The Naked Founder
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The Naked Founder

Crypto city

(image source)

What’s an ICO?

An ICO (Initial Coin Offering) is an event where a company issues new crypto-tokens, usually based on an existing blockchain (usually Ethereum, or on occasion Bitcoin), and sells a percentage of these new coins in exchange for other cryptocurrencies.
These new tokens offer some form of functionality or service, that in theory gives them value.

The Google IPO (image source)

An ICO example

An example: I create the company NotAName Inc., and issue 1 million NotAName tokens (NAN). I keep 50% of them, and sell the remaining 50% at a price of 1 ETH = 50 NAN.

  1. There is an immediate value provided by the STK token, TODAY.
  2. Buying the token now guarantees financial returns in case in which the service provided becomes very successful over time.

My new startup: NotAName Inc.

This is where the idea to use a crypto ICO can be connected to my new (real) startup.

An example of a little “borgo” in Italy

Crypto City

This is why I believe that there is an opportunity to use a crypto/ICO mechanism to finance an infrastructure project. In this case, an entire City, probably from scratch.

  1. NotAName Inc. invests time/money to produce the blueprint of a specific project, named “crypto city”. Let’s assume that it captures the interest of several hundred, if not thousands, of people. They say they want to live in a place like this, if someone builds it. A good start!
  2. First round of funding / ICO: we issue 1,000,000 tokens, retain 50% of them, sell 500,000 for 10,000 ETH (about 3 million US$; 50 NAN = 1 ETH).
    Why would you buy tokens now? Because of what happens at #6 (they eventually generate a dividend, and can be always sold to others).
    The tokens issued to the company have a vesting schedule, and some limitations to avoid speculation or taking advantage of the token buyers.
  3. We use the funding to hire an architecture firm and a real estate developer to identify a land, and create a more structured project. At the end of this phase, we have an executable project that only requires funding to be initiated and completed.
  4. Second round of funding / ICO: we issue 9,000,000 tokens, bringing the total to 10,000,000. NotAName Inc. gets another 1,500,000 tokens, bringing its total to 2M (20%). The remaining 7.5M are sold in an ICO, at a rate of 10 NAN = 1 ETH (total amount raised is 750,000 ETH, or about 250 million US$).
  5. The money raised is used to buy the land, pay the various firms and contractors to build the city.
  6. After some time, a city of 10,000 people is built. Apartments and houses are not sold, but only rented out. The proceedings go to the token holders.

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