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ICO and IBO: How One Letter Can Change the Process

Collective investment as a fundraising campaign first appeared back in 1997, when fans organized a fundraiser in support of the music band Marillion. In just a decade, crowdfunding as a form of attracting funds gained huge popularity, and today, individuals can invest their own funds in business, real estate, agriculture, social projects, scientific research, bank loan systems, etc. Basically, crowdfunding campaigns are the opportunity for everyone to tell Internet users about their idea, receive feedback from them, do preliminary advertising of the upcoming product and try to attract investments.

Despite the growing popularity and widespread distribution of Internet crowdfunding platforms, traditional crowdfunding, unfortunately, is facing a number of unsolvable issues including increased level of legal and statutory risks because of limited rules and regulations; intense competition between projects of similar subjects and low level of credibility due to frequent instances of fraud. The established issues along with the evolution of investment types formed the basis for the creation of a more controlled technology for crowdfunding organization — ICO.

Simply put, ICO (Initial Coin Offering) is a campaign for fundraising through cryptocurrency sales for the project implementation. Essentially, it offers an investor to buy a cryptocurrency of a certain project to finance it and gain either a speculative profit or some kind of privileges after the actual launch of that project.

Mastercoin was the first project to conduct an ICO in 2013, which, in the end, attracted somewhere around $500,000. ICO’s further development became possible thanks to the Ethereum platform developer, Vitalik Buterin, who created the White Paper of the development of the Ethereum cryptocurrency and introduced it to the public. At the end of the ICO, Ethereum’s total profit amounted to 3,900%.

2017 was the “golden age” for ICOs. It is largely due to the fact that the market had a higher ratio of quality projects and there were very few individuals willing to make “easy money” with fraudulent ICOs. As the number of ICO projects grew, the problems started to appear: absence of laws that regulate their activity and allow safe purchase of tokens; absence of mechanisms of backing the project by assets and transparent terms of execution; absence of external monitoring of implementation stages of the projects that are entering the ICO, etc. All of that has significantly decreased the popularity of ICO projects creating the urgent need to regulate this market segment.

At the beginning of this year, the website conducted an ICO market research for 2018 and came to the conclusion that 59% of all projects, which were launched in 2017, have either already failed or are on the edge. Out of 902 ICOs, 142 failed at the financing stage, 276 either fell off the face of the earth or simply disappeared with the investors’ money, and another 113 stopped all sorts of communication on social media, which also indicates an approaching end.

The world wide web has a lot of advice for spotting fraudulent ICOs, but there are no truly effective measures that detect such projects from the start. The need for legal regulations and solutions to the existing ICO problems promoted the development of projects, which minimize the probability of loss and guarantee investment security.

One of such projects is the Bitbon System, which is a platform for asset management and investment with expanded possibilities. The Bitbon System allows entering a new level of working with assets under the conditions of the new digital economy: ensures data storage security; uses new methods of accounting and management of rights to assets; provides the ability to establish a transparent interaction with the System participants and guarantees additional income from investing in projects. All innovative technologies integrated into the Bitbon System have been patented in many countries, which points to the unique nature of the System components.

Bitbon is a digital financial instrument used as a payment unit within the Bitbon System. Bitbon’s defining feature is the possession of properties of a crypto asset because its value is backed by real assets.

The System offers a new investment process called IBO (Initial Business Offering). It is aimed at business project implementation that involves: Contractat (initiator), Bitup-Agency (project implementation supervisor, follower and controller) and Contributor (investor).

IBO’s distinctive feature is the ability to control project implementation using the constantly updated section of the Contractat. The section contains a project progress indicator with stages of its development: from the moment of preparation to its commercial launch.

Moreover, after the Business Plan, the White Paper, the Projectbon Public Contract, the Abstract and the One Pager (a presentation type of delivering general information about the project for its more convenient viewing on mobile devices) are uploaded to the Contractat’s section, the IBO Certificate is generated, which is an interactive document containing complete and constantly updated information about the project. The Certificate is available to all Bitbon System participants and delivers the information dynamically in chronological order.

Based on the above-mentioned, it is clear that in order to analyze the effectiveness and reliability of ICOs you need additional tools and Internet resources, which still do not exclude the high risk, whereas when the project is admitted to IBO, it is already prepared and verified.

To sum up, it is worth mentioning that the main difference between IBO and ICO is the activity within legal boundaries, which implies following all required legal nuances. Thanks to the correctly drafted clauses, the possibilities of IBO within the Bitbon System can be used not only to attract funds but also to transfer property rights to different kinds of assets: currency, movable and immovable property, bank deposits, securities, know-how and shares in companies. Thus, the System can keep data on any asset, whose properties can be accurately described in digital form. Basically, IBO is just a part of a larger process called Contributing, but despite that, it facilitates the creation of real guarantees of complete project implementation and profit to potential investors.

Originally published at on November 20, 2018.

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