Initial Coin Offerings Are Setting Capital Free. That's Huge

As we grapple with the potential future of crypto-tokens and related developments, Wells' volume - and particularly the way he thought about the future - bears closer consideration.

What we do know is that one feature of this technology is already triggering a societal and economic shift before our eyes: initial coin offerings.

Access to capital for risky ventures is a key constraint both for the development of individual firms and for our economy-wide process through which new technology reaches the market.

In the 19th century, before there was a boom in industrial development projects, we built a lot of railroads in Europe and the U.S. The legal form varied somewhat across jurisdictions, but every country that made progress in raising capital did so through some form of Joint Stock Company - liability for investors was limited, and ownership shares could be traded in a relatively efficient forms.

If there are barriers to entry into venture capital, as seems plausible, it is fairly straightforward to reason that there are very high returns to capital in this sector, at least on average and over a sufficiently long period of time.

Predicting a limited future for a new way of raising capital today is rather like hearing about the properties of radium in 1898 and remarking, "Is that all it can do?".

It should not surprise us if, in our usual empirical and haphazard way, we find a path along which regulation can support more decentralized and lower cost ways of raising capital.

If better access to risk capital lies in our future, what can we say about when this might happen?

In the end, some relatively prosperous countries - this could include the U.S. or perhaps smaller countries with less of a stake in the existing global financial system - will end up with a better way of raising capital and, most likely, an associated change in how corporate governance operates.

The way capital finds and supports opportunities around the world is not just changing - it has already changed.