We have been talking about Initial Coin Offering (ICO) for years, but it has not been until recently that everything that has to do with cryptocurrencies have reached an astonishing dimension. ICOs are just one more aspect of cryptocurrencies, but very important, in the aspect of their birth.
What is an ICO?
An ICO is more like a hybrid between crowdfunding and capital raising.It is the method used by the developers of blockchain technology to raise funds for a new project. Currently, the collection of capital is done by pre-launching a new virtual currency, which is exchanged for an existing digital currency (such as bitcoin and ethereum). This digital currency gives access to the development project once it is launched. In addition, if the project is successful, the first investors will benefit from an increase in the value of the new currency.
Financing a cryptocurrency
In the case of an ICO, what is to be financed is the birth of a new cryptocurrency, in the style of Bitcoin or Ethereum. These are scarce virtual tokens, protected by cryptography, which have a value due to their scarcity and demand. These virtual currencies serve both to make payments in a very economic way and to store value, since there are markets where they are exchanged for real money.
The cryptocurrencies are created over time by a process called "mining". The "miners" make computing power available to the project, which allows the system to work and therefore receives prizes: both the "mined" coins that appear spontaneously and randomly and the commissions they receive when verifying commercial transactions that occur between users of the currency.
When someone decides to create a new cryptocurrency, he first designs it and then implements it through software. Finally, this software is made available to the community so that the miners who support the activity of the same appear.
The whole process has a cost and one way to finance the project is an ICO. The developers carry out a closed-door pre-mining and offer the new virtual currency in exchange for other currencies that already circulate, such as Bitcoin, and which are also interchangeable for real money in circulation. Therefore, an ICO is to offer some initial investors the new currencies in exchange for money. Hence its resemblance to an IPO, although it could also be said that it is very similar to crowdfunding, since it is a community of users who finance a project without intermediaries.
What advantages does an ICO have?
Having the possibility of launching an ICO to finance a project has some advantages. The clearest is that the authors of the cryptocurrency do not have to obtain financing through the usual circuit (banks or venture capital investors). This means that more advantageous conditions can be achieved.
For individual investors, it also has an advantage: to finance very innovative companies directly. The usual channel for financing projects is usually not available to private investors or only for very large capital. Of course, the reason that this possibility does not exist is that there is normally a very high associated risk that banks and venture capital funds normally do not market to retailers but to qualified investors (both for strategic and legal reasons).
Is it safe to participate in an ICO?
There are multiple risks of participating in an ICO. The first is that the project does not go well and the coins that are delivered in exchange for money are worth nothing. It is the typical risk that runs when you invest in a business project , so nothing new under the sun.
However in the ICOs there are other problems. For example that the security of the cryptocurrency is not good enough and someone manages to steal all the money. A recent case is that of DAO, where more than $150 million was stolen, money that investors lost. This risk is not negligible.
Another risk is that this type of operation is not regulated, it is outside the conventional financial system. This does not please governments for several reasons: on the one hand because they lose control of money and taxes; on the other because these ICO can be used for criminal activities (financing terrorism, for example).
What do you need to create your own ICO?
Back up your ICO
Before anything, you must support your ICO with something: a physical good, a service, actions of a company, whatever. At this stage, you design the Whitepaper and the Roadmap of your currency, which must be consistent with your project and you must follow it to the letter to inspire confidence in the investors. This support will be your foothold and your main "seller", since this alone will attract or frighten potential investors.
Design your brand
Since you defined your support and therefore the target audience of ICO, now you must give a name and an aesthetic logo to your ICO. The coins with greater capitalization have attractive names and logos that can easily be identified.
Create the tokens
One of the easiest ways is through Smart Contracts through the platforms Ethereum and Counterparty. You can also create tokens in the Bitcoin blockchain through the Counterparty platform.
Promote your currency
You already have a nice coin with a striking name and an attractive logo, you also have a good project that supports it and you only need people to want to buy it. Although this is necessary, it is not enough to ensure the success of your ICO. There are several very good projects out there that have almost no investment due to lack of publicity.
This is the hardest job and the one that will determine the future of your ICO. You have to invest in paid ads, in a good website, in which the most popular youtubers in the middle speak of your project, in campaigns on social networks, in bonuses for your affiliates, look for "whale" investors who give their support publicly and negotiate with the exchanges to sell your currency, among many other activities. In short, it is a very arduous and expensive task. If you do it right, investors will arrive on their own.
Start your project
You have already sold the tokens and your exICO now cryptocurrency is listed in different exchanges. What you must do at this stage, is to follow the actions that you detailed in your Whitepaper and in your Roadmap to the letter. You must fulfill each of the commitments you made with those who trusted in your ICO and take care of the sustainability of your project and therefore of your currency.
Tips for Launching a Successful ICO
Set achievable goals
Campaigns, as we know, have their precise objectives, likewise an ICO. You are expected to make clear the goals your project hopes to achieve in its whitepaper/roadmap. This tends to increase the confidence of potential investors if done properly.
Make use of ICO tools
A good and credible digital tool can be a game changer in your crowdsale campaign. Several hundred ICO tools exist, but making the right choice is essential in achieving success in your ICO project. CIS is one of the top facilitators, aiding rising establishments in the areas of legal advise, technical solutions, among others.
Build a reliable team of professionals
Undoubtedly, when running and ICO project with a team of knowledgeable and professional individuals, the chances of achieving success is higher. With an experienced, authoritative team by your side, potential investors can easily be won over, while also putting you in pole position to make a breakthrough.
On your website, it is advisable to include resumes and profiles of individuals in your team. Emphasize their previous successful projects and make your ICO more open to scrutiny by adding their photos and links to social media accounts. Once investors have confidence in your team, crowdsale will be automatic.
Secure your ICO
In recent times, there has been a rise in hacking attempts on popular websites and crypto wallets. The theft of over $32 million from Parity multisig wallet by hackers is still fresh in our memories and therefore, securing your ICO is absolutely important. Hackers are likely to attempt all sorts of tricks to gain possession of funds from investors, but with a secure ICO, you can successfully tackle this threat.
Create a PR campaign
Have it in mind that there is fierce competition out there, which could make it difficult for you to gain advantage in the market. However, a good PR strategy can act as a real boost. In this regard, social media and blogs are the major battlegrounds. Your main aim will be to establish yourself as a leader in the industry, while also trying to attract potential investors to your project. Online communities are a great place you can exploit to elaborate on your ICO. Additionally, it would be excellent to hire a social influencer, as this can speed up the process of building online authority.
In conclusion, cryptocurrencies have managed a great deal of success in recent years and this has made ICO campaigns more popular than ever before. With ICOs, companies have a chance to develop their branded products and gain massive profits within a short period. Nevertheless, success in ICO projects is no mean feat and depends largely on an excellent and well-thought-out strategy. With the right preparation and coordination, your crypto-based project is sure to secure a satisfactory amount of investment.
Cyber Infrastructure, “CIS”, offering niche cryptocurrency related consulting, planning and development services since 2012. Our cryptocurrency, blockchain developers are uniquely capable to handle your needs. Some of our well-regarded cryptocurrency services include New cryptocurrency development, multicurrency exchange development, cryptocurrency trading software development, cryptocurrency wallet development, Initial Coin Offering or ICO related services, blockchain based financial and nonfinancial application developments, smart contract development etc. Contact us today to start your Crypto venture.