Blockchain and Cryptocurrency as Opportunities for Financing and Monitoring Startups: The SEED Venture Case

To define cryptocurrency, it is possible to begin with the most famous one: Bitcoin. To properly define Bitcoin, it is necessary to refer to the Bitcoin White Paper named “Bitcoin: A Peer-to-Peer Electronic Cash System” written by its creators under the pseudonym Satoshi Nakamoto (2008).
The introduction of Bitcoin White Paper provides a clear idea about why Bitcoin was created. It was clear that commerce on the Internet had to rely almost exclusively on financial institutions serving as trusted third parties to process electronic payments; while the system worked well enough for most transactions, it was still suffering from the inherent weaknesses of the trust-based model (Nakamoto, 2008).
That cost of mediation related to financial intermediaries increased transaction costs, limiting the minimum practical transaction size and cutting off the possibility for small casual transactions, and there was a broader cost in the loss of ability to make non-reversible payments for non-reversible services; moreover, there was a certain percentage of fraud that was accepted as unavoidable. These costs and payment uncertainties could have been avoided in person by using physical currency, but no mechanism existed to make payments over a communication channel without a trusted party (Nakamoto, 2008).
So, there was the need for an electronic payment system based on cryptographical proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party (Nakamoto, 2008).
As previously briefly seen, it is possible to define an electronic coin as a chain of digital signed transactions, in which each owner transfers the coin to the next by digitally signing a hash of the previous transaction and the address of the next owner and adding these to the end of the coin; then, a payee can verify the signatures to be sure about the chain of ownership. So, what is proposed with the advent of Bitcoin is a system for electronic transactions without relying on trust (Nakamoto, 2008).
Returning a step back, Consob explains the concept of cryptocurrency by splitting the word in two parts: “crypto” and “currency”; then, Consob asserts that cryptocurrency is referred to currencies that are “hidden”, explaining that it is visible and usable only knowing a specific informatic code. This definition seems to be only partly useful, since it could lead to fall in error to read that cryptocurrency has the characteristic of being not visible, when in fact it is in plain sight for most of the currently used and all the widely adopted blockchains.
A significantly better definition is given by Investopedia, which states that a cryptocurrency is a digital or virtual currency that is secured by cryptography, making it nearly impossible to counterfeit or double-spend. Many cryptocurrencies are decentralized networks based on blockchain technology; moreover, a defining feature of cryptocurrencies is that they are generally not issued by any central authority, rendering them theoretically immune to government interference or manipulation.
All these definitions permit to come to a sort of summary definition, that can define cryptocurrency as a digital or virtual payment instrument, that is secured through a cryptographical proof instead of trust, allowing to two willing parties to transact without the intermediation of a trusted third party and nearly totally avoiding counterfeiting or double-spending dynamics.
Finally, before concluding the whole theoretical framework and after a brief description of what cryptocurrencies are, it is necessary to give a rapid definition of tokens, in order to have a clear and complete vision to comprehend the whole case study dynamics. [...]