spent responsibly or the company might be manipulating information that is in the public domain.
Either way CEDGAR will serve as a counter weight to the promises in the white paper and provide much needed stability to the crypto markets. In the long therm all stakeholders will benefit from the use of CEDGAR.
Over time, CEDGAR listed crypto-companies will enjoy preferential treatment from business partners (such as exchanges) and investors. This will further drive the adoption of CEDGAR until it becomes the industry standard.
Perhaps most importantly, if the industry manages to establish effective self-regulation, it is also far more likely that governments will stay away with their own undoubtedly far more draconian versions of the same.
Why should ICOs join CEDGAR
It’s probably fair to say that 2018 hasn’t been too kind to crypto assets thus far. With bad news followed by more bad news since early January 2018, it exposed the market volatility in the worst possible way following the massive bull run in November and December of 2017.
The problem with such massive swings and an unstable market is that a lot of people ended up losing a lot of money, which has resulted in a very negative public image for crypto. First Facebook and now Google have reacted to this by banning crypto related ads on their advertising platforms, which depressed the markets even further.
It’s become clear that the crypto market is currently more influenced by Tweets, forum posts and news articles than anything fundamental and our plan here at 2100NEWS is to change that by introducing self-regulation in the form of CEDGAR.
So how will CEDGAR change the current unstable nature of the crypto markets?
By releasing price sensitive information through an officially sanctioned channel such as a blockchain verified CEDGAR account, all market participants will receive the same information at the same time. These intervals will be announced in advance, so that it will be fair for all traders and at the same time devalue any unofficial sources of potentially misleading information.
Why is CEDGAR a WINNING recipe for the crypto ecosystem as a whole?
It is in everyone’s interest that crypto markets adapt transparency and self-regulation practices that are currently missing. CEDGAR, therefore, provides a winning solution for everyone: token issuing companies, contributors, influencers, exchanges, and countries. Here’s how:
1. A win for token issuing companies!
By providing their financial reports to CEDGAR, token issuing companies will reach a broader community within the crypto world.
Company’s involvement in CEDGAR also shows its willingness to self-regulate and be transparent. Authorized publication of financial data will also reduce the risk of insider trading as well as give companies a higher chance of being listed on major exchanges.
Participating companies will receive a certificate to display to their crypto community, who will recognise reporting through CEDGAR as good business practice.
2. A win for contributors/traders!
With CEDGAR, contributors are getting a new information source, as opposed to relying just on companies’ PR departments and influencers. Now, through CEDGAR, 2100NEWS provides an unbiased infrastructure for self-regulation that results in higher quality financial analysis.
Contributors can now track the project’s progress at regular predefined time intervals and compare actual (quarterly, half-yearly, annually) business results to targets set in the Whitepaper. This gives them a much better insight into company’s progress and performance.
3. A win for influencers!
Until now, influencers communicated their opinions on certain ICO/token issuing company based on the Whitepaper, PR statements and rumors. CEDGAR enables influencers to have a reliable and unbiased third party information at their disposal. Consequently, they now have a more objective information source to base their assessments on, which means their followers will get a more balanced picture.
4. A win for Exchanges!
Exchanges will use CEDGAR as a standard of transparency for the token issuing companies. It will enable faster and easier due diligence check-up of crypto-companies before listing them on their exchanges and ensure higher trading volumes.
It is not in the interest of exchanges, for the market prices to be manipulated by third parties. CEDGAR will offer a stable and reliable way of communicating financially sensitive information between all stakeholders.
5. A win for Countries!
At the moment the whole crypto ecosystem is more or less unregulated. For most countries this represents an unacceptable situation. Self-regulation through CEDGAR will present a more palatable alternative to either no regulation or establishing full blown national regulation.
CEDGAR as a standard of transparency
As shown above, the whole crypto ecosystem will benefit from CEDGAR. Regulations are inevitably coming our way and it is in crypto’s best interest to start to self-regulate instead of being regulated by other parties. This is why we strongly believe CEDGAR is the logical next step in the evolution of the crypto economy.