A Cryptocurrency With “No Purpose” Has Raised $700M

One of the hottest cryptocurrency investments of 2017, a startup called block.one, has raised $700 million selling a digital token that has “no purpose.”

According to The Wall Street Journal, this is the largest initial coin offering to date, with block.one’s market value now at around $4.5 billion. The sale of the token, called EOS, has benefited from a boom in ICOs – overall, 165 firms have raised more than $4 billion in 2017 through coin offerings.

Launched in late 2016 and registered in the Cayman Islands, block.one is a software company that writes code for its main project: a bitcoin-like operating platform that hosts any variety of applications.

EOS is the idea of Brendan Blumer, a 31-year-old internet entrepreneur in Hong Kong, and programmer Dan Larimer. Brock Pierce, a prominent bitcoin investor, is a minority partner and adviser.

Block.one is planning a full rollout of the software next June, which Pierce recently predicted would be “like Windows launching, but much bigger.”

But unlike Microsoft, block.one plans to only write the initial code for EOS and then release it publicly. Instead of building or developing the platform itself, the task will be left to unrelated third parties. As a result, the EOS tokens have no relationship to the software. In fact, a purchase agreement that investors must sign states the tokens “do not have any rights, uses, purpose, attributes, functionalities or features.”

Despite the reveal that the tokens have no real purpose, investors have been eagerly bidding for them. Investors in many countries, excluding the U.S. and China, can participate in a daily auction where block.one sells two million new tokens to investors.

Mosala Sehloho, a 32-year-old media producer in Johannesburg, said he understands the EOS tokens made no contractual promises, but he thinks the $10,000 worth of tokens he bought will rise in value. “I’d buy more” if the price dropped enough, he said. “This will be the technology that will be the best of its kind.”

And Matthew Roszak, one of block.one’s early investors, isn’t worried about the tokens. “I don’t think it’s fair reading into that language too tightly,” he said. Given the “regulatory environment is as clear as mud,” he said block.one needed to write something to provide the broadest protection possible.

Block.one’s EOS deal is now about three times as large as the next biggest coin offering. It plans to keep raising money until next June, and is on pace to raise “well north of” $1 billion, according to Pierce.

The company will use that revenue to invest in companies that could develop the EOS code into products.