Categories: Featured

Dos and Don’ts of Holding an ICO

Cryptocurrency ICOs have become a global phenomenon throughout 2017. A lot of companies use this new approach to raise money and get their projects off the ground. However, there are clear indications that this method of fundraising isn’t suited for every project either. One should create an ICO for the right reasons and not just because of the money.

To ICO or not to ICO?

When it comes to cryptocurrency ICOs, the sky is pretty much the limit these days. That is what most companies think, anyway. There are a lot of things to consider before creating an ICO in the first place. Several industry experts shared their comments with us in an effort to create a more robust industry. After all, there are a fair few bad players in this industry, and it is becoming difficult to differentiate between legitimate and overhyped projects.

Firstly, Spice VC’s Ami Ben David advises companies to not raise too much money. Any project attracting high amounts of money with an initial coin offering may be labeled a scam, regardless of its actual intentions. At the same time, it is important to retain one’s integrity at all times and not oversell one’s product, especially if it doesn’t exist yet. Rather, building trust between a team and potential investors is paramount. A lot of ICOs forget this point for some reason.

Perhaps one of the more solid pieces of advice comes from CarFix’s Pavel Nazarov. According to him, ICO projects should ensure they don’t fall victim to blockchain hype in order to justify building a database. If the term blockchain is used, the project should involve an actual blockchain and not a mutable ledger. Support from industry leaders will certainly allow more projects to gain legitimate traction over time. A big “do not” is underestimating the US SEC when it comes to securities and tokens that may be regulated as such.

Publiq’s Alexandre Tabbakh feels transparency should be the number one priority for every ICO. Most projects emphasizing transparency along with communication, technology, and legal compliance will not run into trouble. However, if there are very few updates disseminated to the community on a particular project, people will be wary. Sadly, we have seen a lot of ICO projects struggle with communication once money has been raised. There is a lot of room for improvement in this regard; that much is evident.

When it comes to ICO projects, experts cite many of the same pitfalls these days. More specifically, the lack of communication, excessive greed, cutting corners, and overselling are issues which are in need of addressing. Some projects also struggle to protect community members and investors from scammers, which is another big concern. Moreover, it is always in the best interest of any ICO to solicit legal advice in regards to whether or not its tokens classify as securities.

All of the above expert advice is pretty solid, to say the very least. Although opinion may be somewhat divided as to whether or not ICOs should exist in the first place, if people took these simple guidelines into account, most issues would not come up in the first place. There is an interesting future ahead for cryptocurrency ICOs, although no one knows for sure how things will play out.

JP Buntinx

JP Buntinx is a FinTech and Bitcoin enthusiast living in Belgium. His passion for finance and technology made him one of the world's leading freelance Bitcoin writers, and he aims to achieve the same level of respect in the FinTech sector.

Recent Posts

Incent Loyalty celebrates ‘Bitcoin Pizza’ moment with first real-world transaction

Incent has been used to settle a $1,400 bill with a local restaurant – the token’s very own Bitcoin Pizza…

17 mins ago

Bitcoin Price Watch: Is the Recent Drop Part of a Bigger Picture?

At press time, bitcoin is retaining its $6,100 price from yesterday. The currency fell to this position from $6,700 after…

17 hours ago

Are Centralized Exchanges Breaking the Crypto Promise?

Exchange hacks are becoming the new normal. Just two weeks after Conrail’s $37.2 million hack, it was time for Bithumb’s…

17 hours ago

What Is Forging, and Is It a Viable Alternative to Bitcoin Mining?

As more and more people join the cryptocurrency conversation, Bitcoin mining has been thrust into the limelight. And just like…

18 hours ago

Litecoin Founder Remains Optimistic Despite Recent Bithumb Hack

Charlie Lee, the developer behind the world’s sixth-largest cryptocurrency, Litecoin, believes the price of Bitcoin and other cryptocurrencies will recover…

19 hours ago

MIT Media Lab Project Enigma Partners with Intel on Privacy Research

American multinational technology company Intel has partnered with Enigma on research and development of privacy in computational technologies. Announcing the…

20 hours ago