Another day, another potential use case for the blockchain. This time, Chroma Fund wants to use the ledger technology as a means to link startups with crowdfunded investments – though not as one might think of at the first thought of “crowdfunding.”
Reports in TechRepublic Tuesday (Oct. 20) outlined the vision for Chroma Fund to use the metadata that can be found within the blockchain to organize how company shares can be traded and sold.
It’s the ability for the blockchain to provide authentication of data and information that sits at the center of the Chroma Fund idea.
“There is a massive shift in what it means to raise capital and how we think about the idea of investing,” said Mike Merrill, the company’s co-founder. “We’re pushing up against it and I know it’s going to start slow. But once we build up momentum this will be ‘the way things work.’”
The company allows investors to acquire shares of a company in the form of share certificates based on the blockchain, reports said. Those digital certificates are certified by the blockchain technology, making them as valuable as physical items, the TechRepublic article explained.
[bctt tweet=”Chroma Fund lets investors acquire company share certificates based on the blockchain”]
This makes trading these shares more secure and does so through a more trustworthy process. The digital share “is the sacred object that proves your ownership and validates your investment,” explained the firm’s other co-founder Marcus Estes.
Like so many working with blockchain technology today, Chroma Fund is not depending on the success of bitcoin for the company to take off.
“We didn’t presume only bitcoin people would want to use [Chroma Fund] as a crowdfunding tool,” said Estes. “It’s a complicated protocol, but we wanted normal people to understand why they should use Chroma to fund projects.”
According to reports, Chroma Fund only operates in Oregon, as private investors need to be authorized to buy shares. But the company said the JOBS Act helped the company progress, “because it means we can focus on the tech and on the product, rather than waste time figuring out the bureaucracy,” Estes said. The company said it expects changes in national rules that will allow Chroma Fund to open across the country.
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