The Evolution Of ICOs: What’s Changed?
One year ago, the crypto-market was hotter than ever. The fortune of many altcoins were owed to Bitcoin which soared up to very near $20,000. ICO projects (crypto calling) also flourished as each company can call up millions of dollars. Investors from individuals to mutual funds poured money into the dream of making x5, x6, even x10 ROI.
However, the market fell suddenly, the confidence of investors dwindled, and ICO projects promising so much with little more than an idea on a Whitepaper, couldn’t keep those promises.
How ICOs were done before
When a company initiates an ICO project to raise capital, they often create a plan that specifies what the project is about, what problem it solves, the community, the project needs, required investment figures to carry out the project, how many tokens are being sold and retained etc.
During the ICO, investors use their own assets (usually in the form of BTC or ETH) to purchase tokens. Once complete, users can trade or hold tokens depending on the requirements and the success of the project in a Myetherwallet or the wallet of that project.
Previously, ICO projects opened and tokens sold-out very quickly, often in a few days, or even in minutes, seconds. Investors always hope to get in early to benefit from the best price, waiting for the successful project to bring them a profit many times the original amount.
However, all of the above, including the goals, products, vision, etc. of these ICO projects were still just plans. Investors were completely unaware of whether their investment was intended to be distributed appropriately within the project. Are they really developing a product or not? There are examples of many ICO scam projects taking information and money from investors completely and deliberately not following their Whitepaper.
How ICOs have changed
Although the market has been descending for the past year, and has shown few signs of a major recovery, the number of ICO projects has constantly increased in volume. According to the leading audit firm PwC, a total of 537 ICOs raising $13.7 billion have occured so far this year. The ICObench website recently released statistics for the year up to the end of September. Although Cryptocurrency is not the largest industry, it received the highest total of investment. What do ICO companies now need to do to build investor confidence in their projects?
As mentioned above, most projects were painted beautifully on paper, but credible projects have now found the neccessity for the development of POC or MVP.
POC stands for Proof of Concept, a technical template which refers to the deployment (at least at the basic level) of the core features of the product to demonstrate its feasibility. MVP or Minimum Viable Product is a product with minimum characteristics to meet the needs of customers. Such products will help users to visualize the reality and potential of the project that was previously only shown on Whitepaper.
Nonetheless, in essence, POC or MVP is still a demo of the product, still not complete, perhaps containing bugs and an unknown future quality of the product. The possibility of scam is still there.
A new solution for ICOs in 2018 to help solve almost all of the weaknesses of the POC and MVP, giving customers absolute confidence as well as knowing exactly where investment funds are going. ICOs need to create real-life functioning product that generates revenue without the need for a trial. Undoubtably, many past ICOs tried to paint a picture of a product with their Whitepaper that just wasn’t so. Investors will use their own investment products, even give suggestions so that it can grow better in the future. This is a much more exciting and community involved way to attract capital to an ICO, not so different to “Shark Tank.”
To make it easier for you to understand, let's take the example of a cryptocurrency trading platform. Before ICO (now still in the presale stage), FinanceX had its own functioning cryptoexchange launching in August, 2018. This allowed investors to trade coins such as BTC, ETH and, most importantly, fiat (local currency, for example, VND) to buy and sell cryptocurrency in the market.
FinanceX has nearly 9000 total registered users on the platform with about 50% regularly active, the average daily volume has reached 10 billion VND. The overwhelming pitch of the feedback has been positive with many people using their trading profits to reinvest in the ICO. It also creates a loyal community that want to use the platform. The low transaction costs are also extremely attractive to traders used to parting with 1% of their transaction amount.
The ambition of FinanceX is to not only lead the Vietnamese market, but also Southeast Asia supporting the fiat of these countries. Next month, FinanceX will open an exchange in Indonesia, and in 2019, Thailand, the Philippines, Malaysia, Singapore, Myanmar and Laos. Users can choose to invest in daily trade coins on the trading website, or invest in the ICO for the future profits of FNX token.
With no more paper promises, investors can touch and experience the FINAL product. This way, ICO investors in FinanceX will really know where their money is going, how they will spend the funds, and that what is stated on the Whitepaper is true.
In conclusion, whether an ICO is old or new, classic or modern, ICO projects still need to be transparent and clear to investors, considering each customer's investment as the blood of the business.
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