The future of ICOs: a new model for investors
Home Top Global News Markets The future of ICOs: a new model for investors to protect
Martin Hubmann –
If you are reading this, are you sure the hype of the Initial Coin Offerings (ICO) in the year 2017, aware. This revolutionary method, it should Blockchain-allow developers to change the world forever, but was, unfortunately, a “get rich Quick” method, and is therefore referred to, unfortunately, by many today, often as a Scam.
If we want to look to the future and find out if ICOs are to be a good investment opportunity, we must first analyze the past. We need to think about what is wrong, why are people with minimal or no Investigations have been able to achieve huge profits, and was ever a Chance that such a market would remain sustainable?
At the beginning there were only good projects with talented and dedicated team of developers and Visionaries who worked day and night to build your extraordinary product. Of course, these projects were only very small communities of technically experienced investors are exposed to, and things went as intended.
Then other projects came and to increase the capital, had to ask the developers of your babies in front of a larger audience. The few websites and forums such as bitcoin talk, where everything took place, were not large enough for users and potential investors.
The Development Of
Of course, the next step was involving Online marketers, and it wasn’t long before a large part of the Web joined entrepreneur of the ICO-scene. Most of these people are like grasshoppers, jumping from one opportunity to the next, and only care about short-term results. Obviously, such a market have not brought to participants a lot of value, you have him harmed.
Since most of the early ICO investors achieved due to the low entry and high profits high Return on Investment (ROI), were all the other people around them in the FOMO-mode (Fear of Missing Out). At this time, all Online Hustler started to create fancy Websites, and white papers to market these all over the Web and generate millions to develop without a real product. For this reason, Google and Facebook have banned the ICO-Ads.
Since ICOs are more likely to be a Fundraising Option for concepts than finished products, there is a large Chance of failure. Developers that have no idea of Tokenomics, marketers create products for ICOs, and fraudsters have done a “great job”, about 95%. No wonder that most of the people want to hear no more of ICO’s.
Who to blame?
Unfortunately, we can’t just give the debt to get the money, because you have not forced anybody to buy your “Shitcoins”. What is with all of those investors who try to quickly get rich, without making an effort to learn about cryptography and Blockchain, you are not responsible for their actions?
Most of the people are always driven by GREED and FOMO, and when it comes to new opportunities, where money is involved, the Greater Fool theory again and again.
Normally, when you visit the ICO Website, how many tokens you offer, at what price, the current Phase and the Bonus, the concept with little or no development, documentation, team members and a goal of between 5 and 100 million dollars to be applied.
Nothing wrong with that, but the way most of the ICO campaigns are managed, is certainly not correct. Set a random token price during the ICO, you invest funds in the Marketing in order to sell as much as possible, lists the Token Exchanges immediately after the end of the campaign, and only then begin to build the product (if you have one).
The only thing that serves as a protection for investors, the refund, if the Soft Cap is not reached. You are aware of what most Teams do, if you don’t see that things are going as planned? You can buy the rest of the tokens with your own money, in order to reach the Soft Cap and the Rest of the applied to retain capital.
Another big Problem is that Token to go before their use on the Exchanges. We have all seen this highly stylized ICOs, which have been sold all over the Internet, the procurement of funds to complete successfully, and all of their investors, who were waiting for the Token will be listed on Exchanges in order to travel afterwards in Lambos to the moon.
Most of the time are disappointed the investors, when you see the Token, the languages, all the while the ICO, noted, and then dropped is pumped. Why? Because the only thing that leads to a price increase, is the demand. The IPO, before the Token is used, and demand, interested investors.
All of these “Big ICOs” were really a lot of money on the backs of their investors, rather than using the money for development and to generate income.
ICOs are dead?
We do not believe that you are.
ICOs are truly revolutionary and will continue to develop. You will be an amazing vehicle for developers, entrepreneurs and investors, the search for innovations and to make the world a better place want.
However, it is obvious that this model will not work any more, because the investors trust him. No matter how good the Team is, how great the product is and how well marketed this it, Blockchain developers have to focus on, to protect the contributors.
Fundamentally, the following applies:
- Developers should focus on projects, the values of the world have created a scaffold, a solid economic base, Token to create a real application case, transparent and accountable.
- The investors should form their care, the projects to assess the risk, have patience and never decisions based on emotions meet.
Following are some of the smaller but important Changes that can be made to ICOs make again attractive for investors to:
- The capital must be collected in stages and it should be clear what the funds will be used (development, Marketing, legal, etc.). After the completion of each Phase, a large part of the amount expended in development and results will be invested before the next Fundraising Phase begins.
- Projects that start without MVP, in principle, have no value of their Tokens, therefore, the price should be set at the beginning to a Minimum. The more development is made, the more valuable the Token is, of course. The big bonuses for early investors just a marketing trick. Instead, the Token should rise in price after each level, which is much more sensible.
- For the protection of investors, the Token should only be listed on Exchanges, if there is a functional product, in which the Token is to be used. This will certainly increase the holding period to 12 or 18 months, but bring the satisfaction of the investors. If a Token is circulated in a growing Ecosystem, there will be a demand for it, which will lead to a price increase.
In addition to the obvious benefits of the above extensions to guarantee that the respective ICO-campaign is not a SCAM. While in the past many Teams have collected millions and disappeared, the Collect in the levels, and the earmarked use of the funds on any level with Evidence, such as an escrow account.
A good example of how the above can be implemented, is a Token of the recently-launched Winto-Sale campaign to see.