ICO is a pre-sale of cryptocurrency units at a price that will increase significantly in the future. Selling tokens on ICO is a way to raise funds for any project, an alternative to lending and looking for investors. Used primarily by blockchain startups to raise investment in a short time frame.
Tokens and ICO
Tokens are a kind of virtual shares issued on the basis of blockchain technology and sold to investors in exchange for any cryptocurrency. If in the future tokens increase in price, investors will receive tangible profits by selling them on the exchange. In addition, the owners of tokens can use the services of the project in which they have invested for the entire time with large discounts.
ICO in cryptographic currency systems is analogous to IPO, but ICO is almost not regulated by law. To participate in the ICO, there is no need even to register a legal entity. On the one hand, anyone can issue their tokens at the ICO and raise funds. On the other hand, it scares off potential investors who do not really want to invest in projects, each of which can be fraudulent or amateurish.
The process of issuing tokens itself is also fraught with risks. Preparing for and holding an ICO can take several months up to six months, and investments will be collected in cryptocurrencies. High fluctuations in cryptocurrency rates can, ultimately, both sharply increase the planned profit, and sharply reduce it to zero.
ICO development
Preparations for the ICO take from 2 to 6 months, for the ICO itself - from half a month to two. The speed of the ICO depends entirely on the quality of the preparation. For example, the FileCoin ICO raised over $ 200 million on the very first day.
Development begins with an in-depth analysis of other well-known ICOs, successful and unsuccessful. The functions that the tokens will perform are carefully thought out. Tokens that do not carry any functions and are created only for fundraising will not attract investors. Also, tokens should become a functional part of the blockchain.
Large platforms for discussing new ideas based on blockchains have been created abroad. They can discuss the resulting idea and "probe" the market of potential investors. Also, you can pre-place an offer for tokens and a blockchain business model on them.
Team building
If there is no desire to outsource the ICO process to third-party specialists, you need to assemble your own team of 20-30 people. It should include:
- content managers;
- SMM specialists;
- PR specialists;
- designers;
- developers.
At the same time, all team members must be fluent in English and be stimulated by a good salary.
To attract investors, it is advisable to think over the mechanisms of their legal and economic protection. From a legal point of view, your company must be registered and it is better to do this in the USA, Great Britain or Switzerland. In the worst case, in Singapore or Estonia, but not in Russia.
For the economic protection of investors, it is necessary to consider mechanisms for returning their funds in the event of a fiasco.
Documentary support of the project is issued in the form of White Paper - a document explaining the work of the project and drawn up in several languages. It is on the basis of this document that investors will make a decision to participate in the project.
In addition, it is necessary to launch a website that will detail the mechanism of the project and the stages of its launch.
It is extremely important for the project and advertising, focused more on small investors than large ones. In the modern world, this advertisement should fully cover all existing social networks, providing potential investors with channels for communication.
Issue of tokens
Tokens are created independently or through specialized ICO platforms.
To create tokens on your own, you need to get a blockchain code on BlockChain.org for a fee (about $ 1000). After that, programmers create their tokens based on this code.
Many sites provide services for generating tokens on their blockchains in exchange for buying a certain amount of cryptocurrency. In most cases, this method turns out to be cheaper than the first, although full-fledged cryptocurrencies cannot be created on its basis.
Token sale
The sale of tokens to end consumers-investors is the ICO itself. Immediately after the start of the sale, the site should be under the round-the-clock control of specialists in case of DDOS attacks, site collapse due to an influx of visitors, provocations from scammers.
The better the stage of preparation for the ICO was carried out, the faster the bulk of the tokens are sold. To make this happen as quickly as possible, you can artificially increase demand by encouraging the first investors with some bonuses, by announcing a limited release of tokens or by releasing them on cryptocurrency exchanges.
