What you need to understand about an ICO

ICO stands for Initial Coin Offering. These days you can’t really avoid seeing an ICO listing on social media. With the rapid increase of cryptocurrency adoption the rate of ICO development has skyrocketed. At the time of writing this there are approximately 1340 ICO’s available and more springing up every day. It is safe to assume that many of these will not make it past 12 months and it also safe to assume that many are scams otherwise known as ‘pump and dump’ schemes.

ICO Live listing and Feed

Companies and Investors are aggressively listing ICO’s in a bid to get into developing cryptocurrency ecosystems. Initial Coin Offerings have the promise of a lot of money and although extremely volatile have attracted very large investors to the table such as JP Morgan and the like.

What makes an ICO such a hot item on the investment radar? Well there are a few underlying benefits to an ICO start-up than any other traditional business can offer. Here are the key benefits that we will elaborate on further:

5 Reasons for starting up an ICO

  1. Cost of operation
  2. Adoption
  3. Evolving Horizons
  4. Potential Returns
  5. Mass Marketing

 

Cost of Operation

The cost of deploying your own ICO is technically cheaper and quicker than any other traditional business model can offer. ICO’s take advantage of the blockchian whether it’ their own or BaaS like Ethereum’s or their own proprietary model.

Most ICO’s at the moment and according to our research use the Ethereum blockchain. It allows for scalability and ease of use. The Ethereum Blockchain allows for DaPP development – Decentralised Applications.

The total cost of operations related to these start-ups if planned properly and deployed correctly can quickly yield an ROI in a significantly less time frame than traditional business models. We find that the initial investment is recuperated in a shorter time frame using the developing growth of the cryptocurrency.

Adoption Rates of ICO

The adoption rates of most ICO’s is relatively quick as we are in the early adoption phase of cryptocurrencies. This implies that because of the excitement and the development of the blockchain technology and the generation of tokens that can yield potential long term AND short term value excites the public and stirs participation.

When it comes to ICO adoption we find that the science of crowdfunding using cryptocurrencies becomes a highly effective and motivated medium of on boarding new ICO startups into the crypto-economy. This is especially true when we see the effectiveness of pre-launch token giveaways such as bounty awards.

Speed of Capital Aqcuisition

An ICO is definitely one of the very few ways a business can scale almost immediately from the beginning of its launch. An ICO is more a technology start-up than anything else. This means that in the world of evolving technology we find the adoption rate rapidly increasing and the time frame of public participation becoming shorter.

Click here to read more on Adoption Rates using the Technology Adoption Curve

Return on Investment

ROI or Return on Investment is very promising provided that proper planning and execution is in place. Some returns have been incredible while other ICO start-ups have crashed in as a little as 6 months. This means that like any good business model, an ICO needs to be based on a solid understanding of its market and the challanges it will solve.

Here is a graph of current ROI of a few ICO start-ups.

If you believe you can solve a real world problem then perhaps starting your own ICO is a good idea.

Mass Marketing

Mass marketing and hype is at its highest right now in the ICO space. We have specialized services [for a healthy fee] that will generate a lot of social media interest and participation in your ICO. This together with the already anxious market wanting to invest in the next BIG start-up. Market sentiment is very bullish right now and will likely continue in to the future.

Here is an example Airdrop scenarios used on Telegram to get people into action. Airdrops are very active on Twitter as well. Facebook has banned them but Instagram continues with them. They are an excellent way of informing the public to invest early.

Is it hard to create an ICO

Yes. It is very hard to create an ICO that will be successful. There are many components and factors that go into an ICO and for most people it is too much work and commitment. Several key components that go into an effective ICO may not guarantee its success either.

Many important components must come together to form an ICO. It is worth noting that different countries call for different regulations and legal compliance. Also some countries are excluded or are being excluded from ICO participation such as China and the USA. Many long hours of planning will be required and the following list will provide some insight into the requirements needed:

  1. Business plan
  2. Whitepaper
  3. Correct Team
  4. Compliance with regulations
  5. Legal
  6. Advising board
  7. Blockchain technology to use
  8. Token cap and value
  9. Marketing
  10. PR from non-stop participant communications
  11. Strong IT staff
  12. Investor backup

Closing

Many ICO’s are not very well structured and are created with the intention of quickly taking in mass funding but with the intention of dropping the proposed project. We have seen this happen numerous times. The landscape of ICO start-ups is full of investment worthy business opportunities and also nonsense. Investing in an ICO is exciting and potentially profitable but also risky.

Read here on how to evaluate an ICO using the MOAT method