Are you planning to become a part of the cryptomarket and create your own cryptocurrency? Great idea! Nowadays, the digital currencies are a global phenomenon that arouse huge interest among the investors. According to CoinMarket group, the total capitalization of Cryptomarket exceeded 6 billion dollars in December 2017.
The most famous and valuable cryptocurrency is Bitcoin. However, as Coinmarket states, it is not the only one that attracts investor attention. In the following chart, you can see that in 2017 more than 3.5 billions dollars were invested in the cryptocurrency market, not including Bitcoin.
What is common in all these projects? Each one of them has run a successful ICO before actually presenting a new cryptocurrency.
ICO is an abbreviation for Initial Coin Offering – a crowdsale of a new cryptocurrency that becomes a part of blockchain network. The aim of ICOs is to attract investors to invest their money towards the project by selling to them a limited number of tokens – unique digital assets confirming the buyer’s ownership of a coin or their right to purchase the company’s services. In the case that the campaign is successful, the price of tokens increases giving profit to their owners.
According to Coinschedule, last year more than 200 crowdsales were run, and almost 4 billion dollars were gathered. Fascinating numbers, aren’t these? And this is only the beginning. 2018 is predicted to be even more impressive. If you are interested in official figures, feel free to check the stats of this year.
The advantages of ICOs explaining include:
Although the popularity of initial coin offers increased dramatically during the past year, it is not a new method of fundraising. The first famous crowdsale was held by Mastercoin in 2013 – they managed to raise $500.000 during the campaign. A year later, Ethereum attracted $17.3 million in investments. In 2016, their record was beaten by DAO or Decentralized Autonomous Organization, who collected about $150 million.
In 2017, DAO was surpassed five times over! Here are the most successful ICOs of the last year:
We have come to the most important question for you – how to launch an initial coin offering? Despite the ease and popularity of crowdsale, its preparation requires сoncerted efforts of numerous people, from developers to marketing, and PR-specialists. In this article, we will give you a brief ICO tutorial which will help you to plan the stages for your crowdsale.
Before launching an ICO project, you should get familiar with your target audience. Usually, they are:
First of all, you cannot do everything alone, and you need a team of people that will be working on your project. During your crowdsale, you will require the help of the following specialists:
In any business, you will need to prepare a detailed business plan and create a strategy of its development. You must understand the very essence of your project and you must be able to explain it to your potential investors. At a minimum, the business model should answer the following questions:
What is the most important thing needed for an ICO? Without what it is impossible to succeed? The answer to this question is very simple – the investors, their attention and their money. This is why it is essential to plan how will you attract the investors’ attention. How you will tell them about your product? You need them to trust you, to understand that they will benefit from investing in your product.
One of the means to educate your investors about your product is by creating an MVP (minimum viable product) that will allow users to estimate its relevance, possible benefits, and give them the opportunity to offer feedback. It is one of the key points in handling the ICO, since it is meant to clearly present your project to the investors.
Once the MVP is released, you may launch a presale. It is in the pre-ICO stage where you will begin to sell a limited number of tokens. After finishing the presale (in a couple of weeks to a couple of months), the ICO itself is managed. However, if the project becomes popular, all the tokens may be sold out during this stage. Thus, the pre-sale may be the only stage of your campaign.
While preparing to launch your crowdsale, be ready to face some legal challenges. Blockchain and cryptomarket are an unexplored area for modern lawyers, and therefore, it lacks proper regulation, and may have unforeseen challenges. Modern law does not have a clear definition of blockchain, cryptocurrency, ICO, tokens etc. Some lawyers do specialize in the blockchain industry; in fact, there are only a few of them, consequently, it will be extremely difficult and expensive to hire such a specialist.
In order to settle legal issues, we recommend you to find an experienced and curious lawyer that is skilled in the following areas:
This will be sufficient for your campaign to be compliant with legal requirements.
Another important step of ICO preparation is creating a pre-ICO teaser. It is a brief (about three to six pages) description of your project highlighting the most important points that will be publicly available to your potential investors. The information should be presented in a clear way not only for experts in blockchain technology but also understandable for the general public.
Non-exhaustive list of issues that must be highlighted:
The most important document of an ICO is the white paper prepared by the party launching the cryptocurrency. It contains detailed explanation of everything the investors need to know before deciding whether they are going to invest or not. The whitepaper should include the commercial, technological, and the financial details for a clear and understandable read:
– project goals and objectives
– a timeline indicating the timetable
– important milestones and deliverables
Having worked on all the above-mentioned stages, it’s time to think about the advertising campaign. To run a successful ICO, you will need to pay attention to the following:
In order to best engage the investors, you may arrange a bounty program, which implies token distribution via different channels. Free tokens are offered to those users who do some work for the project – e.g, sharing the information via social networks, reporting bugs, or translating the whitepaper into different languages. Usually, bounty programs are advertised on thematic forums like Bitcointalk.
Everyone wants to have their funds safe and sound. In order to ensure the security of your campaign for your potential investors, and for yourself, you will need to pay attention to the following:
Can your ICO be classified as fraud?
If your target audience considers your campaign as a scam, they will not invest. In order to avoid misunderstandings, provide as much information about your project as possible, pay serious attention to developing a professional whitepaper. If your project implies an open-source code, upload it to GitHub. For those who are experts in Blockchain, it will help them to understand and be interested in the nature of your coin and to ensure its reliability.
Monitoring the phishing sites
When you announce your crowdsale, be prepared that there will be people trying to obtain the money from your investors. They will copy the design of your website and give your clients the numbers of their wallets. In order to prevent phishing attacks, you may want to use the services of companies specializing in cybersecurity, e.g. – Netcraft fraud detection.
Protecting your servers from DDoS-attacks
The DDoS-attack aims temporary takedown of your website. If your site is down for some time, your investors will not be able or willing to buy your product. In order to ensure the safety of your servers, consider using DDoS-protection services, e.g. – Cloudflare.
Audit of the project’s security
Before launching the crowdsale, perform a security audit of your project – this will help you ensure that your ICO meets the above-mentioned requirements and that the funds invested are safe and sound.
Now that you know how to launch a successful ICO, and what to do to organize the development of your own cryptocurrency, you are ready to begin! Since you are determined to be a part of the cryptomarket, our team of experienced developers at Sloboda Studio is always at your disposal.
We can offer our help in:
Any questions? We are always here to help.