possibly having learned from its experience with digital cameras that timing is everything, Kodak is n’t bequeath to let the boom in cryptocurrencies pass it by. The 130-year-old photography and film company plans to enter the digital currency and blockchain business, albeit reasonably indirectly, with hopes of breathing new biography into its shares .
here ‘s what you should know about the most interesting fib in finance today .
All about the KODAKCoin
Buying and selling the rights to use images and video is a big business, worth equally much as $ 14 billion a year, according to estimates by Shutterstock ( SSTK -2.19 % ). Kodak wants a piece of it : It announced that it will develop a platform for managing and selling the rights to pictures and early contented.
In simple terms, Kodak will create an double and licensing marketplace ( KODAKOne ), and take a slice of every transaction for itself. But quite than build this clientele in a traditional way, Kodak is obviously going out of its way to use the “ blockchain ” to do it, according to its imperativeness release :
With KODAKCoin, participating photographers are invited to take part in a newly economy for photography, receive payment for licensing their shape immediately upon sale, and for both professional and amateur photographers, sell their work confidently on a impregnable blockchain platform. KODAKOne platform provides continual network crawling in order to monitor and protect the IP of the images registered in the KODAKOne system. Where unaccredited use of images is detected, the KODAKOne chopine can efficiently manage the post-licensing work in order to reward photographers .
In other words, Kodak wants to do with blockchain what, say, Shutterstock does without blockchain. Photographers will be able use the KODAKOne chopine to license their images to people and businesses that want to use them, and transact in KODAKCoin rather than traditional currencies .
In theory, people who want to buy the rights to images will happily go through the add measure of converting their dollars or euros, for case, to buy KODAKCoin, which they can then spend to license images and creative content from photographers. Photographers will obviously embrace the theme of getting paid in KODAKCoin, which they can then convert into their currency of choice .
There ‘s fodder for agnosticism in this frame-up : KODAKCoin merely adds an extra step in the process of buying and selling the rights to content, making it more difficult, not easier, for buyers and sellers to meet .
Platforms for buying and selling the rights to photos and videos already exist, led by Shutterstock, iStockphoto, and AdobeStock. Shutterstock ‘s regulative filings reveal that it has 300,000 contributors. In the first nine months of 2017, the company reported that it generated more than 128 million paid downloads across its network.
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bilateral networks are notoriously unmanageable to build. Convincing photographers who presently enjoy getting paid in dollars on Shutterstock to join KODAKOne and get paid in KODAKCoin with uncertain value seems … well, a small difficult. But investors do n’t seem to care, if only because they ‘re hyper-focused on the son “ blockchain ” to notice that the KODAKOne platform is equitable a more-complicated interpretation of platforms that already exist .
But that’s not all!
possibly the most amusing separate about Kodak ‘s plunder into cryptocurrency is that it is n’t stopping with its own digital currency. Kodak besides plans to get into the commercial enterprise of mining early cryptocurrencies, such as bitcoin .
Bitcoin mining, the process of creating newfangled bitcoins, is a ferociously competitive business. Bitcoin miners buy expensive electronic equipment that is specifically designed for the determination of mine cryptocurrency. These “ mining rigs “ cost a set of money up movement, and keeping them active voice requires a lot of electricity to ability them and keep them cool .
not surprisingly, these rigs are normally set up in Iceland and China, where electricity is brassy and bountiful. After all, when everyone is using the like carriage to mine digital currencies, a competitive advantage can entirely be derived by finding the cheapest world power reference .
As it turns out, electricity happens to be brassy and ample in Rochester, New York, where Kodak is headquartered. The electricity is brassy for Kodak specifically, because the ship’s company has a exponent plant on-site that, according to the BBC, can “ power each [ mine ] rig for four cents per kilowatt hour, which is importantly cheaper than running a swindle at base. ” For perspective, the average cost of residential power in the United States is approximately $ 0.12 per kilowatt hour .
But this is where Kodak ‘s propose business line takes another curious turn. Rather than risk its own capital on mining rigs, Kodak wants investors to pony up the $ 3,400 cost of the rigs in rally for half of the trailer truck ‘s bitcoin production over a 24-month period. Its projections, already questioned by many conversant with the business of mine cryptocurrencies, call for the investor to receive $ 9,000 over the life of the 24-month investment, frankincense generating a net profit of $ 5,600. If such returns were potential, one wonders why Kodak would tied bother to let others parcel in the profits, given that the supposed advantage is Kodak ‘s low-cost power source.
If you ‘re confused by all this, simply remove the “ blockchain ” label from Kodak ‘s plans and you ‘ll see them for what they are. Kodak ‘s broth is surging because the company is creating an unnecessarily complicated net for buying and selling stock images, and, in a carousel way, entering the low-return utility program business through a questionable bitcoin-mining opportunity. Buyer beware .