Initial Coin Offerings (ICO) portrays a new face of digital transactions that is taking the industry by storm. The ICO space offers lucrative potentials for entrepreneurs who hold the long-term positive perspective for blockchain technology. For those who do not know, ICO is the concept of crowdfunding projects in the crypto and blockchain industries. So initially, the agency releases a fixed number of crypto-tokens and then sells these to the intended audience in exchange for Bitcoin or any other digital currency.
Perhaps the major reason why more people are willing to take the plunge in ICOs is the propagation of media over how it raises high amounts of money. Also, many heard about the potentials of blockchain technology and are willing to upgrade their business and align it with new concepts. They desire to be fully ready when the new technology reaches maturity levels. Nonetheless, it is fundamental for the business that is willing to invest in ICOs that they consider the whole picture and not just a fragment of it. ICO is not a tool that works out well for all kinds of business. The ICO ethos is rapidly shaping up. And at times, it ends up making project owners rich at the expense of contributors who do not receive any positive attention.
Launching an ICO is not an easy task. If you have been on the sidelines observing and planning to initiate your own ICO, here are a few things to consider before you take your first step:
Research your due diligence
Every ICO investor will conduct a certain degree of due diligence before investing in your project. They will examine the project specifics and figure out if it serves a good investment opportunity. So if you want to ensure that your project befits their due diligence, analyze what the criterion of their diligence is. For example, you can check out the website and social media accounts of key influencers to fully fathom what makes them big. It is crucial for you to find out elements that appeal to the serious investors and what turns them off.
Once you know what ICO investors seek from successful projects, it is now the time to internalize the findings. For instance, you may have to hire a professional to write up your white paper. The motive is to cater to potential investors, and you may have to go an extra mile at each step.
Your token will be subject to fluctuations
Since inception, the altcoin market is a subject too high volatility and wild swings. Some scam groups artificially raise a cryptocurrency’s value and sell it at a profit. It makes the crypto market a dangerous place for the inexperienced investors as they may end up losing a fortune. Adding to that, another cause of fluctuations is that everything tracks Bitcoin. They all move up or down the scale depending upon the patterns that Bitcoin follows.
A very common trend is that every ICO, immediately after its launch witnesses a huge hike that increases the price beyond expectations. Soon after that, the price of token collapses and hits the initial sale pricing. Given the dynamic nature of ICOs, you must formulate a game plan that helps to retain the value of your token during bad days. The fluctuations and vigorous price changes are inevitable, but your strategy determines the long-term value of your tokens.
Is organic infusion possible with your ICO?
It is important for every startup to ask itself a question before they decide upon conducting campaigns. That is, will they be able to integrate the ICO tokens with their business model in a meaningful way? The AutoBlock is a perfect example of the company that secures its tokens. The Auto-coin is an ICO of AutoBlock, and it helps to conduct deals in the virtual automotive industry. Thereby, it is extremely important for you to accelerate demand for your ICO by offering real utility.
In case the only motive of your coin is buying and selling, it practically certifies that the price will crash abruptly after the ICO ends. The bottom line is, you should only go for ICOs if you are positive that the decentralized token will enhance the value of your product.
How will you implement your token?
Along with business and marketing plans, you should also have a token plan. It provides that you have a clear insight of the economies such as the number of tokens you will release and distribution plans. You should also stay aware of the characteristics of your token (security or utility) and the function it serves on your platform (product or service). Other integral factors of consideration are:
- What date will you generate tokens?
- Is there a maximum cap on tokens?
- Are there any incentives for early contributors?
- Is there a refund program if ICO ends up in failure?
- What is the number of tokens your team receives?
- How much of these tokens do you plan to spend for internal developments?
In light of the current market, it is apt to state that ICOs are moving forward with great momentum. This financial mechanism is evolving with a continuous surge of new ideas accompanied by the leverage of creative and highly competent digital tools. Besides this, the blockchain is growing, and new avenues open up every day. Of course, some issues tag along with cryptocurrencies and everything is still very much in the idea stage, but technologists are coming up with new solutions at regular intervals. So, if you devise perfect strategies to beat up the scams and unpredictable price swings, ICOs are your definite chance at getting a big break.
Evie harrison is a blogger by choice. She loves to discover the world around her. She likes to share her discoveries, experiences and express herself through her blogs. Find her on Twitter:@iamevieharrison