ICO stands for Initial Coin Offering. It might sound similar to an IPO, but it isn’t burdened by the heavy SEC regulations that come with that kind of offer. Crowdsale is a more preferred term for an ICO, as it better illustrates its function as a fundraiser. A crowdsale is where future cryptocurrency — tokens- are sold for liquid cryptocurrency, like Bitcoins. Users receive tokens in exchange for cryptocurrency in the hopes that it will gain value over the time.
What are the prerequisites for a successful crowdsale (ICO) campaign?
– Ensuring that blockchain technology is an integral part of your app/platform/system is important. There can certainly be platforms that don’t utilize blockchain technology that can still take advantage of a crowdsale, but this only works if you have a star team of advisors and team members that can hide this flaw behind their reputation.
– Build the team. People are the biggest asset of any company that plans to crowdsale.
What makes a team suitable for an ICO?
A team with an excellent reputation. It isn’t crucial to have an Ethereum developer or a marketer, these services can be outsourced, but no one will rent out their good name to serve your ICO if you are completely unknown. Make sure you have the necessary connections to people who will vouch for you. One of the most trusted listing services, Smith & Crown, looks at your “Public Reputation” and “Reputation Within the Community” before listing you on their website.
The listing service TokenMarket also runs a team background check before placing you among other tokens on their site. As stated on their website “preferable recommendations from a cryptocurrency community public and trusted person.” Reputation is not something that can be created within a month, take this into account before rushing into a crowdsale.
Infrastructure and costs to launch an ICO/Crowdsale.
To give a few examples, here are some quotes we gathered from companies who successfully launched multiple ICOs.
We sent an inquiry for an audit of an existing contract but we never heard back. After several followups we still did not hear from them. This post will be updated with a quote if we ever receive a response. According to the Yesware service that we use to track emails, our email was not opened. It looks like the company is swamped with ”ICO wannabes.” Inquiries and emails are not the best way to contact the company; it’s best to be referred if you want to be considered.
They have also established themselves as a trustworthy company that audits contracts. We also contacted them with a similar request and got a similar result. They never opened our email and never responded.
This is another company that offers a wide range of services, from whitepaper creation to deployment of the contract. They never responded either.
So far the landscape looks like a “closed club” that doesn’t welcome newbies into the industry, which makes sense since their own reputation may be at stake if they take on a potential scammer.
Another company that came up as a google result was CoinFabrik. This was our fourth and last attempt to get a response. We explained that we have a pretty standard capped contract and need auditing services. After three days we received a response from a sales representative with a quote of $15,000 per audit within the time frame of 1–2 weeks.
Using conventional logic we can safely assume that an ICO launching superstar like TokenMarket would cost a good deal more. Industry experts suggest that, on average, infrastructures for an ICO can cost $40,000 — $100,000, despite TokenMarket’s site claiming “running a token sale will cost several thousand dollars.”
This is a sad trend, since ICOs had become a valuable facilitator for companies with great ideas and the communities built around those ideas. If a company had $100,000 they wouldn’t need an ICO in the first place. These artificial obstacles have become commonplace due to the popular demand for crowdsales, as it naturally filters out people who cannot finance the launch of their idea. This comes on top of new government regulations in China and the United States. We anticipate that it will get worse.
So why is it so expensive to launch a crowdsale?
Does it take superpowers to code a contract? No. To be perfectly honest, creating a smart contract based on business specifications is no more difficult than building a simple website or coding a primitive app. There are zillions of samples, tested scenarios, and modules to make your contract happen. It all boils down to what was mentioned above: reputation.
By running your ICO, companies sign their name on your project. They give their vote of confidence. They risk their career in the industry every time they take on a new client. If something goes wrong with your ICO, it can ruin their reputation and put their future investments at risk. It’s the same as having it written down in blockchain, it can’t be altered, edited, fabricated, or reversed, it’s forever. Does it makes sense now?
So what do we do?
We provide affordable services by removing our name from the transaction. This is what we offer:
- Putting together the technical portion of your whitepaper.
- Creating smart contracts, auditing your existing ones, and deploying and managing them during your crowdsale.
- Designing and running your bounty campaign.
- Distributing your press releases within reputable media outlets.
All of these services come with the one condition though: we act as a ghostwriters and never risk our name. We don’t take credit for your success but we also don’t compromise our reputation if you turn out to be a scam. We are not looking for fame, we just want to do our job well. Therefore you will not see any successful case studies on our website, though you may hear about them if you’ve been referred by one of our grateful clients.
We do our best to be reasonable in our costs and we make sure to respond to every inquiry.
Drop us a line!
Originally published at bigbreak101.com on September 19, 2017.