How to launch an ICO: a technical perspective.
ICO becoming an increasingly common abbreviation in the tech world. Meaning Initial Coin Offering, ICO is a method of attracting investments via blockchain infrastructure that is seeing a huge rise in popularity nowadays. Startups have quickly grasped at the new method of gathering investments and are jumping at the new opportunities blockchain provides, like lemmings from the cliff. To some, ICO means a dubious attempt to fund an otherwise doomed undertaking, while to others it is just a newest gig in the world of investment banking. The reason behind startups, crowdfunding and ICOs are generally genuine attempts to create new solutions to the existing problems. However, ICO itself is not a magic tree which sprouts bitcoins, but a complicated process of attracting money for a promise of future gains. The more mind one puts into organizing an ICO, the more benefits it can reap, increasing the whole project’s chance for success.
In this series of articles I’m writing, I will be focusing on the specifics of the process of preparing an ICO, aiming to help responsible team members gain a basic understanding of the technical processes required to run a successful campaign. This article is meant as an overview of the whole process and a point for quick reference, each section being a preface to a corresponding future article.
Whitepaper and presentation of the idea
Any ICO is primarily an idea, a hypothesis that some action, if completed, will solve particular problems, or, at least, bring more benefit than existing solutions. To deliver an idea of ICO to the public and potential investors, whitepaper exists. Whitepaper is a document, formalized and expanded project pitch that aims to elaborate on the problem, propose solution and explain how it creates value for the investors. Well-written whitepaper is one of the main means of selling your idea.
However, writing a whitepaper is not a trivial task. Like any content aimed at the end reader, it should empathize with them rather than with its creator. Most common advice here is follow common sense and scientific writing logics — start with a problem that needs solving, overview your solution and changes it can bring, and include a good summary. As with any marketing copy, there are many nuances with whitepaper, content- semantics- and visual- wise. Never forget that the end goal of a whitepaper is to convert a reader into an investor who will help reach ICO goals (as in monetary objectives).
Smart contract, tokens and Etherium
When the idea is refined and delivered to the market for judgment, comes the time to organize the technical side of the ICO, directly integrating your source of funding with the blockchain infrastructure. Tokens is what stands for ‘Coin’ in Initial Coin Offering — these are crowdfunding currency of your project, directly convertible into cryptocurrency or fiat currencies. To emit and distribute tokens a Smart Contract is used. Smart contract is, essentially, a secure blockchain script that generates and allocates tokens according to specific conditions of your ICO, giving them out to the investors in proportion to the invested funds. Smart contract regulates most of the technical specifics related to your ICO, including terms, token price, minimal transaction and a lot more.
Normally, smart contracts are written in Solidity language and operate through Etherium, NEM or Waves blockchain network, with Etherium being the most popular, demanding contracts to be in line with ERC20 standard for security. Etherium is a blockchain platform for deploying and executing smart contracts, as well as processing transactions in tokens and the Etherium, a cryptocurrency second only to Bitcoin. Smart contracts are built into blockchain sequence of the Etherium and are executing transactions when called upon. Etherium uses an elaborate model of redistributing commissions for transactions and execution of smart contracts, offering to spend ‘gas’ to move the process forward and adequately reward miners, who support infrastructure with hardware. Other than gas consumption, smart contracts may have dozens of parameters, related to functionality and security. It is advised to have at least basic understanding of how smart contracts operate, and always put a smart contract through independent audit by a third-party company.
Personal cabinet — the interactive part of the ICO
Next important thing when you have a functional smart contract that is capable of exchanging funds for tokens, is to let users access all its functionality with ease. It is normally achieved through an interface, known as Investor’s Personal Cabinet. Essentially, this is a web-based accounting program integrated with blockchain technology that acts as a transaction platform. Personal cabinets allows potential investors to register in the system for KYC purposes and spend money to buy tokens, accepting preset number of currencies, both crypto and fiat. It can also include more marketing hooks, transaction history for your team and investors, various settings and commands for the smart contract and visual display of ICO results — gathered funds and sold tokens — in real time. Like smart contracts, personal cabinets have a number of specifics one should look at when deciding on the solution for particular ICO, whether it is bought as a tool from a third party, or developed from scratch.
The visual component
Technical side of thing meets marketing when it comes to web presence, and ICOs, as Ideas that require funding, are fully dependent on good marketing and solid web presence. First thing potential investors and secondary audiences will see is your website, be it a simple landing page or a piece of web design art. ICO is a model of funding a business, and modern business needs design more than ever — logo, typeface, colors, branding rules — those should reflect the nature of your project and core values you want your investors to see.
Moreover, user experience and usability is immensely important in our time — fast loading times, adaptive mobile version and bug-free experience can make or break conversion rates, which is especially true for ICOs where businesses compete for looking more devoted and legitimate. Branding and UX forge the image of the company, and should not be overlooked in any ICO hoping to attract serious investments.
Challenges of marketing
Having whitepaper, website and personal cabinet means having some good tools for your marketing, yet, coining and executing a marketing strategy is a totally different undertaking. Marketing an ICO is not an easy task. As with any product, you should start by analyzing markets, defining your project’s advantages you want to make into selling points, and deciding on the platforms you want to focus on. It is generally recommended to use a combination of marketing techniques, and try all available platforms, allocating more activity to the ones that respond best in metrics. More traditional marketing methods are often less applicable to ICOs, as they exist on the edge of digital technology, and basic digital marketing tools can fail as well for a multitude of reasons. There is no easy recipe that will work for any particular ICO, rather some general list of what to try.
This is the general breakdown of technical tasks, related to going through with an ICO. Specifics and needs may be different for each ICO, where some or all tasks from this list can be performed by outsourced teams, or done in-house. Remember that blockchain is still in its infancy and no one knows anything for sure. General advice is: try to keep your mind open and never stop learning.
For more particular technical questions refer to my future articles, or you can join Discord channel for blockchain developers and ask for assistance there: https://discord.gg/PSW4WZZ
Read more in my article cycle about technical specifics of ICOs:
What should be in the smart contract
