The IBO: The better ICO

MicroDapp
MicroDapp
Nov 4 · 4 min read

Introduction

The IBO (Initial Bounty Offering) was designed as an alternative to ICO’s. It’s cheaper, faster and safer compared to regular token offerings, it focuses on getting a product built over maximizing the amount of funds the company can receive from investors.

ICO’s work by taking funds from backers and giving them tokens in return. If the project succeeds, the tokens that backers received would increase in price over time and backers would profit from the increase in token price. Companies use the funds they received to build their product which increases the price of the token. This is risky as it requires the investor to trust the company enough that they will not steal the funds and disappear.

IBO’s work similar but require funds to be put into bounties instead of directly going to the company. These bounties will go towards developing the product directly. The benefits to this are numerous and I will go in detail later on but let’s analyze the problems with ICO’s further.

The Problem

ICO’s were an amazing discovery when it first came out but after a few years, the problems became very apparent. The idea was to allow anyone the opportunity to get funding from anywhere on earth if their idea was good enough and solved a much-needed problem. This allowed a lot of amazing companies to rise but as late 2016 approached, many scam artists realized that they could just create a website, a whitepaper, an idea that grabbed attention and go directly into an ICO. On top of that, the ERC-20 standard was created, allowing anyone to create a new token with a few clicks.

Early 2018 the average investor figured out what was going on and started to see cryptocurrency/blockchain companies as a risky investment as most projects didn’t deliver and started pulling out. Most of the companies that had ICO’s haven’t created anything to date, meaning that investors lost huge amounts of money.

The last bit of investment was taken out of the Ethereum eco-system towards the end of 2018 and the beginning of 2019. Crypto-winter was created due to a few reasons:

  • Lack of product development and deliverables.
  • Inadequate management of funding.
  • Corruption.
  • Lack of user-centered dApps.

The IBO aims to solve all the problems above and will make sure that another crypto-winter will not occur as well as put blockchain technology forward. I will explain how below.

Enter the IBO

The IBO puts investor funds into bounties instead of giving money to companies in good faith.

The IBO will work with three parties instead of the two that ICO’s use. These three parties are:

  • The investor.
  • The standard bounties contract.
  • The company.

The bounties contract is

How does it work?

The process of the IBO is complex so here is a written step by step as well as a visual diagram below to illustrate.

  1. A company creates an idea or solution to a problem.
  2. They create a whitepaper or documentation about the product.
  3. They create a plan of action on how the product or service is supposed to look like.
  4. They create a list of achievable bounties to build the product.
  5. The bounty drafts are looked over to check for any errors.
  6. The company decides on the prices of each bounty.
  7. The bounties can then be crowdfunded by investors and will receive tokens in return.
  8. The bounties go live and developers can work on them.
  9. The product gets made and investors now have their product and a token hopefully worth something.

Major benefits of an IBO

  1. Creating bounties and putting them publicly on websites like Gitcoin and the bounties network allow you to get the entire community involved from those platforms. This community environment allows for the sharing of ideas, getting an initial user base, getting good user feedback and potential investors.
  2. With an IBO you can find specialized talent by creating a wide variety of bounties. This allows companies to find people that specialize in different parts of the development. Gone are the days where you hire one person as a front-end developer when you can hire three or four developers all working together on a specific task.
  3. Working a-sync. The company can now focus a lot of its time on the business side of things as well as the ideation and community management. It takes the load off a lot of small startups in the Ethereum space.
  4. Companies are accountable to investors as bounties are publicly open to all and you can track progress easily.
  5. Wider market reach. With bounties, you can create translation bounties to allow for a wider user base as well as get user feedback from

What a bounty offering is

The IBO is not an alternative to venture capital and raising any sort of funding. It’s just a way to get people to invest in your product through development, funding that development, community and

What a bounty offering isn’t

IBO’s aren’t a good replacement for venture capital or traditional types of investment. This is just a way to get an MVP or product funded through community-funded development. Nothing more or less.

Will this replace ICO’s?

No, they both have their place. The IBO is meant to be more than just a way to get funding and build a product. It’s also a way to build a community, find long term employees, get a product built and go directly to the market. This is more for startups and projects that don’t have an MVP built. As a company grows, something like traditional venture capital and an ICO makes a lot more sense as you have a product built and haven’t given away any equity for the creation of an MVP.

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