Key Considerations Before Launching Your Blockchain Initial Coin Offering (ICO)

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The pathway to your ICO in Ethereum, Hyperledger, or a custom created blockchain is paved with a large series of technical, financial, economical and strategic considerations. This article attempts to bypass any hype on the topic, and instead, present a straight and informative path to your successful Initial Coin Offering.

There are many legitimate cryptocurrencies. New ones are launched daily. Some are offshoots of various blockchain platforms. Some are written in custom code, like Monaco VISA Card, and Bank of America’s Ripple, but a large number of them are leveraging one of two popular open source systems…Ethereum and Hyperledger.

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Ethereum is a decentralized platform that runs smart contracts: applications that run exactly as programmed without any possibility of downtime, censorship, fraud or third party interference. Hyperledger is an open source collaboration effort created to advance the cross-industry blockchain technology by identifying and addressing important features for a cross-industry open standard for distributed ledger technologies (DLTs) that will transform the way business transactions are conducted globally. It is a global collaboration, hosted by the Linux Foundation, including leaders in finance, banking, IoT, supply chain, manufacturing and technology. Hyperledger is running on an open source system entitled Fabric 1.0.

Your choice to create your project in one of these existing platforms should be predicated upon the values of using a finely developed open source platform. Great minds from around the world have contributed to these open source systems, leaving a pathway for you to quickly move from your concept, to a fully realized blockchain platform for your Initial Coin Offering.

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There are hundreds of viable purposes for use of a blockchain model with dutiful smart contracts to ensure a comprehensive system of order, consistency, exposure, opportunity, and much more. I do not wish to fill this particular article on Blockchain 101, so if you are desirous of starting at the beginning, https://ethereum.org and http://hyperledger.org are the very best places to start. That, and YouTube. Go to YouTube and search Ethereum, search Hyperledger and search blockchain. When you emerge, you will be conversant in all of it.

For the rest, who are past this exploration, this article is about helping you navigate your path to a successful ICO.

To start your project, it is important to consider the strengths of a blockchain platform:

• Authenticates and Attests to Value

• Transfers Value

• Stores Value

• Lend Value

• Exchange Value

• Fund and Invest

• Insure Value and Manage Risk

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The allure of the Smart Contract is that they lower transactional costs, increase the speed of execution, distermediate and potentially replace contracts. Using them to your concept’s greatest advantage is a key component in deciding whether to use a platform like Ethereum or HyperLedger.

Smart contracts are used in a wide variety of use cases, such as between multiple parties, corporations, groups, or other to becoming a cybercurrency for a specific purpose. Blockchain at its face value, promises to eradicate unnecessary costs of multiple validations, counterparty risks, brokerage fees, and more. Collectively, these constitute 2-4% of revenues for a Fortune 500 company. In a blockchain model, the multiple verification is now replaced with a single validation and single signaling, thereby substantially reducing the costs associated with the a very wide spread of transactions.

Smart contracts create a legal finality that is relatively unparalleled in the multiparty world, by creating a cheaper and more dynamic product with substantially reduced frictional costs.

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Blockchains must be operational. By digitizing the transactions through their complete lifecycle, a business gains efficiency, reduces cost and reduces their risk. Blockchains have costs associated, so a business must ensure that their business model substantially outpaces the costs associated with running the blockchain. A blockchain traditionally launches and runs with a strategy with clearly defined challenges to be met as the company progresses. It eliminates the costs from separate operating systems with market segments and leads to the streamlined future of integrated financial services using smart devices as the point of origin.

As the future technologies are becoming a daily new reality, a blockchain must be equally collaborative with the Internet of Things, cyber-security, AI and conversational agents. Blockchains are launched with a very large number of coins which yield an intraday curve and immediate settlement without risk or expense.

In setting up your ICO, you may wish to use Open Asset Protocol that allows for colored coins, debt coins with a termination attached, or as an asset that may be forwarded under met specifications. Coins may be issued as an IOU for any financial asset, insurance claim or similar. You may allow direct ownership of the coins themselves, as well as atomic cross-chain trading (trading one cryptocurrency for another). As blockchain becomes more advanced and more prolific, we expect all assets and claims to be digital. So why not be a part of the digitization at the early stages? The digitization leads to a worldwide market with substantially greater potential for legitimate commerce than ever before. The coin exchange between the digital markets will also standardize, allowing for faster and easier cross market prospects to come to fruition.

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If you are considering crowdfunding your business or offering, through an Initial Coin Offering, your options are decidedly different when using cryptocurrencies which are paired with blockchains and smart contracts. Your goal in your ICO is to raise money quickly in exchange for your coins, which most commonly will exchange for Bitcoins or real money. Your goal of funding is complete, and the people who purchased your coins, own them outright. If your ICO is backed by a solid proven team and your product is in demand, then an ICO may be a good option for your new or established company. Either way, you have bypassed the highly regulated IPO fund raising, in exchange for a cryptocurrency crowd funding method. Given that the focus in funding an ICO is to help a company achieve their objectives, the investors speculate with substantial risk that the company will come through with the product that they have promised. High risks sometimes lead to very high rewards, as has happened with BitCoin, Ethereum, Mastercoin, WAVES and more. To get your ICO out to the proper audience beyond your own sphere of influence, WAVES, ICONOMI, and State of the Dapps are all great places to consider gaining exposure.

WAVES is a decentralized blockchain platform focusing on custom blockchain tokens operations. National currencies transfer is maintained on the WAVES blockchain through compliant gateway operators. Decentralized token exchange facilitates fundraising, crowdfunding, and trading of financial instruments on the blockchain. Lightweight clients provide an easy installation procedure and a flat learning curve for end users.

The ICONOMI Digital Assets Management Platform is more than just a market place for digital assets. They provide the best experience and simplest method to enter the growing distributed economy. The ICONOMI service breaks down the barriers traditionally encountered by first-time investors in the centralized economy.

With a broad set of unique and intuitive tools for a person of any skill level, it enables users to invest and manage various digital assets or combined Digital Assets Array™ (DAA). The first DAA open for investment is index-based ICNX. This presents a first step towards establishing a network of DAA managers and users.

State of the Dapps – A Decentralized Application (or ‘Dapp’) is a piece of software consisting of a user interface (UI) and a decentralized backend; typically making use of a blockchain and smart contracts. To learn more about creating dapps, subscribe to the EtherCasts YouTube Channel.

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ICOs have self imposed regulations to keep investors secure in their choice to purchase coins in a specific blockchain. These restrictions include escrow wallets, which store community member contribution, and require more than one key to conclude the smart contract, to ensure compliance has been achieved. A trusted 3rd party, separate from the contract usually holds a decision making key.

ICOs are most definitely not for most companies. It may actually be a very bad choice that will cost you substantial investment of your time, energy and financial resources, only to fail to raise the desired sum of money and come out upside down for the experience. Further, the main question you should be considering, is whether the currency that you have created for your business can be used in a valuable way in your business? If that answer is yes, you are well along the way to having a viable option with cryptocurrency. If your business creates a viable demand for your currency, then market speculation, which could work against you and your ICO, could maintain strength as your product supports the currency as a real utility.

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In putting together your ICO, you must consider the external perception of your offering. Traditionally, the investors are going to focus on how you protect their interests, who comprises your team and the goals for your ICO. Your offering must be precise, your team must be fully detailed, and your goals must be very clear and achievable. Stability is always a prerequisite to winning investor’s confidence, so making certain of these choices and picking a team who will stay with the project until their respective goals are achieved are, at a minimum, the benchmarks you must aim for. Your ICO requires a fully realized white paper, which details your entire plan, the problems you intend to better, with clearly defined goals and their timeframes. If you are already at a working and tested proof of concept, then your prototype will become the main focus of your offering, thereby influencing your investors as you might hope.

There are ways to protect your investor’s interests including the potential of offering premiums for the early investors, combined with an escrow wallet for their contributions and a process for returning their funds in the case of a failure. Incentivizing your early bird investors to come in within the first two days, to show substantial momentum out of the gate, is imperative to a very successful launch of an ICO. Consistent in the ICO process is the use of a multi-signature escrow wallet in which all contributions are stored. In addition, it is traditional to allow a couple of the keys to the wallet to be held by people who are not involved in any with the project, thereby adding an additional guarantee for the safety of your investor’s funds.

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Your ability to communicate clearly with your investors and releasing at the proper time of week or year are the two most important criteria in launching successfully. A choice of the proper duration for your limited time offer is important in creating the urgency, and then planning your PR to coincide properly with that launch strategy is essential to the proper mix of variables surrounding a successful ICO. You must continually communicate with your audience to get feedback, which could allow you to make modifications as required during your campaign. Use your social media accounts on Twitter and Facebook to bring information out, and pair these options with continual monitoring and contributing to the forums on Reddit and Bitcointalk. An otherwise successful campaign can derail through the lack of proper outreach.

WAVES behaves a lot like the Kickstarter of ICOs. Anyone can set up a digital token on WAVES for next to nothing, list the token on WAVES’ exchange for discovery by eager investors. You will not control your own token, but you will have saved substantial development costs. If the token is not the company’s main product, then this savings of time and money is a viable consideration.

Using proper counsel is critical to ensure all legal compliance and best practices. This, combined with transparency, consistency and great proof of team and concept will most likely propel your ICO to ever greater successes.

IllusionQuest Studios will gladly help you through these ICO processes, program your systems, smart contracts, help promote your venture and much more. Call us today for a free consultation. 818-788-9700 x1. Or email me directly at brian@illusionqueststudios.com

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