CTO 103 — S02: Blcokchain — Chap03: Initial coin offering(ICO)

CTO 103 — S02: Blcokchain — Chap03: Initial coin offering(ICO)

Initial coin offering or ICO is the hottest topic about blockchain right now. It stands for initial coin offering, right, it sounds like IPO(initial public offering), but it creates a much better form of an investment for the general public and founders. in an ICO company worth is mapped on a certain currency which represents valuation of that company but unlike IPO in ICO, investors won’t gain share and won’t have any decision making power for the company. So, IPO is not good for VCs or Angels but it’s good for the general public because just like crowdfunding everyone can contribute to a very early business as much as they can and get the reward based on the success of the business, Sounds disruptive doesn’t it?

Successful ICOs have gained 500%, 1000%, 10000% or even more valuation, you can always check some of the most successful of them on this list. Apart from its potential for investors, it’s very crucial for any founder, CEO, CFO and especially CTO to know about ICO and how to tap into this method of funding the project and the company. So, how to run an ICO campaign:

1.Idea and setup: You have to think how does blockchain helps your business, is there any logistic, transaction, supply chain or any sort of activity that tokens can facilitate it. All kind of businesses are involved with them so for sure you can have ICO in any sort of business you are working.

Then you need to register your token business, make sure you get some financial advice linked to your ICO.

2.White Paper: you have to put your idea and all different aspects of it in the white paper, it’s some sort of mini business plan. You should explain:

  • Product: What are you making, its benefit, its reliability and security and other aspects.
  • Purpose: What problem is being solved? How do you solve it? What kind of good or services your token can be exchanged with?
  • Specialty: How is this token different from all the others?
  • Ecosystem: How do you build an ecosystem around your product or service that the token can be exchanged for? How does one buy, sell, hold, transfer the tokens?
  • Technical: You should mention programming language, algorithms, and infrastructure that it will be built upon.
  • Team: Most importantly you should mention all kind of people who are involved, the history shows this is the biggest determiner of the success, all roles such as developers, advisers, marketers, pre-sale investors users, merchants should be mentioned.

Speaking about legal issues, terms and conditions, token safety, customer comments and the other sort of materials which gives better insight to investors it helps. Bear in mind it should be simple, so don’t use a lot of technical jargon and don’t make it very large as well.

there are plenty of white papers out there simply name any crypto or ICO plus white paper in google and you will access to their pdf, read some of the successful ones to get some idea how they work.

3.Issuing the tokens

So, first of all, you gotta choose your platform:

Ethereum: the most established and the most used.

Waves: In my opinion is much faster and easier than Ethereum.

Bitshares: Just like Waves it has a very easy learning curve. But the concept of delegated proof of concept in Bitshares doesn’t seem to let this method to be a good option.

So in any of these cases, you gotta create the tokens and here we are you are ready to sell.

4. Campaign

You can start campaigning even way before you settle rest of the stuff and set the sale date on a time that you assume rest of the stuff are done. The goal is to achieve your fundraising goal in the shortest time.

A common method for campaigning beside running social media, PR and community involvement is bounty campaigns. You can reward the contributions for your campaign with some free coin, this attracts lots of involvement from the community. Bitcointalk, Telegram, and Slack channels are normally popular places that blockchain community involved with, so it’s best to create a bounty campaign for these networks along with popular networks such as Facebook and Twitter.

5. Selling

So, the most important issue here is the legal issue, talk to law firm focusing on ICO or partner up with them even before the time of writing the white paper. For selling all it takes is just a Bitcoin or another cryptocurrency address which people can transfer you some coin and buy your token but make sure you provide as many methods as possible for the purchase. There are platforms that accept fiat money for cryptos which help lots of newbie investors partnerships with these platform makes your ICO being announced and marketed to the cryptocurrencies communities.

Bear in mind there will be lots of costs for the ICO and most of the costs will be linked to the marketing of your ICO to investors. Expect to spend at least $50k to a $100k on brand and online marketing, PR, and communication. Legal cost can be large as well. Most serious projects will raise some sort of pre-ICO funding to finance the marketing costs linked to the launch of an ICO.

Here I list some resources you gotta involve to have a successful ICO

Participation in forums and chats:

getting listed in:

Getting featured in press:

My last advice is to keep checking post in medium and key figures on blockchain scene to get a better understanding of best trends in this volatile market.

 

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