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It seems ridiculous, but shares of Kodak (KODK) spiked on Tuesday when it announced that it would be launching a venture called KodakOne, an “anti-piracy” service that will use a new cryptocurrency called KodakCoin.
Since the announcement on Monday, Kodak’s stock has rallied up almost 57%.
What is KodakCoin Built On?
Kodak will not be launching its own crypto-coin from scratch.
Like many businesses that have ventured into coins and tokens, KodakCoin will be built on the Ethereum network.
Ethereum is considered a “2nd Generation Blockchain”… It is a cryptographic platform on which other blockchain based businesses can be run by companies, such as Kodak.
In the case of Kodak, that blockchain business will be called KodakOne.
Ethereum’s cryptocurrency, called Ether, which must be used by any business that is built on the platform, has spiked lately, approaching almost $1,300 per Ether. It is up almost 50% in only a few weeks.
The run up in price of Ether may be because word is spreading that Ethereum is the platform of choice for new initial coin offerings, aka ICOs, such as KodakCoin.
Bitcoin, which has become more of a valuable asset than a currency, is considered a “1st Generation Blockchain” because it can only be used for transactions of bitcoins between parties.
ICOs have attracted the attention of the Securities and Exchange Commission (SEC) because they may be considered securities.
If they are formally labeled securities, which seems likely, they will be subject to securities laws. Securities laws can be burdensome because their purpose is to protect investors from fund raising malefactors.
Perhaps this scrutiny is why Kodak is following Regulation 506(c) of the SEC guidelines in issuing its cryptocurrency.
What Does KodakCoin Do?
KodakOne aims to provide a new way for photographers to make money from their digital photos online, while also protecting against piracy.
KodakOne is actually being led by a company called Wenn Digital, in a joint venture with Kodak.
While Kodak will benefit from any success of the service, the profit sharing arrangement only accrues 20% of the profits to Kodak.
As such, it seems kind of nuts that the market cap of Kodak would rise by over $250 million in 2 days…!