Initial Coin Offerings are a type of fund collection that makes use of digital currencies. The basic function of ICO works in a way that some cryptocurrencies are bought by the investors, as an exchange for a legal tender or other cryptocurrencies such as Ethereum or Bitcoin. Companies consider these sold tokens as future functional currency units, or at times when the funding goal of the agency meets, they launch their project.
Check Out Also: What is an ICO? The Good, the Bad and the Ugly
Perhaps, the reason why most people appear willing to be a part of this new mechanism is that it enables them to raise easy money since there is no regulatory compliance and intermediaries involved such as banks, stock exchanges or venture capitalists. It offers lucrative potentials for startup companies, in particular. The established business entities are also showing interest as they are positive about the potentials of blockchain technology and want to upgrade their business so that its fully ready when the technology matures.
In general, the ICO space has exploded with new concepts over the last few months. The concept of crowdfunding is new and has led to the digital financial streams taking a new turn. Nonetheless, for any business entity that considers taking a plunge into the ICOs, it is vital that they observe the ICO space with attention. Launching an ICO is not easy, you might get caught up with fraudulent groups and scams.
If you are standing on the sidelines and desire to start your own ICO, here are six important elements you must consider:
Does it suit your Project?
Before you start walking on this road and begin to collect funds via an ICO, think whether the blockchain technology befits the nature of your work. Look deeply and analyze whether the ICO will be a useful way to collect funds or you may obtain more funds through traditional methods, such as seed funding.
The market is dense as there are a lot of projects out there that are seeking contributions. In such a fierce state of competition, you must have a unique project, a perfect team and a proper plan in place. Only then can you expect to attract investors and make your ICO turn out to be a great success.
Work on satisfying due diligence
Every investor will examine your project and evaluate if it will bring them a good investment opportunity. This is the process of “due diligence,” and if you are willing to make sure that your project fits the criterion, find out the priorities of that investor. It may ask for you to check out their social media accounts and point out the aspects that appeal them as well as the ones that may turn them off.
Once you determine the elements of appeal for these investors, you may then work on integrating these into your project. For example, you can hire a professional to work on your white paper. There is no harm if you go an extra mile to satisfy the requirements of the potential investors. One of the best ways to prepare contributors is to ensure that your development team produces a proof of the project or they may release an early version of your product.
How do you plan to implement the tokens?
When you step into the arena of ICO, it is necessary that you have a solid token plan. It means that you have to determine the economies of your token such as the number of tokens and distribution plans plus what function will it serve on your platform, service or product. Below are some other things to consider in this regard:
- On what date will you launch the tokens?
- What is the maximum cap on tokens?
- What are the incentives for initial contributors?
- Is there a refund program in place if the ICO fails?
- What number of tokens does the team receive?
- How many tokens will go for internal developments?
Countless public queries
Cryptocurrency itself is in the young stage. A majority of contributors are hesitant and work out their due diligence to figure out the worth of a coin before investing in them. Their investigation is justified, and it also means that you must have a solid theory to address all probable questions. Be prepared to respond to all the queries about your token, the project, and outlook for the future. Verily, an exceptional customers service will bring benefits for you in the long-term.
How to stand out?
This market is young but crowded, and for you to make a lasting impact in here, it is mandatory to have a strong product, professional association, exceptional promotion, and a responsive team.
Do not underestimate the aspect of marketing. It may sometimes involve team expansion or hiring an external agency to look after specialized operations. A professional agency can help you with public relations, web development, social media management, and some other marketing functions.
As discussed earlier, you will need to establish the token details, provide market analysis, technical overview and at times, you may have to provide the information on the team.
Safeguard against hackers
The threat of hacks in the industry is also rising with the increasing public interest. It is important to have a smart contract in place so that you can steer clear from the transaction errors and ensure the security of your tokens. It will also enable you to transfer the cryptocurrencies to your investors safely.
In light of these considerations, it is apt to state that ICOs can turn out to be the new face of the financial sector. The fact that most businesses are considering their application is proof that it is moving forth with great momentum. Let’s take the example of the AutoBlock. It is a digital automotive platform that caters to the car enthusiasts across the globe and allows them to carry out their transactions using AutoCoin. They conduct negotiations and work on a legitimate exchange of vehicles. It is proof that ICOs can offer real utility if they bring ideas that are creative and if they control all negative variables.
So, if you are an established business or a startup looking to dive in the pool of ICO channels, it is vital that you take care of all scams, offer distinct product/service and test your entire system before you pull the trigger.
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- 6 Things You Should Think About Before Starting Your ICO - November 14, 2018