Top Tips for Launching an ICO for Startups

Top Tips for Launching an ICO for Startups

What is an ICO?

An ICO is a widely misunderstood way of “raising capital”. I’m sure you’ve read articles which portray an ICO as the best way to raise funds for tech startups today. Before we jump into this article, I’d like to explain exactly how an ICO works.

Let’s take an example. The Basic Attention Token was one of the most successful ICO attempts, it raised over $30mn in 30 seconds. I know that this gives hopes to many tech startup founders that their ICO could do the same, but it gets more complicated.

The Basic Attention Token is a representation of value in the project that is being built now. Thus, the token has value for the holder when the project is complete. The token works as a representation of viewership of an ad which is given to the viewer whilst also having value for the viewer. Then this token can be used within the Ethereum ecosphere for exchange against goods or services.

How does the ICO work?

The Basic Attention token actually eliminates the middlemen and unnecessary costs with online publicity. The ICO was launched with the idea that some of the tokens will be sold now, at a lower price, before the project is even built. When the project will be complete, the increasing number of users will increase the demand of the token. With a limited number of tokens, the value will essentially rise over time if the project is successful and people demand tokens. Thus, people who buy in early will receive more value for their money in the long run.

If you sell a “unit” of share, you need to register it with the local SEC. That’s the national institution which protects the people from scammy investment schemes. That’s why it was a great investment method, even though it has a striking resemblance to a security, it doesn’t count as a security. Quite recently, the SEC in the US called tokens a security, thus they must be registered and go through a paperwork intensive process.

So, can I do an ICO?

Yes, but that depends on how the token is integrated into the ecosystem of your company. If the token is just a representation of the share in a company, the token will launch and then quickly devalue to 0. This gives people the opportunity to scam investors on the internet by launching a fake ICO. Since it’s not regulated, the token could devalue and the “founder” will have pretty much gotten away with millions. That happens with most small ICOs, their token quickly devalues due to the uncertainty of the project. However, if one was to develop a great white paper with the in depth explanation of how the token is integrated and will increase in value over time, it will bring a lot of investors. That’s what most people should aim for in the first place.

Thus, you can technically do your ICO but you will also need tons of security. Unfortunately, ICOs are often the target of attacks, which eventually drain the company funds into the hacker’s’ pockets. Quite recently, there was over $7mn stolen from an ICO which had shabby security. This goes to show how secure an ICO needs to be for it to resist any attempt to break in.

What technology do I need for an ICO?

You can do your ICO with the help of Ethereum. Since Ethereum gives users the possibility to create an IRC20 token, you can use the Ethereum token to launch your token. This takes less than a few days to create. Furthermore, you will need at least a hot wallet and a cold wallet. These will be used to protect the money you receive when the the token sale takes place.

That’s it. You can thus launch your ICO and raise millions!

Check out our guide for how to invest in Bitcoin here

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About Article Author

Martina Kelowsky
Martina Kelowsky

Currently working on her Master Degree in Economics & Computer Science she lives in Russia. She is a Bitcoin Enthusiast since 2013 and Investor in various ICO since 2014. She aims to democratize a future where money is decentralized and transaction anonymous.

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