Lately, there has been a lot of confusion about what is ICO? What kind of companies can use ICO? What goes into launching ICO sales? Are there any regulations? Etc.
Initial Coin Offerings (ICO) is a smart way for startups or companies in need of funds. ICO offers quick mechanism for raising capital which otherwise seems to be a tough job with venture funding.
Given the fact that blockchain technology is new, so you won’t find much of information or useful facts required for clear understanding. With ICOs coming every day, companies are getting better insights on do’s and don’ts checklist.
Last year, we have seen boom of blockchain and ICO where around $4 billion was raised by startups. This stirred excitement and also opened doors for scammers.
Although you may have technical knowledge of what is blockchain and how the ICO sales work. But, there are certain preventive measures which you can take as a contributor or an investor.
There are few things which you can ask yourself to differentiate between a legal ICO and a scam.
1- ICO team members experienceDo seek proper details of the team members and their respective fields experience. ICO teams are comprised of developers, lawyers, designers etc. you need a solid chunk of your time for vetting the team members’ profiles. While in the process of digging, there are chances that you will find some red flags.
LinkedIn and Twitter are good places to search for the team members. Don’t just rely on their Twitter accounts. Go one step further and check their LinkedIn profiles. Read comments, follow threads and scan the content they share and the people they follow.
Over LinkedIn, do check past experiences, recommendations, connections, and activities. Fabricated online personas are common these days if you find anything suspicious it probably is.
2- Funds Utilization - Whitepaper documentationA clear outline in the form of a whitepaper is provided along with the project before an ICO sale initiation. This gives an investor overview of what company does, how it operates and if it’s stable enough. Smart contracts and type of token are also listed in the whitepaper.
If an ICO delivers little information about allocation of funds, that’s another sign of ambiguity and scam.
3- How blockchain will solve the problem?ICOs provide information in the form of use cases that how blockchain will propose a solution for a certain problem. After reading use cases, an investor can identify why blockchain was needed for a particular venture.
If you can’t find any reason blockchain or the tokens of any help, this is sketchy.... Read More
Crowdfunding through ICOs was all the rage in 2017 and for a good reason; it allows startups and entrepreneurs raise funds for keeping their dream projects up and running. Without going through complicated and time taking legalities, ICO is a quick way for raising capital.
It’s knowingly being said, ‘a goal without a plan is just a wish’, same implies for ICOs. Although in the last year, around $4billion were raised through ICOs and more is expected in 2018, there still is a space for industry standards to follow.
According to news sources, $6.3 billion has been raised in the first three months of this year, which is a lot more than the whole funding raised in 2017. Common perception of ICO platform as a controversial fundraising method and it will soon be extinct, now seems highly overrated with that much of investment in ICOs.
Looking forward for participation in an ICO or want to launch one? Here are few tips which will help in making up your mind.
Whitepaper - Define Your Goals, Plan WellLike any other business project, ICO has its own goals, and objectives. Usually, this is done through whitepaper, hire whitepaper expert who will structure and narrate each and every phase of the ICO in detail. This gives investor confidence and brief understanding regarding the ICO project.
Also, participants of the ICO should get to know what’s the problem and how it will be addressed through an ICO. This comes along with a roadmap, a document which gives the timeline of the ICO, when will the presale starts and ends? Live ICO dates and milestones.
Highlight Team of Professionals, Build CommunitySuccessful ICOs are composed of team of professionals dedicating their time and effort on the ICO project. They have knowledge and experience much needed for launching an ICO. An ICO website should mention profiles of team members along with their social accounts, this builds trust.
Community building is another step towards launching a successful ICO. Socially activate blockchain enthusiasts long before launching the pre-sale. This helps in generating social buzz and traction for ICO.
Popular Ways for Setting Price PlansThere are certain ways which are followed in ICOs price plans. In ‘no fixed price’ plan, participants can buy tokens as a contribution without any fixed pricing. Whereas in ‘fixed price’ tokens price is fixed and they can only be traded after freezing period.
Dutch auction is another way where initial few tokens are the most expensive and as the ICO sales comes to its final ending, price decreases with the passage of time. And lastly, participants will get the best possible price for the purchased tokens.... Read More