Blockchain technology disrupts everything from banking transactions to tourism and the food industry.
Disruption exceeds all transformations and changes related to the financial industry so far.
Thanks to the blockchain, now there is a possibility of initiating a business through the Initial Coin Offering project.
You might have heard of it if you are a crypto enthusiast and investor.
ICO is an excellent way to raise funds through various altcoins and tokens without facing bureaucratic issues typical for Initial Public Offerings.
If they pick up a promising project, they can expect decent returns when it comes to investors.
Their benefits are great but also could be the risks. To help you make the right choice after perusing the ICO calendar, here are the aspects of the ICO projects to pay attention to.
The success factors of an ICO
It is very complex to determine a priori whether an ICO fundraising will achieve its objectives. However, standards of good practice are emerging. In particular, if many projects in 2017 were completed very quickly, often in less than two months, the trend is now to take the time to do the best by giving yourself 3 to 6 months.
An ICO project requires a meeting in a sometimes short time of many criteria to maximize the chances of success of an ICO and limit the pitfalls.
People behind the project, meaning developers and the marketing and PR team, are the bearers of the project reputation. Check them up via social media platforms and using all viable research ways on Google. You need to make sure they are experts and that there are no suspicious initiatives in their portfolios.
The project initiator must ensure that the tokens are issued following the various regulations in force, particularly that the general conditions of sale specified are relevant and that the anti-money laundering procedures carried out are satisfactory.
The project’s creators ought to determine whether it is necessary to create an ad hoc legal entity and what taxes will apply to the entities receiving the fundraising funds. An accounting perspective is also desirable and can potentially influence the timing of the ICO.
The importance of white paper
A convincing white paper is at the core of the success of an ICO. Initiators often include quantitative elements justifying the modalities chosen for the ICO. It also requires a clear presentation of the envisaged use case and the technical response provided. In most cases, the development of a smart contract will also need to be done.
The team behind the project must be able to track down potential flaws that could lead to the misappropriation of funds raised for the benefit of hackers.
ICOs are, therefore, a new way to raise funds. They are making it possible to disintermediate the financing of innovation and thus reduce the cost of capital for startups. It implies developing new methods to provide investors with the necessary confidence to make this system reliable and sustainable. As an ICO investor, you always need to do your own research and if not sure what the project entails, seek advice from the initiated professionals.