How to start ICO
To paraphrase an old Chinese saying about planting trees – the best time to launch an ICO was a year ago, now it is the second best time. The first crowdsale was held in July 2013 by Mastercoin. Since that initial sale, the popularity of this fundraising mechanism has skyrocketed. There are no official statistics on how many crowdsales have happened, due to the absence of a mandatory registration or official aggregation. An ICO launch still remains quite a democratic process, where you can announce your crowdsale on your Twitter feed. This is great for giving burgeoning ideas a chance to succeed, but makes keeping an exact count difficult, if not impossible. Tokenmarket has 388 tokens listed – and that’s a curated list. We can assume that it represents around a tenth of all the tokens. At least 400 ICOs have been created so far in 2017. By the end of August 2017 ICO coin sales for the year were worth a combined $1.8 billion, more than ten times as much as in all of 2016.
What does this mean to you as a potential contributor?
It means that people have started thinking about ICOs as a way to make fast money. We have lot’s of inquiries for our services from people who don’t even have an initial concept, but they have a pretty good idea about how much money they want to raise. There is a lot of advice on how to make diligent contribution decisions – let’s look at ICOs from a slightly different angle and consider the following: Whitepaper. Before joining the ICO make sure you understand the idea – read the whitepaper and see if it makes sense. If you don’t understand it, don’t always blame your limited tech or financial knowledge, that may be a sign of a bad project. Whitepaper is written for you, the potential contributor, and if it’s too inaccessible it might mean that they don’t want you to figure out how it works so they can hide the absence of a real working idea behind pseudo-scientific language. Press. If the company has received good press from a reputable news outlet, that usually means that the publishers have already done some background checks to make sure that it isn’t a scam – otherwise they risk their reputation, career, and relationship with the media outlet. This is not 100% foolproof, but an important point to consider. To modernize an old farmer’s adage – don’t put all of your money into one Token, even if the company is legit and trustworthy. Diversify your portfolio.
What does this mean for you as an entrepreneur who wants to launch an ICO?
Be ready for your tokensale to pass unnoticed in the wave of tremendous competition.
New ICO announcements come on a daily basis and your idea has to be very strong to stand out and win the trust of the community. Start announcing your intentions early. Let your idea grow with the community. Update them on every component of your progress:
- Launching of the website.
- Opening of Slack or YouTube channel, Facebook or Linkedin page, etc.
- Creating the smart contract.
- Auditing the smart contract.
Your marketing strategy needs to start the day you decided to launch your crowdsale, not two weeks before the ICO date. In many cases a tech team is so excited about their project that they forget they need to prove it’s legitimacy and worth. We get dozens of emails everyday from CEOs, founders, and community managers asking us to take over their marketing campaign 10 days before the ICO’s official date – this is reckless and stupid. Remember that all of your preparation activities need to be aligned. Communicate honestly, let them know if you are still working on your whitepaper, or if you found vulnerabilities in the code that are being fixed – this will give participants a look behind the curtain, and instill a sense of collaboration that will win their long term trust.
Expect that your idea will already be there.
This already happened in the medical sector, where dozens of companies simultaneously worked on similar algorithms for the secure storage of medical data. By the time you’re ready to start the ICO preparations a similar concept may be launched by a competitor. Be ready to modify your idea on the spot by coming up with competitive advantages. It’s important to stay alert during your venture. You should continuously be checking the new Token announcements on the listing websites and ANN threads on bitcointalk.org. The sooner you see that there’s a similar idea, the sooner you can alter your platform and make it unique, or at the very least market it in a slightly different way.
Beware of government regulations.
Keep up with all the new laws and regulations and make sure your project complies. In July 2017 the U.S. Securities and Exchange Commission (SEC) indicated that it could have the authority to apply federal security laws to ICOs. The Canadian government is also working on regulating ICOs. Several weeks ago the People’s Bank of China officially banned ICOs, citing that they were disruptive to economic and financial stability. South Korea’s financial regulators stated they will ban raising money through all forms of virtual currencies. It is very possible that the rise of crypto fundraising instruments will be hampered by the wave of new financial laws aimed at restricting uncontrolled crowdsales. The situation as it is right now won’t last – so Carpe Diem. Seize the opportunity to innovate, create, participate, and contribute to making the world a better place – and become a little richer along the way.