Bitcoin Critic Mark Cuban Backs Coinbase Employee’s Token Fund

Is Mark Cuban having a change of heart regarding the cryptocurrency space? The billionaire entrepreneur and investor said recently that he wants a slice of the sector despite saying that bitcoin is in a bubble.

According to reports, Cuban is investing in 1confirmation. It’s headed by former product manager at Coinbase and Runa Capital principal, Nick Tomaino. Launched on the 22nd August, Tomaino is seeking to raise $20 million for a fund that will invest in cryptographic assets.

The company is already attracting early backers. One of which is bitcoin critic Mark Cuban.

Bitcoin is in a Bubble

Earlier this year, Cuban took to Twitter to claim that the digital currency was in a bubble. At the time, bitcoin was trading around $2,900. During his tweets, he said:

“I think it’s in a bubble. I just don’t know when or how much it corrects. When everyone is bragging about how easy they are making $=bubble.”

After his comment, the price of bitcoin dropped, which seemed to confirm his opinion that the digital currency is in a bubble. Despite this slight drop in price the currency has continued to scale to new heights. At the time of press, on the 22nd August, bitcoin is trading above $4,000 at $4,079.

Sees Potential in the Blockchain

Despite his criticism toward the cryptocurrency, Cuban believes the blockchain holds great potential.

At the time, he said:

“I think blockchain is very valuable and will be at the core of most transactions in the future. Healthcare, finance etc all will use it.”

More recently, Cuban restated his believe in the blockchain.

“I have always looked at blockchain as a foundation platform from which great applications can be built.”

What is 1confirmation Setting Out to Do?

1confirmation has been created to make initial investments amounting to $100,000 and $500,000. It will put these in a range of SAFTs (Simple Agreement for Future Tokens) and SAFEs (Simple Agreement for Future Equity), which are designed to aid investors to buy tokens prior to an ICO.

It then aims to help those companies develop their product rather than investing in ICOs.

The ICO Craze Gains Momentum

In the first six months of 2017, more than $1.2 billion in cryptocurrency had been raised through ICOs. This outpaced venture capital investment in blockchain and bitcoin companies, according to Autonomous NEXT. At the time, Charles Hoskinson, ethereum’s co-founder, said they are ‘a ticking time-bomb.’ He added that as a result, there was now ‘an over-tokenisation of things.’

Several months later, in August, and that figure now amounts to $1.8 million. This is according to CoinDesk’s ICO Tracker.

As such, Tomaino’s fund follows that of others who are keen to start funds to invest money into digital currencies. Of course, that’s not to say that some ICOs aren’t scams or that they aren’t targeted by hackers.

Enigma ICO Hack

Recently, it was reported that as much as $500,000 in ether was stolen from supporters of the Enigma blockchain project.

Following a security compromise, hackers gained control of the project’s website domain, one of its Slack administrator accounts and its mailing list. Enigma released a statement, saying:

“At this time, the Enigma team has retaken control of all compromised accounts, including the website. Some pages will remain deactivated for the time being while the team works. Please continue to be vigilant and check our communications across ALL channels. Do not send any money or personal information to anyone.”

Interestingly, around the time that CoinDash experienced a hack during its ICO, which resulted in $7 million of ether stolen, Can Kisagun, the co-founder and chief product officer of Enigma, said his company had a simple solution to preventing similar attacks.

In a report from July, Kisagun said:

“Hackers got into the backend of the site and changed the address.”

As a result, investors sent their money to the wrong ethereum address. At the time Enigma’s solution was to hard wire the address of the token sale contract into the ethereum or bitcoin blockchains when it was getting created, according to Business Insider.

Unfortunately, such a measure didn’t prevent hackers from gaining access to over $500,000 in ether from Enigma supporters. No doubt this will be a significant blow to the company who has become a target from hackers like so many other ICO funds.

Parity Gets Targeted Too

Smart coding company Parity has also been targeted by hackers. On the 19th July, shortly after the CoinDash hack, reports arose that it had suffered a security breach. Data from Etherscan found that more than 150,000 ether was stolen. At the time this was worth around $35,000.

On the organisation’s blog, the company listed the situation as critical. As a result, users were urged to move ‘assets contained in the multi-sig wallet to a secure address.’

Cuban’s Foray into Cryptocurrencies

Yet, despite the number of hacks that several ICOs have experienced, they still attract a crowd. And no doubt they will continue to do so.

As a result, Cuban is expected to continue his journey into the digital currency space. Aside from 1confirmation, the billionaire entrepreneur will be investing in tokens sold by his portfolio company Unikrn. He is also planning to invest in a third digital currency-related fund in the future, reports Bloomberg.

Cuban added, though, that it’s hard to establish any value to bitcoin.

“If everyone continues to tell their grandparents, cousins and co-workers to buy, the price can go a lot higher as there is a definable, finite amount, but if the number of buyers dry up or there are a few massive sellers we could see under $1,000 again.”

He concludes:

“None of this has anything to do with the applications that can be built with blockchain. The question is whether great companies can be financed and built and I think the answer is yes.”

It remains to be seen what else is in store for Cuban, but he appears adamant that the blockchain is something that needs to be looked into further. The fact that he is backing a crypto fund could see him eventually backing bitcoin in the future.

Featured image from Shutterstock.