99% of ICO’s are complete garbage and I will tell you why.
Companies are raising millions in minutes, that literally only have a white paper.
Now from the outside, it might seem like the holy grail of raising capital but think again.
ICO’s are not about raising capital.
ICO is about creating network effects and adding value to the ecosystem. = + net utility.
Not everyone can do an ICO
ICO Formula. A simple three step check list for you to use.
#1 What is your Token Utility?
Your Token that you are creating MUST provide a utility in your ecosystem, and increase network effect. Your token must be integral to the business model of your startup. Without a utility of your token, you can not do an ICO.
Ask yourself this questions. If you take away your token does your business fall apart? If the answer is no, then you don’t need a token. There are only a few cases that make sense to tokenize.
Majority of companies will not and do not need a token
Hence why most ICO’s are garbage.
They are raising money with a token that has no fucking value.
People literally just giving money away to nothing.
Your token in the ecosystem must have proper cryptoeconomic models and consensus models. This ensures the security and usability of your token to be valid. (MOST SKIP THIS STEP)
This step requires enormous amounts of due diligence from the brightest minds out there. There are only a few in the world who understand this.
Once again most ICO don’t do this…
If you do raise money, if you are one of the few that actually makes sense to ICO, then your first priority is the security of your token for your customers.
At this stage, you become a red target for hackers to attack you and trust me they will. Every week people are getting hacked and millions are stolen.
Questions to ask yourself.
Where are you storing your private keys?
How are you protecting your wallets?
How are you protecting your customer’s tokens on your ecosystem?
These are serious questions that need answering.
Now I have only touched on three points.
There are much more.
I am not here to shit on ICO’s.
I love them! I think they are revolutionary…
I might do one, one day too!
But, I am here to inform you that, ICO’s are much more than fundraising, they are about building networks and new mathematically ecosystems
I know we will see an evolution of ICO’s going forward
From Crypto equity ICOS
To Rev share ICOS
…And many different models
But as of today companies that are raising money with a token that has no utility is a just pure scam.
So be warned!