Tag: ICO

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Cryptocurrencies

Is Tokenization the Engine of Future Economies?

The concept of tokenization has grown in popularity in the age of blockchain technology and online commerce, but it is not entirely a new concept. The 17th to 19th century British empire used tokens when fiat was in short supply.

The concept of tokenization has grown in popularity in the age of blockchain technology and online commerce, but it is not entirely a new concept. The 17th to 19th century British empire used tokens when fiat was in short supply.

The concept of tokenization has grown in popularity in the age of blockchain technology and online commerce, but it is not entirely a new concept. The 17th to 19th century British empire used tokens when fiat was in short supply.

Contemporary online payments contain advanced security protocols to protect users’ critical data according to the latest international standards. In a nutshell, this is tokenization. Payments are made without necessarily revealing the user’s data. 

But what are tokens? 

Typically, tokens are unique digital identifiers that replace information about the user’s card and transfer it in encrypted random alphanumeric form. They do not carry any practical value that can be used by cybercriminals. Only the bank servers can interpret the tokens to confirm the transaction.

Tokenization improves the transaction process’s security, and this has been the driving force behind its growing implementation. But is it the engine of future economies? 

The Chicken-and-Egg Concept

Online platforms such as Airbnb and Amazon have grown in popularity and importance in the global economy. These platforms are intermediaries or matchmakers, bringing sellers and buyers together. They create value by reducing transaction costs and search costs.

The value created by these popular platforms depends on several factors, such as the platform’s size. Inarguably, the utility derived from using the platform depends on how many users are on the platform, and only experiences accelerated growth after reaching a critical mass of users.

In the past few years, business models have focused on developing platforms that can propel business growth. Unfortunately, low platform utility experienced by first users acts as a barrier to accelerated growth. There is no incentive for potential buyers to join it if they cannot find any sellers in it and vice versa. 

This is what is referred to as the chicken-and-egg problem. Every company that wishes to establish a platform must overcome this challenge, which is a gradual and expensive endeavor to create a suitable incentive. This is where tokenization comes in. 

Thanks to Satoshi Nakamoto, the introduction of blockchain technology can change the incentives for platform participation to skirt around the chicken and egg problem.

Usually, the platform founders issue their blockchain-enabled token for different applications. The utility token is one type of token that represents the privilege of access to products and services on the platform. In the blockchain context, the utility token is simply tokenization. 

The Incentive in Tokenization

The blockchain community views utility tokens as a medium of exchange on the platform. Before the platform launch, the entity undertakes a token issue at a particular price and uses the proceeds to fund platform development. The process is much like the stock exchange, where a company issues shares to the public to obtain funding.

The issuer promotes the sale of the token in the hope of increasing its value. As the number of platform participants rises, the demand for the tokens also goes up. Eventually, the entity limits the token supply in the face of an increasing demand to raise the token’s value. 

There is a financial incentive for buying tokens earlier because the value presumably goes up. Therefore, tokens are not only a medium of exchange but an investment vehicle as well. The early adopters get compensation as the platform grows.

A suitable financial incentive overcomes the chicken and egg problem as potential users want to benefit from the growing platform, or simply, the ever-increasing token value. There is a direct relationship between the growing token value and the platform’s growth, and every participant wants to contribute to the growth.

Asset Tokenization 

Blockchain and decentralization are synonymous. Decentralization is one of the main wheels that have kept blockchain growing, and unlike centralized systems, it is not prone to manipulation, bureaucracy and cumbersome systems among other shortcomings.

The advent of blockchain has transformed the process of asset and business valuation as well as their funding. Not long ago, the market for serious funding through securities was only accessible to fairly big organizations. But thanks to tokenization of assets, businesses of any size can access this borrowing. 

But what is the tokenization of assets?

From the blockchain perspective, asset tokenization is the secure transfer of rights to a financial asset or property to a digital asset. The primary characteristic of the process is encrypted transactions in blocks of information that can be monitored in the blockchain network.

Tokenization is a transparent, secure and progressive method of evaluating and managing any asset of value. Indeed, it is the future of the digital market.

The true potential of tokenization is unfolding right before our eyes, thanks to blockchain technology. Through blockchain, you can efficiently and safely tokenize businesses and a wide range of assets.

The Growth of Tokenization and Its Benefits 

Since the 2017 cryptocurrency boom, there have been various revisions of the concept of tokens as security. There is wide use of the term security token offering or STO to denote tokenized assets – rights or partial rights to other assets such as real estate or precious metals.

  • The apparent benefit of tokenization is dividing up an asset into tokens to open up new investment opportunities. This allows small investors to participate without the associated bureaucracy. The process of tokenization simplifies the registration process for investors and lowers the financial requirement.
  • More importantly, tokenization improves the security of data. The token does not contain any personal data, so your information is safe from hackers. Tokenization also increases the speed of transactions as there is no need for intermediaries when transacting.
  • Various transaction aspects, such as ownership registration become simpler. For example, a token can be created for a piece of the prime property somewhere around the world. It is also possible to apply tokenization to time, ability and an idea. There is also no need for a lot of paperwork that currently inhibits trading. That means you don’t need asset management companies to support transactions.
  • The management of physical assets is also transforming with tokenization. Token holders can manage the assets without necessarily going through the procedure of physical transfer. Clearly, tokenization is gaining new supporters with increased democratization of the market.

Anyone can become indirect shareholders without infrastructure costs and barriers. As a result, it is now possible to enter the market with zero costs.

Expectedly, there are some legal challenges to overcome, such as applying the new technology to illiquid assets, but it is only a matter of time and patience. Everything is moving in the right direction.

Shortcomings of Tokenization

Tokenization is an exciting new way of trading in the digital space. However, some shortcomings currently stand in the path towards the transition to full universal application. 

  • For starters, global tokenization will not be realized anytime soon since there are not many software solutions to digitize assets. Most of them are prototypes, and which is not sufficient.

A clear tokenization concept is necessary to provide all participants with interaction algorithms, token management, withdrawing, registering and exchanging assets. Furthermore, the simplicity of registration and unrestricted access to assets is a recipe for chaos.

  • Tokenization is not standardized, affecting integration with traditional payment processors, security, and asset management. Of course, blockchain technology was built upon decentralization, but it appears that tokenization will need government regulation to achieve standardization.
  • There is also the issue of trust. The creator of the token is not regulated, and the model only operates on authority and trust. There may not be any documentary evidence to prove the asset’s security, and you only have to rely on the honesty of the token developers. It is not legally binding.

In every aspect, tokenization has the same characteristics as a bubble in the absence of a regulator to minimize frauds. Typically, the traders of secured tokens are anonymous on the network, and this poses serious challenges.

  • Also, the concept of smart contracts is not adapted to the traditional financial markets and the current IT infrastructure, which is a challenge. Other obstacles to tokenization include distrust among participants and the existing legal framework. 

Final Word 

Tokenization is finally here, and it is going to disrupt the asset investment market and the financial industry at large. If you are not ready, you risk being left behind, and that is not ideal for anyone.

But what benefits does tokenization have to create such an excitement?

Well, the main benefits of tokenization are similar to those of blockchain technology, and they include decentralization, security and transparency. 

No doubt, the current digital market is embracing tokenization with real assets, and this is the best thing that could happen to the financial industry, and of course, investors. And similar to wildfire, tokenization is spreading fast to various industries as its advantages become apparent. The market is ripe for tokenization. 

But as with any other technology, there are some hurdles to jump before going mainstream. For example, there is a need to implement algorithms to support participant interactions in a decentralized system, and a mechanism for the distribution and issuing of tokens is imperative. Also, there are legal and legislative mechanisms, issues and interactions with tax systems that need to be solved. 

Slowly but surely, we are heading in the right direction, but admittedly, it will be some time, maybe decades, before tokenization can become globally accepted. 

Categories
Forex Fundamental Analysis Forex Market

ICO´s Are Indeed Risky, But Here’s Why You Shouldn’t Ignore Them…

What will the future of ICOs look like internationally? Without a doubt, ICOs are generating great expectations and I think there is probably an excess of them. Often these are planned too quickly or with a very unclear after business idea. But it is also true that very powerful and interesting projects are coming to […]

What will the future of ICOs look like internationally? Without a doubt, ICOs are generating great expectations and I think there is probably an excess of them. Often these are planned too quickly or with a very unclear after business idea. But it is also true that very powerful and interesting projects are coming to […]

What will the future of ICOs look like internationally? Without a doubt, ICOs are generating great expectations and I think there is probably an excess of them. Often these are planned too quickly or with a very unclear after business idea. But it is also true that very powerful and interesting projects are coming to light and that they are also generating a lot of benefit to many investors and also in the short term.

The regulations established and the time will make the situation normal, but we must also bear in mind which is very laborious to analyse the real potential that some blockchain companies can have in the long term. Probably, some of the ICOs that have already come out is laying the groundwork for how technology works in the near future.

What is the operation, essentially, of an ICO, why is this system born and what differentiates it from the rest?

An ICO is a new financing (and therefore investment) model for technology companies in the Blockchain sector, although they are also starting to be used in other sectors. ICO stands for Initial Coin Offering and there are certain similarities between an ICO and an OPV. In early 2012, J. R. Willett published a draft of the project he wanted to create: Mastercoin. The summer of 2013 opened a time period where users could buy Mastercoins, the future tokens that the protocol would use to perform transactions.

The idea was that with all the money raised the Mastercoin protocol could be developed, so the appraisal of the tokens would be increased and the initial investors could sell their Mastercoins more expensive than when they bought them. This way both sides would win.

Funding a project through an ICO allows you to get financing through a path that did not exist until recently and with several advantages. Many could be listed, but I will only highlight a few. For example, you can present your idea to thousands of people and not just a dozen investors, so you increase the chances of finding more people willing to invest in your proposal.

Another positive point is not having to negotiate different agreements or contracts for months with different investors. In addition, at no time do you relinquish control over decisions that are made in exchange for investment.

Also, if you look from the investor’s point of view, the ICOs are very interesting because you have a chance to get very good returns in a relatively short time and also has a great range to choose from, although we do not fool ourselves, choosing a very profitable project is not so easy. And finally, note that VCs are increasingly interested in this new figure for the liquidity that allows them and that they in their model can not have.

How to differentiate a cryptocurrency from a “Token”? On many occasions, we confuse them…

We call a cryptocurrency a currency (virtual and digital), which is encrypted using cryptography. By the latter, I mean that encryption techniques are used to secure and verify the performance of transactions.

We could then categorize cryptocurrencies in two ways: altcoins (“alternative cryptocurrency coins”) and tokens.

Altcoins could be said to be alternative currencies to Bitcoin. Some altcoins are a variant of Bitcoin, that is, they have been created using the protocol itself but changing parts of the code leading to a new currency with different features. Some examples of this type of altcoins could be Litecoin. But in addition, there are other altcoins that have not been created from the Bitcoin protocol. This means that they have been created with their own Blockchain and protocol that supports their currency. A very clear example is Ethereum. In short, it could be said that altcoins have their own independent Blockchain, where transactions relating to their native currency occur.

Tokens are the representation of a certain value or functionality and are normally located above another blockchain. For the latter reason, creating tokens is a much more “easy” process as you don’t have to modify the code of a particular protocol or create a blockchain from scratch. All you have to do is follow the requirements of a certain blockchain such as Ethereum or Waves, which allows you to create your own tokens.

In short, one of the main differences between altcoins and tokens lies in their structure. altcoins use their own blockchain, while tokens operate on a blockchain It could also be explained or differentiated in another way. Altcoins can be used as money, and tokens “only” can be used on the platform that created them. Although this does not mean that a token can also be sold or purchased at a certain price.

What is the procedure to launch an ICO? And to go to an ICO?

There are really different ways to launch an ICO but I could summarize some common points that you have to have the knowledge very clear when launching. The first, and one of the most important, is to know if the token of the ICO has a sense, a real utility, in the future project. Otherwise, it doesn’t make much sense to throw an Initial Coin Offering. Linked to the token, it is also highly recommended to correctly set the type of token sales model (reverse Dutch auctions, hybrid capped, etc.) because it is another of the many elements that can influence whether or not to collect the required amount.

Another point to bear in mind is to have the right legal and tax advice. First, because being such a recent sector it is difficult to find real professionals. And second, because if you don’t have the legal and fiscal conditions well defined, the ICO could be blocked at some point.

With regard to security, it could be said that a smart contract should be developed to raise funds and issue tokens that have passed different security audits. You have to be prepared to receive “attacks” to the web and be very attentive to the different forms of phishing that are given, either from your own web as in social networks and forums.

To achieve the highest visibility of the project, and therefore, a large number of investors is vital to proper marketing planning where I can tell you that the costs of campaigns are very high given that there are more and more ICOs that need to stand out from the rest. And more briefly, it is necessary to write a detailed Whitepaper, get agreements with the most important exchanges, have an investment committee, and that the customer service before, during, and after the ICO is excellent.

Regarding the steps to go to an ICO. To tell you that it is complex because you must have a wallet compatible with ERC-20 tokens, find a solid ICO, and with revaluation possibilities. Once you get to that point you should wait for the day of the launch of the ICO, be quick not to stay out, and also buy your tokens correctly. Well, it is usually difficult not to arrive on time because it usually takes several weeks before all the tokens have been purchased, unless it is a very important ICO since there have been cases that in a matter of hours all the tokens have been sold.

Are ICOs safe? Of course, there have been cases of failure and success.

Let’s not kid ourselves, investing in an ICO is a high-risk operation but it is proportional to the great returns you can get. However, if you take different measures you can partially minimize that risk. For example, you must read the Whitepaper several times to be well informed about the project and from there you can look for additional information: know the state of the sector where it will operate, know in more detail the equipment behind, request information in case of doubt, analyse whether the distribution and destination of the money to be collected are correct, etc.

A story, in this case, of success, because it has achieved high profitability, which I always like to name is that of the Stratis project. The price of the token during the ICO cost $0.007 and a few weeks ago I got to see it at $4.9 which is an x700. But I have also seen for example the token of Virtual Accelerator that was worth $0.04 in its beginnings and that its price has been at some point at $0.002.

And we ask ourselves the next question, what is the most important thing we need to know before we enter the world of cryptocurrencies? The most important issue we need to take into account with respect to the two big cryptocurrencies of the moment, Bitcoin and Ethereum, is that if you plan to invest in them you must do it with long-term thought and not sell even when there are moments of heavy falls. However, it is only a point of view and in the end, everyone decides their strategy and what to do with their money.

Categories
Crypto Daily Topic Cryptocurrencies

What is IDO? Is it the End of ICO and IEOs?

Cryptocurrency and blockchain aim to reduce dependence on regulated financial models and centralized platforms. Unfortunately, the majority of the exchanges are still running as centralized and in fully controlled models. 

Cryptocurrency and blockchain aim to reduce dependence on regulated financial models and centralized platforms. Unfortunately, the majority of the exchanges are still running as centralized and in fully controlled models. 

Cryptocurrency and blockchain aim to reduce dependence on regulated financial models and centralized platforms. Unfortunately, the majority of the exchanges are still running as centralized and in fully controlled models. 

IDO or the Initial DEX Offering has emerged as a solution to ensure independence and autonomy. The interest in the decentralized token listing is growing, indicating a desire to move towards a no-restriction and higher efficiency model, and that is where IDO comes in.

Initial DEX Offering is only a few months old, and it has already become a preferred method to raise capital in DeFi and distribute tokens. Admittedly, the IDO community is inexperienced, but still, it is making great strides.

Shortcomings of the Initial Coin Offering

2017 was nothing short of a fantastic year for ICO, and anyone with some white paper on digital currency could raise funds. But as it turned out, most of them were scams, and billions of dollars were lost, highlighting ICOs as scammy. 

ICO has its place in the history books as it represents the first method that investors raised funds in the crypto realm, but its weaknesses are quite glaring, and therefore the need to move past it. 

Essentially, investors in crypto startups did not have the necessary knowledge background to assess the project’s viability. Some of them invested in rumblings on white papers, and others in ICOs with staggering high valuations. But that is not all.

Initial coin offering had a loophole, and most scammers exploited it gleefully. After ICO fundraising, the project teams were free to collect the funds in one lump sum. Even if the project teams were truly committed to the project, receiving such a sum in one fell swoop was distracting, and the motivation to continue with the project would diminish significantly. 

The other shortcoming was the absence of a decent governance mechanism to safeguard the investors’ funds. People who put up their money were left stressing about their investments’ fate, continually sifting through everywhere for news, and there was also the issue of gas wars.

The most common way to contribute or participate in ICOs was through sending money from personal wallets. This created a “gas limit,” which is the maximum amount of funds you are willing to part with as transaction fees to move up the transaction validation system’s queue. 

Gas wars occurred when particular investors put up transaction fees too high to push rivals down the queue. Over time, the initially overjoyed investors for winning the gas war would then begin to sulk as regulators and other bodies started to examine some of the fundraisings’ legitimacy. For example, the SEC is beginning the process of filing cases against some of the concluded ICOs. 

Considering all these factors, legitimate projects can fail to get sufficient funding through ICOs. This is mostly because of the diminishing reputation and the need for a better alternative. 

What is IDO?

The IDO fundraising method has striking similarities to ICO and IEO. However, it is decentralized and based on DeFi, a robust, innovative, and scalable open finance technology.

An excellent example of Initial DEX Offerings is the Raven Protocol-built IDO, the first of its kind, hosted on Binance DEX. The others in operation include UMA (a Synthetic asset) and BZX, a margin trading and lending protocol. Many other platforms already have IDO dashboards and are looking to throw their hat into the ring.

Not too long ago, UMA, BZRX, and COMP used Uniswap, popular for its fair and smooth way to deliver tokens to the market. This method of distribution has become standard and is open to public access. IDO empowers users from different countries to participate in the trade. That means people from all over the globe can purchase tokens from Raven Protocol and other token vendors. 

The Difference between IDO, IEO, and ICO

The main difference between IDO and IEO is the fundraising platform hosting them. On the part of the ICO, the operations and transactions are managed on an inner platform. 

On the other hand, the centralized exchange IEO (initial exchange offerings) hosts “ICO” in-house and is, therefore, the ICO’s mutated version. Unlike ICO, IEOs offer an additional layer of intermediation, only allowing legitimate projects. Unfortunately, a large number of IEO’s are selling similar tokens to ICO, which may complicate the whole issue.

No doubt, the regulatory landscape governing crypto exchanges such as EIO is complicated, but that does not shield it in any way. The U.S. regulator has made it clear that ICO token sales are the same as securities issuances, posing a significant risk to IEO issuers and contributors. It is not an exciting prospect to invest in a promising project only to enter the SEC’s bad books. 

Typically, IDO (Initial Dex Offering) is IEO and ICO rolled into one decentralized platform. IDOs emerged with the DeFi rally as a new form of raising capital on a decentralized platform. In the case of IDOs, it is the active community members that vet and approve projects and tokens. This mechanism is somewhat favorable as it incorporates diverse opinions. 

Also, DEXes and IDOs are part of the push to decentralization as regulators begin to shift their attention to cryptos. Furthermore, the synergy between DeFi and DEXes reinforces their value in the crypto world.

The exchange fee for IEO is spiraling out of control as the market develops, and together with increased scrutiny by the regulators put it at a disadvantage. The advantage of IDO over IEO is in its decentralized nature and scalability. You don’t need permission from any authority to trade in the exchanges.

Is IDO Replacing IEO and ICO?

The birth of new technology is most often similar to a human child that goes through various stages before it matures. IDO is still in its infancy and is quickly moving to puberty, with various noticeable characteristics such as instability. The concept of IDO is no doubt exciting and may replace IEO and ICO sometime in the future. However, it has to mature first before it can take over from IEO and ICO. 

UMA, the synthetic assets platform which placed $500k into a liquidity pool, best illustrates the above point. The total supply put up was 2% under a starting price of $0.26, similar to what the seed investors paid a couple of years ago. Investors scrambled to purchase the tokens, and the bonding curve effect occurred, raising the price in the process.

Competing traders set up higher gas costs, resulting in a higher $2 price of UMA within minutes. Some buyers were dissatisfied as they purchased the tokens at a higher price than the initial investors. 

This is the same problem that BZX’s buyers face on Uniswap, with BZRX token prices rising to 12 times within a minute. There is still no IDO model that balances fairness and the need to maximize the capital. In the future, this goal may become a reality, but there’s some distance to cover. 

Conclusion 

No doubt IDO is the next big thing in DeFi and blockchain finance. However, it is still in the development stage, with instability and slight uncertainties, and it may be some time before it becomes mainstream and replaces IEO and ICO. In the meantime, IDO is in a wait-and-see situation.

But that does not mean you should stay away from IDO, at least for the time being. It means that you should be prepared to deal with the price instability until the platform matures and stabilizes in a not so distant future.

Categories
Crypto Daily Topic Cryptocurrencies

How Bitcoin Has Transformed Crowdfunding

Before the world started seeing cryptocurrency as a valid way of sending and receiving money, global charities and fundraisers relied on slow, geographically-limited, censorship-prone, and expensive donation methods. Admittedly, raising funds to promote educational content for children with special needs wasn’t a particularly easy feat a decade ago – just, for example. Bitcoin came, and activities in the crowdfunding space started breathing a new life. Fundraising for charity causes moved from local to international audiences, and project champions shifted their reliance from donors to the general public. 

Before the world started seeing cryptocurrency as a valid way of sending and receiving money, global charities and fundraisers relied on slow, geographically-limited, censorship-prone, and expensive donation methods. Admittedly, raising funds to promote educational content for children with special needs wasn’t a particularly easy feat a decade ago – just, for example. Bitcoin came, and activities in the crowdfunding space started breathing a new life. Fundraising for charity causes moved from local to international audiences, and project champions shifted their reliance from donors to the general public. 

Before the world started seeing cryptocurrency as a valid way of sending and receiving money, global charities and fundraisers relied on slow, geographically-limited, censorship-prone, and expensive donation methods. Admittedly, raising funds to promote educational content for children with special needs wasn’t a particularly easy feat a decade ago – just, for example. Bitcoin came, and activities in the crowdfunding space started breathing a new life. Fundraising for charity causes moved from local to international audiences, and project champions shifted their reliance from donors to the general public. 

In this article, we look at how the adoption of cryptocurrencies (Bitcoin) has transformed crowdfunding. We will review why Bitcoin was best suited for the job and the different forms in which crowdfunding has manifested.

Why Bitcoin?

It would be unfair to dismiss the contribution that altcoins have made to the transformation of crowdfunding. However, Bitcoin remains the leading crypto and, by far, the biggest contributor to this transformation. The transformation has mainly been due to the following characteristics, which fiat currencies lack:

#1. Anonymity – There are crowdfunding causes in which contributors wish to remain anonymous. The (relatively) anonymous nature of Bitcoin has made this possibility a reality. 

#2. Global presence – Unlike fiat money, Bitcoin is available in virtually all the countries of the world. This has made it a suitable currency for collecting donations from multiple countries. 

#3: Lower transaction costs – Compared to traditional money transfer platforms, Bitcoin offers relatively lower fees. While this might not make much difference to a user donating $5, a charity could realize massive savings, particularly if it has to bear the transaction’s cost. 

While Bitcoin has taken the lead, other cryptocurrencies have gained popularity in the recent past, especially due to increased privacy concerns. For instance, Monero, Zcash, and Dash have seen a rise in use among fundraisers focused on privacy. 

Centralized versus Decentralized Crowdfunding 

The case against centralized crowdfunding has been gaining momentum, with proponents arguing that it goes against the spirit of cryptocurrencies. Centralized crowdfunding has nothing to do with the centralized nature of fiat currencies. Instead, it is the idea that crowdfunding should not be facilitated by organizations in business just for that. There are firms, such as Patreon, whose core business is collecting funds on behalf of charities. Such organizations have been condemned for giving preferential treatment to charities they consider worthy of public support. 

Given this background, crowdfunding can either be organized privately or through centrally-managed platforms. Similarly, it can be done for individuals or organizations. Crowdfunding platforms are able to reach a wider audience within a short time, but usually charge some commission. Some of the common ones include Classy, Fundly and Crowdwise, which are popular among nonprofits. For personal fundraisers, sites such as GoFundMe and YouCaring are common. Individuals can also raise funds by posting requests on social media. The bottomline is, there is no one way to crowdfund. 

So, let’s look at some of the different ways through which Bitcoin has made the crowdfunding scene more exciting. 

#1. Venture Capital (VC) Funding

When small and medium-sized enterprises want to expand, they usually seek capital from investors. In such cases, investors offer their support in exchange for part ownership of the enterprise, which they call equity. Such investors can end up acquiring a majority stake in the enterprise and controlling the company, possibly against the founders’ vision. This undesirable situation is easily avoidable through alternative crowdfunding approaches discussed below.

For various reasons, such as higher returns, venture capitalists have shown a lot of interest in supporting blockchain projects such as PiggyBank, BlockCypher, and Chronicled. The growing prospects for Bitcoin have further boosted the confidence venture capitalists have on blockchain-based startups.

Apart from inspiring traditional venture capitalists, Bitcoin has also created a new breed of crypto-focused VCs such as Node Capital. The contribution of such VCs in powering new enterprises cannot go unnoticed. For instance, investments in companies such as Coinbase and Ripple are now paying off handsomely. 

#2. Initial Coin Offerings (ICOs)

ICOs have become the new standard for startups to raise funds for their projects. Unlike traditional venture capital funding, ICOs do not target high net-worth investors, neither do they promise equity in the business. On the converse, they allow ordinary people to contribute to the growth of a project and get tokens in return. These tokens can be redeemed, exchanged for crypto or fiat money, or accord holders special privileges in the company. 

ICOs provide startups with a promising avenue for generating funds for whatever project the founders envision. Without the widespread adoption of Bitcoin, most of these startups would still be struggling to raise capital to bootstrap their operations. 

#3. Anonymous Donations

Crowdfunding has found its way to anonymous donations, especially in the wake of increased government censorship. Where authorities believe organizations are raising funds for clandestine or outright illegal projects, they normally freeze donations. For organizations that insist on pursuing their fundraising objectives despite government restrictions, anonymous fund transfer becomes the only available option. 

Bitcoin offers a substantive level of anonymity when it comes to transferring funds. While receiving addresses can be linked to a specific organization, the actors behind the organization can choose to remain anonymous since transacting with Bitcoin does not necessarily involve any know-your-customer (KYC) processes. The obscurity provided by Bitcoin’s privacy also benefits donors since those who do not wish to be identified with a certain movement can donate without leaving any trace of their identity. 

Activism has equally benefited a great deal from anonymous donations, thanks to Bitcoin. Activist movements, such as #EndSARS would have suffered a large blow if donations were restricted to fiat money. You see, it is very difficult to raise money to fight a government when you’re relying on currency issued by the same government you’re fighting. Other than beating logic, such efforts are tantamount to pushing against the wall.

Final Thoughts

Bitcoin has shaken many finance subsectors. Crowdfunding, which is a form of alternative funding, is among those sectors that have seen a massive transformation. Bitcoin has made crowdfunding possible from privacy-focused charities to those seeking support from global audiences in circumstances where it was previously impossible. The idea of crowdfunding using crypto has also inspired new funding initiatives, such as anonymous donations. It has also become easier for small organizations like startups to raise funds to power their ideas. End users have had new opportunities to contribute to ideas they believe in and would love to support – something that was less heard of before the age of Bitcoin crowdfunding. Overall, Bitcoin has made crowdfunding more accessible to the masses, which has in turn inspired radical ideas across the fundraising industry. 

Categories
Crypto Daily Topic

Investing in ICOs – What You Need to Know

An ICO (Initial Coin Offering) is a strategy startups use to raise capital to fund a project by selling digital tokens. The project’s nature could vary from building an app to creating a new service to developing a new cryptocurrency. It is a similar concept to an Initial Public Offering (IPO) – the sale of shares by corporations to raise lump sum capital. 

An ICO (Initial Coin Offering) is a strategy startups use to raise capital to fund a project by selling digital tokens. The project’s nature could vary from building an app to creating a new service to developing a new cryptocurrency. It is a similar concept to an Initial Public Offering (IPO) – the sale of shares by corporations to raise lump sum capital. 

An ICO (Initial Coin Offering) is a strategy startups use to raise capital to fund a project by selling digital tokens. The project’s nature could vary from building an app to creating a new service to developing a new cryptocurrency. It is a similar concept to an Initial Public Offering (IPO) – the sale of shares by corporations to raise lump sum capital. 

ICOs, just like IPOs, often excite investors, which is why: at the launch of an ICO, tokens are usually sold at an outrageously discounted price. If the project goes well, the startup will become attractive to investors, and so will be the tokens. At this point, early-bird investors can sell their tokens at much higher prices and walk away with their newly-acquired wealth. This is the same thinking IPO investors have.

Despite the potential to gain massively from these investments, the risk of losing everything always lingers. If the project is a false start, the startup behind the ICO will fail to attract investors, and the tokens will be, at best, a little more than useless.

This article explains ICOs in detail, the benefits of investing, and the risks involved. Read on to know if they are a worthy venture.

How ICOs Work

First, it’s worth noting that cryptocurrency startups typically offer iCOs. Startups have limited access to funding. To make it worse, crypto startups lack the assets to back up liabilities such as credit, and this fact makes them particularly unattractive to creditors. 

When such organizations want to raise capital, ICOs come to their rescue. It all starts with publishing a technical paper detailing their idea. The whitepaper will explain the capital requirements, what the project will achieve at the end, how many tokens investors will keep, how the tokens can be redeemed, and so on. An elaborate paper is crucial in convincing investors to jump aboard. 

During the offering, those who have read the paper and see potential in the idea will buy the tokens using fiat money or crypto. In the future, issued tokens can be redeemed for cash. However, there are cases where the tokens only represent a stake in the organization and only entitle the holders to dividends. 

If the ICO fails to raise the amount needed to pursue the project, the startup may refund investors. Otherwise, it will use the funds collected to implement the proposed project. It is important to note that ICO activities are not regulated – and that’s a huge risk. Luckily, the US Securities and Exchange Commission (SEC) can intervene if it believes the ICO is illegal and may harm investors, as was the case with Telegram’s 2018 ICO. Nonetheless, the SEC’s jurisdiction is limited to the United States, something that you need to keep in mind. 

Comparison with IPOs/ Stocks 

ICOs and IPOs have a lot in common, especially in terms of how they work. Below are some of how the two compare:

  • Both are used to raise funds from the public 
  • Investors receive a token that represents their contribution. In ICOs, digital tokens are issued while IPOs feature shares
  • Both are supposed to be tradeable or redeemable 

Despite the similarities, there are notable differences between the two. For instance: 

  • ICOs are not regulated, while stocks are regulated by government agencies (SEC does this in the US)
  • Returns on IPOs are straightforward – stockholders reap annual dividends. On the other hand, ICO tokens do not grant investors ownership of the project. Still, they can be redeemed at a fixed rate, grant buyers access to the startup’s offices, entitle them to a share of the company’s profits, or whatever the whitepaper says – it’s usually all in the whitepaper.
  • IPOs are restricted to specific stock markets, while ICOs can be purchased anywhere the internet has reached.
  • IPOs usually have a high minimum amount of shares that one can purchase. ICOs, on the other hand, offer more flexibility when it comes to the minimum number of tokens that can be purchased.

How to Participate in an ICO

There is no specific process for venturing into ICOs. However, the general guide below can help you get started.

  1. Search online for upcoming ICOs. Using Google search terms like “upcoming ICOs” should be sufficient. You can also check out icodrops.com. The website provides a summary of active, upcoming, and concluded ICOs. When contemplating which ICO to settle for, take your time to read and understand the whitepaper. If you can, consult an investment expert for advice.
  2. Once you have made a comparison and settled on an ICO of your liking, register with an exchange. Since you are likely to purchase the tokens using crypto, you will need to exchange your fiat money for the said crypto. Most ICOs can be paid for using Bitcoin or Ether – that’s if they are not accepting fiat money.
  3. Buy crypto from the exchange and transfer that to your private wallet. 
  4. Go to the ICO’s official website and follow the participation guide. Most of them have simple well-explained guides. That’s it.

Pump-and-Dump ICO Schemes

Not all ICOs are established with genuine intentions. Like it is the case with any other investment alternative, you should be extra-careful when approaching an ICO investment. Pump-and-dump schemes involve overly hyping an idea to mislead investors into thinking that the proposed project will be super successful. In a typical pump-and-dump scheme, ICO owners will make outrageous claims about the potential of their idea. Then, clueless investors will buy the tokens in large quantities. Naturally, the project will fail after the capital collected has been spent, meaning the startup will have no money to pay investors.

It might be difficult to read the intentions of ICO owners from the start. However, if you see an influencer promoting a certain ICO, you should be vigilant. Using authoritative figures to market ICOs is among the best-known tactics pump-and-dump schemers use.

The ICO Bubble

ICO critics have long speculated that the concept is just a fanfare whose curtains are due to close. In 2017, Wired predicted that the ICO bubble was about to burst, but obviously, it didn’t. In 2018, cryptocurrencies saw an all-time decline in market capitalization, with Bitcoin losing over 70% of its value. The thing is, cryptocurrencies ride on speculation, and speculation cannot be predicted. Therefore, we cannot validate claims of a looming ICO bubble burst. What’s more important is to do your due diligence before diving into this unpredictable business.

Final Thoughts

ICOs present an exciting investment alternative to crypto enthusiasts. They offer many benefits that traditional IPOs lack. For instance, you can invest for as low as a few dollars. You are also not restricted to any country – provided you can access the ICO’s website, you can participate. Generally, ICOs have opened up investment opportunities to more people. However, it would help if you exercise caution when dealing with them. Their unregulated nature means if anything goes wrong, legal redress might be impossible. But since all investments are risky anyway, you might want to give it a try regardless.

Categories
Crypto Videos

Is DEFI Doomed To Be The Next ICO!

https://youtu.be/vpvf-Zv44Cw

https://youtu.be/vpvf-Zv44Cw

 

DeFi is like ‘trying to fly to the moon in a cardboard box’

While DeFi is almost certainly the future, that future may not be today, according to Richard Byworth, the CEO of digital finance company Diginex. He added that the crypto, and especially the DeFi sector, has been bursting with innovation, exuberance, and speculation in recent months. However, the niche is still very much in its infancy.

“I do believe that DeFi is potentially the future down the road,” Byworth said during an interview with the co-founder of Morgan Creek Digital Anthony Pompliano. “But it’s very early,” he added, further elaborating:

“It’s like flying to the moon in a cardboard box. You are going to get yourself into trouble along the way, and things are going to break and burn up, as we have already started to see.”
These dramatic attempts, trials, and failures are not making the industry look great regarding various mainstream entities peering into the cryptocurrency sphere and its emerging DeFi niche.

“I definitely look back to 2017, and the whole DeFi thing is probably not what we all need right now,” Byworth said. “We have MicroStrategy coming in, we have Paul Tudor Jones coming in, we have some really serious hitters slowly but surely starting to pay attention to this industry. I just hope that DeFi doesn’t become just another ICO craze that makes people go, ‘you know what, everyone is crazy in crypto,’ and stay away from it for another couple of years.”

Taking a look back, the entire crypto industry reached its peak bubble status in 2017 due to the uptrend of initial coin offerings (ICOs for short), which were an attempt to improve the IPO model. However, this model turned into a fad and later got stomped out by various regulatory bodies. In recent weeks, DeFi’s growth and optimism surrounding it have given off similar vibes, with many completely random assets spiking in the price for no apparent reason.
Byworth is not the first one who compared the DeFi sector to the now-dead ICO sector from back in 2017. Ryan Selkis, the founder of digital asset data site Messari, recently expressed very similar thoughts.

Additionally, as Byworth mentioned, multiple very important mainstream giants have recently placed big bets on crypto and Bitcoin, possibly putting the industry at a pivotal point in life thus far.

Categories
Crypto Guides

What Should You Know About BitDegree & Its Usage?

Introduction

Introduction

Introduction

Cryptocurrency projects mostly start with Initial Coin Offering (ICO). Through ICOs, companies in the cryptocurrency industry raise funds to launch new coins or services in the industry. The trio of Arnas Stuopelis, Andrius Putna, and Roberto Santana was previously serving web hosting company “Hostinger” presented BitDegree ICO to the world. This ICO managed to convince over 12 thousand contributors and raised 32 thousand ETH. In this system, students are offered with the study course and paid with a BitDegree token in return for studying. 

What is BitDegree?

BitDegree is the world’s first e-learning platform powered by Ethereum blockchain. The goal of BitDegree is to gamify the learning process with fun and rewards. Here, gamification in academics means students will be awarded cryptocurrency for completing any study course. Every academic activity performed by the student will be saved in their BDG account and can be accessed anytime and anywhere.

The BitDegree platform not only gives incentives but also provides study material for easy understanding. The official portal is available in English, Russian, and Portuguese language. Is there any other better platform for study, where you are paid with cryptocurrency tokens for studying? No, It’s only possible with the BitDegree platform.  

You can also earn tokens by referring BitDegree to your friends. At every level, you need to qualify an online test to enter the next stage, and qualifying students are rewarded with “BitDegree” tradable tokens. To offer merit students with employment opportunities, BitDegree recently collaborated with companies like Huffpost, Marketwatch, Mogul, etc. After you complete your studies, you can trade with the currency earned, or you can also ask for a cash-out.  

How to Use BitDegree?

BitDegree is a utility token, which means the holder can use it for payments but doesn’t have any voting rights in the company. All community members like teachers, learners, and employers work together and pay each other with BDG token for their efforts. BitDegree accounts can be operated on mobile and desktop as well. Almost all courses are free except for a few professional courses which are available at a subsidized fee. 

Some of the important highlights of the BitDegree portal are: 

  • Learners will be rewarded with tokens for course completion.
  • Learners will pay teachers and for courses via BDG tokens.
  • Donors and employers will issue a token to learners for specific courses.

The payment system is handled through a smart contract system. Once a specific task is completed automatically without any error or delay, the reward is delivered through a smart contract. In computer, conditions are entered in the code like:

IF John completes 6 lessons THEN send John 300 BDG Tokens

BitDegree is classified as an ERC-20 token, and you don’t need an ETH wallet to store your earned token as it will be stored in your BitDegree account itself. To earn from BDG, you can convert it to blockchain for cryptocurrency trading and get them stored in an Ethereum wallet. 

Conclusion

Bitdegree brought huge transparency to the education system and is the first e-learning platform integrated with blockchain technology. It has introduced innovations and developments in the landscape of education. BitDegree’s global education revolution is offering everyone a common platform to learn and share skills to grow together.

Categories
Crypto Guides

‘Howey Test’ & The Role It Plays In The Token Ecosystem Of Blockchain?

Introduction

Introduction

Introduction

Blockchain has led to the emergence of the token economy and, thus, new business models. With the help of the token in the business, both the customers and the owners benefit immensely. We have seen two types of token so far, utility and security tokens.

Utility tokens can be compared to loyalty points up to a certain extent while they are much more in the designated environment. Security tokens allow them to own any material/securities in a digital format in a fungible manner. Security tokens allow people to own things in a never before way.

There is a deciding factor that differentiates between security and utility tokens called the Howey test. Utility tokens don’t need any regulatory requirements since it is intended for use in its designated environment only while security tokens represent a real asset in the real-world digitally. Hence security tokens are subject to regulations.

What is the Howey Test?

Howey test is a monumental case handled by the Supreme court of the USA in 1946, which laid foundations to determine whether a particular arrangement involves an investment contract or not. The case was between the SEC and Howey. Two Florida based corporate put up real estate contracts for tracts of land with citrus groves. The defendants came up with an offer where the buyers who bought the land can lease the land back to the defendants who can grow citrus, market them, and make money.

Most of the buyers did lease the land back to the defendants as they weren’t aware of the agriculture. This was deemed illegal by the Securities Exchange Commission (SEC) and sued the defendants. The arrangement was considered illegal as the defendants broke the law by not filing a securities registration statement with SEC. The defendant’s leaseback was indeed determined as security, and this led to a landmark judgment. Hence this was determined as a test whether a particular transaction is an investment contract or not.

A particular investment can be deemed as an investment contract if it fulfills the below criteria.

  1. It a monetary investment
  2. The investment is made in a common enterprise.
  3. There is an expectation of profit from the work of the promoters or third parties.

Even though the original Howey test used the term money later, it has been broadly classified into other investments and assets other than money. One more criterion is considered in determining a particular investment as security. If or if not, an investor has any control over the profits that come from the investor? If not, then the investment is generally considered as a security.

How the law applies to tokens generated based on blockchain technology?

SES guides that if a token clears all the criteria mentioned above, it can be deemed a security token. If it doesn’t follow, then it can be deemed as a utility token. Security tokens usually derive their value from the external, tradable asset. Hence security tokens are subjected to federal rules and regulations.

If the ICO doesn’t follow all the rules and regulations as prescribed, they are subjected to penalties. If followed, they offer a multitude of investment opportunities that were not possible before. If SEC determines any cryptocurrency as a security token, the founders are deemed to register the coin with SEC, and also, the investors should register their holdings with SEC.

Categories
Crypto Daily Topic

How to Cash Out Your ICO Proceeds

Almost every week, we hear of another new crypto project being launched that will solve an existing problem or fill a gap in the crypto ecosystem. Even if it’s not geared towards the crypto space, entrepreneurial types may be interested in starting a crypto-related business.

Almost every week, we hear of another new crypto project being launched that will solve an existing problem or fill a gap in the crypto ecosystem. Even if it’s not geared towards the crypto space, entrepreneurial types may be interested in starting a crypto-related business.

Almost every week, we hear of another new crypto project being launched that will solve an existing problem or fill a gap in the crypto ecosystem. Even if it’s not geared towards the crypto space, entrepreneurial types may be interested in starting a crypto-related business.

The common practice to raise funds is through an Initial Coin Offering (ICO). An ICO is a lot like an Initial Public Offering through which traditional companies raise funds. In an ICO, a project sells freshly minted tokens so as to raise capital to start the project. People can invest in the project by receiving the tokens and giving away other cryptos such as Bitcoin, Ether, Litecoin, and so on.

Of course, after receiving the funds, the next step is to cash out and inject it into the project by paying for bills, talent, PR campaigns, legal processes, office equipment, and so on.

None of the above things would be an issue in a normal environment. However, in a world where cryptocurrency is still treated ambivalently, things have to be done differently. There is also the issue of cryptocurrencies not being accepted for everyday use.

Cashing out cryptocurrency for Fiat can be daunting, least of all, when doing so in large amounts. We’re going to take a look at why this is, as well as explore the best strategies to use when cashing out your ICO proceeds.

Why is the Process so Complicated? 

As blockchain continues to occupy more space in finance, a lot of banks and financial institutions are exploring ways in which to incorporate the technology in their operations. While this may be so, the vast majority of banks are not exactly lining up to embrace cryptocurrencies. Not only are cryptocurrencies in direct competition with banks, but they were also created to replace them. As such, it’s only natural that banks will treat cryptocurrencies with suspicion.

Reports are rife that banks are reluctant to do business with crypto-related businesses. Influential figures in the traditional finance space have been on record calling cryptocurrency a fraud. And for the few banks that are willing to engage crypto projects, paperwork upon paperwork and jumping through countless legal hoops is to be expected.

The reason for this is banks have to comply with Anti Money Laundering (AML) and Know Your Customer (KYC) regulations. Banks will be trying to ascertain your source of the funds – and whether it’s legitimate or not. Also, every single transaction has to undergo rigorous verification.

After all these procedures, it is not guaranteed that you will have a smooth sailing relationship with the bank. Due to the regulatory uncertainty of cryptocurrencies, your account will always be at the risk of being shut down. Some words such as Bitcoin, cryptocurrency, ICO, Ether, BTC, and so on can get your transactions flagged and your account shut down.

Also, cashing out via a crypto exchange may have fewer obstacles, but it’s also complicated. Assuming you find a legitimate exchange that’s also legal in your jurisdiction, the first thing you should do is ensure you have a bank account that you will withdraw your money to. You also need to undergo layers of verification processes in both the exchange and bank. Then you’ll have to contend with long wait times and high transaction fees.

Storing your funds in a crypto exchange wallet is not an option, either. Crypto exchange wallets are custodial, meaning you’re not in full control of your funds. Also, exchange wallets constitute online wallets  – which are prone to hacking and other types of fraud.

Withdrawing Small Amounts

Now, if you were to try cashing out the entire amount of funds, not only would it be a logistical nightmare, but it would also raise eyebrows with the bank and the authorities. The best approach would be to withdraw the amount of money that you actually need for various steps of the project, once in a while.

Here are a few ways to go about it: 

  1. Exchange the right amount of crypto for Fiat in an exchange and withdraw the money to your bank account
  2. Make use of peer-to-peer exchanges (exchanges that don’t utilize a third party), e.g, LocalBitcoins and LocalEthereum. Such exchanges provide high security for your funds and protect you from transactions censorship.
  3. Skip the bank altogether by using payment processors such as CoinPayments, CoinGate, SpectroCoin, BitPay, SpicePay, and others. These processors allow you to take things through direct crypto to bank transactions.
  4. Get a prepaid Visa or MasterCard that will allow you to load crypto and directly and use it for payments online and offline payments. These can be obtained at com, Tenx,  Bitwala, and other blockchain banking services.
  5. Pay your staff in crypto and instruct them on how to cash out in Fiat

Taking advantage of relaxed jurisdictions

Currently, there is no solution that directly allows you to withdraw large amounts of crypto. But some while cryptocurrency is frowned upon in many countries. Some countries have a rather open approach. In these jurisdictions, it’s possible to open a bank account and operate with crypto without being censored:

  • Singapore
  • Malta Islands
  • Switzerland
  • Estonia
  • Germany
  • Bermuda
  • Cayman Islands
  • Luxembourg
Categories
Crypto Daily Topic

How to Create an Effective ICO Marketing Campaign

ICOs have revolutionized the way startups raise funds for their projects. Generally, it involves the selling of a company’s token in exchange for fiat currency or even popular cryptocurrencies such as Bitcoin and ETH. 

ICOs have revolutionized the way startups raise funds for their projects. Generally, it involves the selling of a company’s token in exchange for fiat currency or even popular cryptocurrencies such as Bitcoin and ETH. 

ICOs have revolutionized the way startups raise funds for their projects. Generally, it involves the selling of a company’s token in exchange for fiat currency or even popular cryptocurrencies such as Bitcoin and ETH. 

While the funds raised through ICO campaigns have declined in the last few years, it doesn’t mean that it’s impossible for your project to achieve its financial goal. To a larger extent, the success of your ICO project depends on the effectiveness of your marketing campaign. 

Interestingly, the same marketing tools used in conventional advertising campaigns are also used in promoting an ICO project. The difference is in the way you use the tools. As such, an effective ICO campaign is one that seeks to inform investors of the benefits of the project and its contribution to the blockchain network. Here is how to do an effective ICO campaign.

1. Research on Your Market

It is anticipated that blockchain will find its way into all major industries improving their operations as a result. But, this blockchain takeover is still in its infancy, and as of now, not every company can embrace ICO. 

So, before planning for an ICO marketing campaign, you need to ascertain whether integrating digital tokens into your business model brings any value. You may consider trying the IPO route if digital tokens aren’t suited for your startup. 

If indeed ICO adds value to your product or service offering, you also have to do more market research to find out if what you intend to offer is on demand. Usually, demand arises from the scarcity of a product in the market. Ideally, your offering should be unique to bridge the market gap and eventually create demand. 

2. Define Your Audience

A streamlined marketing approach works better than a general approach. It may seem counter-intuitive since marketing is all about getting your product out there to as many people as possible. But a wide approach means that you may end up marketing to people who are not interested in your offering in the first place. 

On the other hand, narrowing down your marketing campaign to the right audience will certainly win you more investors. 

You could start by identifying the personas of your ideal investors. Gather relevant information about then including their pain points and how your offering stands as a solution. To achieve this, you need to leverage existing cryptocurrency communities spread across various social media platforms. Most importantly, try and connect to those who are in the same industry as your offering.  

3. Tailor your PR and Media Outreach

In the course of your interaction with the crypto-community, you’re likely to meet two distinctive audiences. The first are those with an extensive understanding of the digital currency while the second group are those who aren’t crypto savvy but understand the potential of blockchain technology. 

It is your responsibility to build a comprehensive media and public relations outreach that address both groups of potential investors. As such, the content you publish on your website and social media platforms should offer deeper analysis and insight to cater to the audience who are well versed in the digital token market. At the same time, make sure you include basic information and guides for those with a limited understanding of the market. 

4. Create a Winning Whitepaper

Your project’s whitepaper is one of the surest ways to connect to your audience. It’s a marketing tool by itself that attempts to convince investors why they should stake their funds in your company. The idea here is not to oversell your project idea but rather to win the investors’ trust. 

Essentially, a good whitepaper should consist of the project’s outline with emphasis on its place in the current market. This will help investors examine if your solution stands out from the rest of the competitors in the market. Serious investors will stake in unique projects that demonstrate the resilience to survive in the market. 

You should also state the exact amount of money you intend to raise and how the funds will help achieve certain milestones of the project. This can be captured perfectly by designing a roadmap detailing the timeline of the project development. 

A whitepaper wouldn’t be complete without the project’s team section. Despite the fact that the section appears at the tail-end of the whitepaper document, it adds credibility and legitimacy to your project. So, it’s a good idea to have reputable professionals in your team to back up your project. Ideally, the team members should have had some success in the blockchain domain to demonstrate their authority on the subject. 

5. Partnerships and Active Involvement in Blockchain Events

Forging partnerships with other startups is a marketing tool that is often overlooked by most ICO projects. This is mainly due to the fear that one party may overshadow the success of the other party. However, if done right, partnerships can actually win you more clients in addition to contributing to the growth of your project. As such, it’s recommended to partner with a company that complements what you offer. For instance, if you are a fintech crypto startup, you can partner with a blockchain payment processor company. 

Also, active involvement in blockchain forums is a good way to get your ICO project known to the rest of the community. In these forums, you’ll not only interact with other potential partners but also investors and other interested parties. 

6. Create a Bounty Program

A bounty program is a marketing strategy that uses incentive-based rewards to attract investors to your ICO. A good example of this program is airdropping. It entails rewarding some members of the crypto community with free tokens for helping spread the word about the ICO project. The free coins can be exchanged for other digital currencies or retained as an investment in the project. This is an affordable marketing strategy, especially if you can offer just the right amount of tokens to make the campaign effective. 

Conclusion

Promoting an ICO can be overwhelming, given the sheer amount of work that goes into creating an effective marketing campaign. But with the guidance of the simple tips above, it can be easier since you’ll have an idea of what to pay attention to when designing your campaign. 

Categories
Crypto Daily Topic Crypto Guides

What Are Pump and Dump Schemes in Cryptocurrency?

Introduction

Introduction

Introduction

Cryptocurrencies and the blockchain technology are relatively new to the financial markets. This makes them vulnerable to the traditional scams that used to take place on stock and some new ones. Since cryptocurrencies are not regulated by the exchange board, it makes them more prone to scam and schemes than regulated securities.

Out of the many scams around, the most common scam is the so-called pump-and-dump. It originated from the stock market, but the issue was rectified and made illegal on regulated exchanges. However, the cryptocurrency market is not immune to it.

The pump-and-dump schemes are such that they put every rise or fall in the market a question mark. So, a genuine investor would be unaware of the rise was being pumped or was shooting up for real.

The working of Pump-and-dump schemes

The actors behind the scene of pump-and-dump schemes are well-organized groups working over some private messenger. They are referred to as the inner core investors, who basically shoot up the volume of a coin by targeting a single exchange. To do so, they even take the help of whales as well. The coin under target must be of low volume so that the core can lock up as much liquidity at the price they intend. Moreover, they make sure that liquidity is relatively small.

By this, most part of the inner core investor is done. And that’s when the outer core investors kick in. These are the investors who have no clue of the planned pump-and-dump. Once the pump is implanted, all the actors in the scene, mostly the outer core investors, get buying. There are also unaware flocks who see a drastic rise and began to buy as a cause of FOMO. This drives the prices much higher and more swiftly.

Once the price anticipated by the inner core actors is reached, they step back into the business. In other terms, they initiate their dumping. Since they are the first ones to short sell, they get the best price available. Then there are the outer investors who were left scammed, sitting with huge positions looking to sell at higher prices. But the dumping brings it down. Hence, this leaves the investors harmed as well as the integrity of the coin been pumped and dumped.

The pump-and-dump has been annihilated from the stock market and other regulated exchanges. However, the haunting in cryptocurrencies or non-regulated exchanges is still in existence. With this into account, the U.S Commodity Futures Trading Commission warned people about these schemes in virtual currencies. Click the image to learn more.

Conclusion

Pump-and-dump are schemes that cannot be put to a stop in the cryptocurrency space due to its non-regulated nature. The only way to get away with it is to avoid trading cryptos with very low liquidity and low volume. Or you may research the coin on its rise and fall and predict if the move is real or just an illusion.

Categories
Cryptocurrencies

How to Identify a Phony ICO

Every new week we hear of yet another new cryptocurrency being launched. Launching of cryptocurrencies and Initial Coin Offerings (ICOs) go hand in hand – as new crypto projects seek financing for the project. Due to their novel nature – in terms of technology and market behavior, cryptocurrencies are a very attractive investment for investors.  […]

Every new week we hear of yet another new cryptocurrency being launched. Launching of cryptocurrencies and Initial Coin Offerings (ICOs) go hand in hand – as new crypto projects seek financing for the project. Due to their novel nature – in terms of technology and market behavior, cryptocurrencies are a very attractive investment for investors.  […]

Every new week we hear of yet another new cryptocurrency being launched. Launching of cryptocurrencies and Initial Coin Offerings (ICOs) go hand in hand – as new crypto projects seek financing for the project. Due to their novel nature – in terms of technology and market behavior, cryptocurrencies are a very attractive investment for investors. 

Thus, any new and flashy crypto project is likely to attract a horde of both experienced and novice traders. Scammers know this, which is why phony projects have been able to successfully con millions of dollars from oblivious investors.

How do you stay alert? How do you avoid sinking your precious savings in a fraudulent ICO? The crypto space is incredibly dynamic, and even the savviest investor can find themselves sideswiped pretty fast. That doesn’t mean you can’t have some antennae out to help you detect crypto ICO fraud. 

This piece arms you with what you need to know so you won’t fall victim to the ICO scam clothed in grand promises and irresistible investment returns.

i) Find Out About the Team

Nothing will familiarize you with an ICO better than the team behind it. To determine whether an ICO is fake or not, check who the developer and the administrative team are. If it’s a legit project, these people will not only be out in the open but also have some history in a relevant field such as cryptocurrency, finance, or technology. If the team has a somewhat questionable history with these fields, you might want to get out.

Other scammers will name drop trusted names within the industry, claiming to have their backing for the project. To determine the veracity of this, a quick Google search is all you need. Also, check whether the people behind the project have mentioned it in their verified social media pages. If the search turns up nothing, you should take that as a red flag. And even if they mention the project and their social media activity generally looks dubious – like no interaction with followers that should also be a big, flashing, red sign.

ii) Study the Whitepaper

The foundation of any ICO is its whitepaper. A white paper should contain the background, motivation, goals, strategy, potential challenges, and a roadmap for the implementation of any blockchain or crypto project. A white paper can tell you so much. Read it thoroughly. Check to see the sources referenced in the paper. Does it have financial models that have been explored by other experts before? Does it address legal concerns? Does it talk about tools like SWOT analysis? Does it have a timeline for implementation?

These guidelines are for when a potential blockchain-based project has a white paper, to begin with. If it doesn’t have one, then you shouldn’t even think twice about it. Note, though, that it’s still possible for a fake ICO to produce a very convincing white paper. In that case, you need to check if it answers all your questions. What sets it apart? How does it aim to thrive in the already competitive blockchain space? How does it intend to achieve its goals? Finally, even if the white paper ticks all your boxes, always rely on your gut instinct. If too much as the littlest thing sets you off the wrong way, perhaps something is wrong.

iii) Look at the Token Sale

ICOs usually depend on crowd sales to fund projects. Know this: the crowdfunding process should be completely transparent. A legitimate ICO will make public sales figures so that potential investors can see and track them easily over time.

If a company is making it difficult for the public to track the progress of its crowd sale, this signifies a lack of honesty and perhaps underhanded dealings. Watch out for excuses, such as protecting the privacy of individual contributors. This is just a ploy to hide the progress of the ICO and prevent people from seeing how much money has been raised and how much time is remaining. Sometimes, scam ICOs will use this trick to generate a sense of urgency and fear of missing out (FOMO) in potential investors – so that they can collect more money.

iv) Is The Project Feasible?

This may sound obvious, but blockchain projects poised for success are those that have a solid and feasible set of goals. Crypto and blockchain are already wildly competitive spaces. A new project should be able to demonstrate what difference it brings and how it plans to outdo competitors. Many projects started out with pomp and circumstance, only to sputter away after the center couldn’t hold any longer. A project should sell a compelling concept that sustains interest in the long haul. 

The issue of transparency also arises. Projects that have an outstanding proposal are more likely to put themselves in the open as much as possible. If a project regularly updates the community with achieved milestones, that means it is legitimate and feasible.

v) Caution Is Your Friend

The crypto space offers opportunities galore for those who have done their research and can read the fine print before jumping into any investment. People have made millions out of this industry. Due to this promise, it is very tempting to want to jump into the next hot new project. And scammers know this, which is why they will not hesitate to flash seemingly irresistible projects in the eyes of naive investors.

Be wary of projects that sound too good to be true. Scrutinize new projects up to the last detail. Watch out for any single piece of important information that seems to be missing. Also, check for outside sources to establish the credential of any projects. 

Check if it has supporting communities on social media and other online forums. Remember, a project doesn’t need to be fake, so you can lose money; it can also be just poorly designed or too weak to succeed.

vi) Beware of Improbable Promises

Investing was never a surefire endeavor – not in stocks, not in commodities, and certainly not in blockchain projects. If a project comes out promising nothing but sky-high results, then it’s probably a scam.

 If someone is promising you a massive ROI before anything even kicks off, or guaranteeing you impressive profits, you need to be very suspicious.

Also, watch out for a project creator who tells you they already raised millions of dollars and that you need to join in now. It is an attempt to convince you to shell out your money, so you don’t miss out on the “golden opportunity.”

vii) Check Under The Hood

Some phony projects are just peddling vaporware. Which is why you need to confirm the software of any new crypto project that you want to invest in.

Check GitHub. Is the product listed on there? Also, is there a community where you can ask questions about the functionality and features of the crypto? You can even ask the developers to show you a prototype.

viii) How Are They Handling Your Money?

The way a project is handling your contributions can reveal a lot. For example, your funds should not be sent directly to an exchange site like, say, Binance. This would mean the creators can automatically cash out the money – without any accountability at all.

Also, how are they vetting contribution sources? Are they following anti-money laundering (AML) procedures? Are they adhering to know your customer (KYC) regulations? 

If the project team is not complying with best practices, it means they are operating outside of the law. And if they’re operating outside of the law, then you’re not supposed to be giving them your money.

Final Thoughts

The cryptocurrency market is fast-paced and exciting. It can make you pretty handsome returns, but you can also lose your savings in a heartbeat. This isn’t to deter you from trying your hand in the market. It’s a call to caution – more measured steps and due diligence before you fork out your cash for any investment. By following these guidelines, you should be able to gauge if that flashy ICO is worth your time and money.

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Crypto Daily Topic

Cryptocurrencies and Ponzi schemes

According to a report by Chainalysis, crypto Ponzi schemes are now the biggest crypto crime. In 2019, Ponzi schemes accounted for 92% of proceedings from crypto crimes. Ponzi schemes are financial fraud schemes that trick unwitting people into investing money in a non-existent enterprise. Ponzi schemers sustain the fraud but paying out profits to initial […]

According to a report by Chainalysis, crypto Ponzi schemes are now the biggest crypto crime. In 2019, Ponzi schemes accounted for 92% of proceedings from crypto crimes. Ponzi schemes are financial fraud schemes that trick unwitting people into investing money in a non-existent enterprise. Ponzi schemers sustain the fraud but paying out profits to initial […]

According to a report by Chainalysis, crypto Ponzi schemes are now the biggest crypto crime. In 2019, Ponzi schemes accounted for 92% of proceedings from crypto crimes.

Ponzi schemes are financial fraud schemes that trick unwitting people into investing money in a non-existent enterprise. Ponzi schemers sustain the fraud but paying out profits to initial investors using the money that new investors have pumped into the project. Ponzi schemes are able to sustain this lie for a while – but the facade starts cracking when they can no longer attract new investors, and old investors start getting concerned.

Ponzi schemers are now moving into the cryptocurrency space to try their luck. This is because many people are still unfamiliar with cryptocurrency or how the technology really works, rendering them vulnerable to any investment lie mixed with some truths. There is also the sentiment about cryptocurrency being a “get-rich-quick” investment. The crypto space also has few checks and balances – thanks to its decentralized and deregulated nature – making it easy to defraud unsuspecting investors and evade the law – even if just for a while.  

OneCoin: the Greatest Crypto Ponzi scheme of All Time

OneCoin is perhaps the cryptocurrency Ponzi scheme that takes the crown. US prosecutors have concluded that the scheme raked in approximately $4 billion from investors around the globe. From Palestine to the UK to Uganda to India to the US, people from all over the world were duped into sinking money into “the next Bitcoin.” 

In China alone, authorities recovered $267.5 million and prosecuted over 90 people in connection with the scheme. 

Dr. Ruja Ignatova, the mastermind behind the scheme, has been missing since 2017. The last that was heard of her is that she boarded a plane from Sofia to Athens never to be seen or heard from again. 

OneCoin was launched by Ignatova, a Bulgarian, who according to her LinkedIn profile, is an Oxford graduate and a former McKinsey employee. 

On the surface, you couldn’t have suspected anything was amiss. After all, OneCoin supposedly worked like any other cryptocurrency that generated new coins via mining and could be used to facilitate global payments. Also, it came with a safe and secure wallet, and it had a “total supply of 120 billion” coins. 

Network participants were required to buy educational materials that included cryptocurrencies, trading, and trading analysis, investments, and so on. 

Participants could also receive discounted packages and referral rewards if they got more users to join the network. 

Ostensibly, OneCoin was a “centralized network” where the team “took care of all technical aspects.” In truth, however, OneCoins were engineered by the scammers who programmed it from $0.56 to around $ 33.68. 

Also, it was later debunked that OneCoin never really had a blockchain, with police saying that it lacked “a true blockchain that is public and verifiable.”

The Launch of Onecoin

In June of 2016, Dr. Ruja appeared on stage at a flashy event on the Wembley Stadium in London, dressed resplendently in a ball gown complete with long earrings. With superlative after superlative, she described OneCoin as the next big thing, including that OneCoin would be “the biggest out there,” and it would “write history.” She told hundreds (or perhaps thousands) of screaming fans that OneCoin was the “most transparent, most powerful, and most legal” cryptocurrency. She concluded with this classic: “In two years, nobody will speak about bitcoin anymore!”

Despite OneCoin allegedly growing rapidly and stories of success, investors were starting to get concerned. A long-touted crypto exchange that would let users exchange one coin into Fiat was being constantly postponed. At an event in Lisbon where organizers would allay investor concerns, Dr. Ruja was a no-show. 

FBI records indicate that she flew on a Ryanair flight from Sofia to Athens on October 25, 2016, and that is the last that investigators know for now. A BBC article surmises that she might be living in Frankfurt under a fake identity. 

She has been charged in absentia with securities and wire fraud and money laundering. Her brother, Konstantin Ignatov, has been convicted for money laundering and fraud. A US lawyer Mark Scott has also been convicted for money laundering in connection with the OneCoin scam.

How to Smell a Cryptocurrency Ponzi scheme From Miles Away

The OneCoin story is a juicy one, but in there lies very important lessons for every aspiring cryptocurrency investor. Investors who put money into the project will likely never be able to recover it. Even though authorities might successfully recoup some of the money, the probability that individual investors around the world will be fully compensated is very low. Their money’s gone, just like that. 

So how can you protect yourself from these kinds of scams? After all, such fraudsters are not going anywhere; in fact, they are constantly reinventing the game. 

Always look out for these red lights: 

i) Massive and Consistent Returns

This is perhaps the most obvious tell-tale sign of a Ponzi scheme. No investment can consistently return massive profits almost without risk. So when you see a project bragging about an impossibly high rate of returns, think twice. The general rule is: if it is too good to be true, it probably is.

ii) Returns Dependent on Referrals

If an investment project relies too much on referrals, then that is a red alert. Referral and commissions are the main routes through which participants will earn in most Ponzi schemes. If you see this kind of a model in any enterprise, it means the business itself is unprofitable, and sooner or later, it will cave in. 

iii) Unclear Ownership

Who owns the company? Are the founders in the shadows, or is information about the company inconsistent? If you know what to look for, a simple Google search should be able to reveal any shadiness. 

iv) Need To Join For More Information

To escape the law, many websites of crypto schemes will put up the facade of a legitimate business such as a wallet service, a cloud mining platform, etc. Then they will tell you that to access the investment portion, you need to sign up first. This should set off your alarm bells.

v) Closed-source or Non-Public Blockchain

The tradition of cryptocurrencies is to exist in the open. But scam coins will usually hide their source code such that others in the development space cannot review it. Also, their blockchain is not up for public participation.

Final Thoughts 

As you can see, crypto Ponzi schemes are well and alive. Fraudsters are rushing in to cash in on the allure that cryptocurrencies hold, and if you’re not careful, it’s easy to get roiled in a Ponzi scheme and lose your savings in a flash. These nuggets should help protect you from falling victim to a crypto Ponzi scheme.

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Crypto Guides

What Should You Know About Security Token Offering (STO)

Introduction

Introduction

Introduction

In our previous guides, we have understood some of the most important fundraising methods like ICO and IEO. These are the ways through which a crypto start-up can raise funds to bring their idea to a reality. But these two methods have paved the way to the raise of one more offering known as STO. STO stands for Security Token Offering, and the entire process behind it resembles the working of an ICO. So in this article, let’s discuss what STO is, how different it is from an ICO, and the pros involved.

What is an STO?

Just like an ICO, a Security Token Offering is launched as a way to raise capital by selling tokens pegged to a firm. As we see, these tokens do not belong to any Crypto company selling their coins. Instead, STO tokens are related to common securities that are speculated by traders and investors across the world. Anything from Stocks and Bonds to Real-Estate Investment Trusts can be offered to the investors in STOs.

Mainly, when we invest in any security, we are investing in a portion of property or company behind that security. For instance, if we are investing in a stock, we are betting on the company behind it. If the company’s performance is better, our stock price will rise, and we make a profit. Using traditional methods, the purchases are documented on a piece of paper, but in STOs, the purchases are recorded in a blockchain.

STOs can be considered as a fusion between the crypto ICOs and the traditional IPOs as its overlays with both of these fundraising methods. It is important to know that SEOs are heavily regulated compared to the ICOs. This is because ICOs are considered utility tokens, and the essential purpose of these tokens is for the usage as an investment, as per the rules. So the ICO platforms do not have to follow most of the strict regulations while reaching out to a broader public.

On the other hand, STOs can only be offered to qualified investors with specific criteria. The fundamental intention to launch as STO is to offer investable asset contracts that are under the purview of securities law. Hence, compared to an ICO, launching an STO is very hard because of the regulations that are in place.

Pros Involved In SEO Participation

💰 Compliance – As discussed, the STO process is heavily regulated compared to ICOs. This will increase accountability and makes sure the entire process is extra transparent because of the transactions being recorded in a blockchain.

💰 Clarity – By now, we know that real-time companies and properties back the security token that has been purchased in an STO. So there is some clarity in the value of the purchase we have made. However, in an ICO, we won’t be sure of the value a token possesses as it is not backed by any asset.  

💰 Low Costs – Just like an ICO, there’s no question of middlemen while purchasing tokens in an STO. Since the transactions are executed in Smart Contracts, there’s no reliability on lawyers and complicated paperwork, which reduces the costs big time while increasing the execution speed.

💰 Increase in Liquidity – As the security tokens purchased in an STO can easily be traded all the time irrespective of the date, the liquidity of many illiquid assets increases.

That’s about STOs and the pros involved in purchasing these Security Tokens. Please make sure to do your due diligence of what STOs to participate in and what security tokens you must buy. All the best.

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Crypto Guides

What Are IEOs & How Are They Better Than ICOs?

Introduction

Introduction

Introduction

In our previous guide, we learned about what an Initial Coin Offering (ICO) is all about. We also discussed that 2017-18 was the golden era of ICOs, where some of the biggest ever ICOs like EOS, Telegram, and Dragon Coin happened. But what happened after that? ICOs took a hard hit after the Chinese government banned them. Also, there was a lot of negativity in this space after many large ICOs turned out to be scams. So it has been challenging for the Crypto startups to raise funds for their companies ever since the downfall of ICOs. This necessity resulted in the invention of a fantastic solution – Initial Exchange Offering (IEO)

Understanding IEO

In an IEO, any crypto company willing to raise funds for their project will approach a credible cryptocurrency exchange. The crypto tokens sales of that particular company will happen on that exchange, and the companies will have to pay a certain amount of fee and a percentage of tokens that got sold during an IEO. The exchange here is acting as a platform for the companies to sell their tokens.

So basically, Initial Exchange Offering works just like how Initial Coin Offering works without the decentralization part. That means, there is Smart Contract functionality in this process. All the transactions are centralized as they are authorized by the exchange in which the tokens are being sold. This is a win-win situation where the crypto companies can have a smooth fundraising process, and the exchanges can make profits by listing new crypto tokens in their platform.

Working of an IEO

In an ICO, people who are interested in purchasing tokens must send their funds to a given smart contract. But since IEO is a centralized process, interested participants must create an account with the exchange that is undertaking an IEO and complete their respective KYC procedures. Then they must deposit their funds in the exchange wallet and purchase the newly issued tokens using those funds. Most of the deposits are accepted in cryptocurrency only.

Top IEOs Till Now

Unless you are absolutely new to the crypto world, you must have heard about the Binance exchange. This exchange is one of the first ones to start the IEO revolution by designing a platform known as Binance Launchpad. The first successful IEO was of BitTorrent, a popular torrent service provider, and it was launched on the Binance Launchpad. BTT (BitTorrent Token) sales created a record in the world of IEOs by raising more than seven million dollars in a mere fifteen minutes. This company was backed by TRON, so this success isn’t a surprise.

If not for IEOs, it would be impossible for a new crypto startup to raise this amount of funds in hours or minutes. One more notable success story of an IEO is also from the Binance Launchpad only. A crypto company known as Fetch has raised about six million dollars and met the target in less than half a minute. After seeing the massive success of Binance Launchpad, many other exchanges have shown keen interest in this space. Let’s see what those exchanges are in the below section.

Top Exchanges That Embrace IEOs

As discussed, it is a potential business for any exchange for conducting IEOs using their platform. So many exchanges have shown great interest in the recent past to conduct IEOs and increase their visibility as well. Some of the top exchanges include Binance (Binance Launchpad), BitMax (BitMax Launchpad), Bittrex (Bittrex Int. IEO), KuCoin (KuCoin Spotlight) and Huobi (Huobi Prime).

IEOs have many pros over ICOs in terms of legality, security, and ease of access. That’s about IEOs; in our upcoming article, let’s discuss another fundraising method known as STO.

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Crypto Guides

What Is An ICO and What Were The Biggest ICOs Ever?

Introduction

Introduction

Introduction

We have discussed many things cryptocurrencies in our recent guides, which talk about their evolution, properties, pros & cons, etc. We also learned a lot about Bitcoin and some of the other major altcoins. As of Feb 2020, more than five thousand cryptos are prevailing in the market. Have you ever wondered how these cryptos come into existence? The answer to this question is ICO. To understand what ICO, AKA, Initial Coin Offering

Irrespective of its size, every company needs sufficient funds to bring an idea to a reality. In the case of conventional companies, there is a concept known as IPO, which translates to Initial Public Offering. Here, a company would go public after they establish their brand name in the market. ‘Going public’ essentially means selling a part of their company to raise more funds and expand its business across the markets to gain more profits.

What Is An ICO?

Like how IPO is for traditional companies, ICO is for the companies who are willing to raise funds to build a cryptocurrency. There might be various agendas for crypto companies, which we will be discussing in the later parts of this article. But not every random crypto company can have an ICO and raise funds. Companies must make their whitepaper public that has all the technicalities of the coin they are going to launch. They must also mention the amount of money they are willing to raise through this ICO.  Along with this, the complete business plan and the acceptable Fiat or Cryptos should also be clearly mentioned.

Once they release the duration of the ICO, interested people can go through the whitepaper of that company and understand the problem they are willing to solve. If that is making sense, and all the other technicalities interest them, they can participate in the ICO by purchasing tokens of that company. Most of the companies accept both Bitcoin and Ethereum to purchase their tokens. The ultimate goal here is to bet on a company that has enormous growth potential in the cryptocurrency space. If that happens, the money they have invested here can have exponential growth and yield huge profits in the future.

If the funds that are raised meets the goal set by the company, the ICO can be considered to be successful. The companies can use these funds and bring their whitepaper to an actual cryptocurrency. But, if the funds raised don’t meet the goal, we can say that the ICO is a failed attempt, and the collected funds will be returned to the investors. Returning the collected funds is a seamless process because all of these transactions are executed through Smart Contracts. So the entire process of an ICO is decentralized and is not regulated by any central authority.

Notable ICO Success Stories

In the year 2013, the first-ever ICO took place where Mastercoin raised around 500k worth of Bitcoin. Then, the ICO of Ethereum took place, which changed the face of the crypto world forever. Without this particular ICO, the crypto world wouldn’t have been the way we are seeing it today. This record-breaking ICO took place in 2014, where the company has raised $18 million worth of funds. This ICO’s massive success enabled the amazing Ethereum platform to transform from an idea on a paper to reality.

Once the Ethereum platform was live with the revolutionary smart contract feature, ICO token sales have been extremely simplified. This resulted in the formation of some of the biggest ICOs to date. One such ICO which is conducted on the Ethereum platform is DAO. If you are a crypto enthusiast, you must have heard about this crypto. DAO has raised about $150 million worth of Ether in just four weeks.

Some of the biggest ICOs we have ever witnessed include EOS ($4 Billion), Telegram ($1.7 Billion), Dragon Coin ($320 Million) & Huobi ($320 Million). Most of the biggest ICOs like the ones mentioned above, happened in 2017-18. This is considered as a golden age of ICOs. The number of ICOs has reduced significantly, and there could be many reasons for that. Some of them include the fall of the crypto market, regulations from the US Securities Exchange Commission, frauds and scams occurred, etc.

Bottom Line

That’s about ICOs and some of the biggest ICOs ever to take place. We must be extremely cautious while participating in an ICO. Getting to know the founders well, analyzing the whitepaper, understanding the feasibility of the project, etc. is crucial before making your investments. Market experts believe that the ICOs are almost dead, but there are a few promising ICOs that are going to take place in 2020, and most of them can be found here. In the upcoming articles, let’s understand what IEOs and STOs are and how different are from ICOs. Cheers!  

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Crypto Videos

Cryptocurrency fundamental analysis part 2 – Finding Fundamental Sources

https://youtu.be/h7lkNqM573U

https://youtu.be/h7lkNqM573U

Crypto fundamental analysis part 2 – Early-stage ICO analysis

While investing in a particular project, one does not have to follow the crowd to be successful. During times when the market is not in the best position for investing (when the whole cryptocurrency market seems to be losing value), people do not want to diversify as much. The ICO market has fewer investors. Most crypto investors are now either Bitcoin maximalists or have a compact portfolio of cryptocurrencies. When it comes to ICOs, they mostly follow the crowd and the hype, or they don’t invest at all. There are, however, many factors that need to be included in the analysis of ICOs before an investment is made. ICO projects need to be looked at from every single perspective available ( and that includes token economics, team, social media, website SEO optimization…), but what happens when an ICO is in the early stages, and most of the information is not available?


Early-stage ICOs

Investing in the early stages of an ICO might be the way to acquire the best bonuses. However, it also brings enormous risks, as the conclusive analysis is usually impossible to do due to the missing data. So how can investors determine whether a project is worth investing?

Project Idea

– Every ICO has to start with a good idea. The problem a project is trying to solve is the lifeline of their project, and what it is based on. The potential acceptance of a project idea can always be determined, no matter how, when we analyze the ICO project.
Team – it’s what makes the idea transform from vision to reality. When looking at early-stage ICOs, this feature becomes even more critical. We have too little data to work with, and that makes the team one thing we can thoroughly inspect. Both the team and the advisory board need to be impeccable for the project to be eligible for investment this early on.

Roadmap

– This factor has less value than the first two but is used to estimate the time frame of the investment.
Potential social media coverage – As the project is still early in development, this part will probably be non-existent. However, some reviewers can be pretty quick when it comes to discovering new and promising projects. Of course, the more people are eager to invest in the project as early as possible, the better the chances it has of succeeding as far as price goes.

The X factor

– Something that will make other people want to invest in this project. This X factor often comes in the form of an idea (or a part of it) or their monetization plan, which makes the project particularly interesting.
If you haven’t noticed, token economics and market traction weren’t mentioned anywhere in the list of important factors here. This is because we are looking at a potential gem project way too early for them to have these. Most projects post their token economics way later, while the market traction will be non-existent when we investigate projects this early on.


Conclusion

Early-stage ICOs can be potential moneymaking opportunities and can bring you amazing returns. On the other hand, we are operating with insufficient data in the ICO analysis, which inherently brings more risk. This lack of data means that compromising on any of the factors analyzed might cost you your investment. It is advisable to pick only the best of the best ICOs when it comes to investing this early on. Another good way of being sure of the project’s possibility of success it just keeping an eye on it and waiting for the data to present itself naturally. This will make the investment safer and the analysis more conclusive.

 

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Crypto Videos

What Happens After An ICO? – Get Rich Quick Or Scam

https://youtu.be/8lGywGdgjLw

What happens after an ICO
Initial coin offerings became an extremely popular subject as people saw the crowdfunding and profit-making potential is brought to the market. Companies create

https://youtu.be/8lGywGdgjLw

What happens after an ICO
Initial coin offerings became an extremely popular subject as people saw the crowdfunding and profit-making potential is brought to the market. Companies create


What happens after an ICO

Initial coin offerings became an extremely popular subject as people saw the crowdfunding and profit-making potential is brought to the market. Companies create an ICO where they sell their tokens in exchange for funds. On the other hand, investors give their funds to the ICO project as they believe that it will solve a certain problem or simply bring a profit. The creation of ICOs meant that companies could finance a project based on just the idea.

ICO stages

ICOs usually have more than one stage. The first one is private and inaccessible to the public in most cases. It is available only to the big investors and companies that are willing to support the project. They get special deals as well as bonuses depending on the support they are willing to provide, and the amount of money they are willing to invest.

The Pre-ICO stage is next in line. In this stage, early investors get a chance to acquire the biggest bonuses available to the public. After that, the regular ICO can be divided into a few stages, with each one giving different bonuses, depending on the time of investing (the earlier, the bigger the bonus), and/or based on the amount invested (which is rarely the case).


ICO caps

Most ICOs have soft and hard caps to measure the funds required for their projects. The soft cap is the minimum amount of investment required to be acquired to even start the project. If the ICO doesn’t manage to get enough starting capital, they shut down the project and return the money to the investors.
Hard cap, on the other hand, is the polar opposite of the soft cap and represents the maximum amount of money an ICO needs. If reached before the offering is finished, the ICO stops as all the required funds are acquired, and no more funds are needed. The best project ideas tend to sell all of their available tokens in a matter of minutes.

ICO aftermath

After a project finishes crowdfunding through an ICO, the second stage of a project starts. The acquired funds are used to pay for project development or improvement (if the project had any form of a product before the ICO), marketing, and branding the idea that the ICO was based on in the first place.
The first move is, in most cases, to list the token on as many exchanges. By doing this, projects quickly enable profit-making from their tokens as the invested funds grow in market value, turning profits for the investors and making them happy, as well as making a profit to the project managers and developers, so they can have more funds to work with.
Buying into an ICO is much like investing in a company through a stock market. The main distinction is that a company that is listed on a stock market is most likely well-developed already, while an ICO represents an investment into an idea.
That idea is described in a whitepaper. When time is added to the equation, we get a roadmap for the project. The roadmap includes the project’s schedule of improvements, public and official launching of the product, and major exchange listings of their coin or token. If the project wants to be successful, they have to keep up with their timeline, or the investors will not be satisfied, therefor reducing the market price of the coin or token they bought.


ICO regulation

Many countries have decided to take a look at ICOs, how they operate, and how they should be regulated after the 2017 ICO craze. Many of the ICOs were just money grabs or scams while others were decent projects with good visions, but unable to deliver on their vision properly.
Even though the whole idea of cryptocurrency is based on decentralization, regulation can be a good thing, especially in the ICO sphere. Some countries, like China and the USA, have made strict regulatory actions towards ICO. However, both of these countries are now easing up on regulation and trying to come up with a solution on how to utilize ICOs.

KYC – know your customer

KYC laws were introduced in 2001 in the USA as part of the Patriot Act, which was passed after 9/11 to provide a variety of means to deter terrorist behavior. The section of the Act that pertained specifically to financial transactions added requirements and enforcement policies to the Bank Secrecy Act of 1970 that had thus far regulated banks and other institutions.
There are many fully legal reasons to invest in an ICO, ranging from belief in the utility of a new piece of cryptocurrency infrastructure to speculation on a coin’s rising value. Outside of these legal motivations, there are also illegal practices such as laundering fiat currency through ICO projects. Unfortunately, the ongoing lack of regulatory clarity and regulation means that people who wish to invest in a project for its intrinsic utility to disrupt established industries for the better feel they risk being treated as money launderers.
This is why the KYC system is what all of the ICO investors usually have to go through to be able to invest in an ICO. KYC is completed by submitting your information (name, address, country of origin) and then providing one or more documents to prove the information provided.

Final word

Investing in ICOs can be highly lucrative, but only if the investment is well thought out, and the project is successful. Much time has to pass until an ICO proves its worth, so investors need to have a lot of patience. The roadmap is the holy grail of investors and should be considered as such by the developers, too, for the sheer positive thinking in the times of waiting for the project to come to life.

Categories
Crypto Videos

How To Get Your Token Listed On An Exchange? – Can You Make Money From Doing So?

https://youtu.be/VtlzvwevxSY
How to get your token listed on an exchange and when?
Tokens that are easily available to the public become more attractive to buyers. On top of that

https://youtu.be/VtlzvwevxSY
How to get your token listed on an exchange and when?
Tokens that are easily available to the public become more attractive to buyers. On top of that

How to get your token listed on an exchange and when?

Tokens that are easily available to the public become more attractive to buyers. On top of that, many exchanges require projects to have a value-adding product to be listed. Therefore, the token listing brings external confirmation of a value-adding product as well as a product that is easily tradable.

This brings us to the conclusion that the success of an ICO project often lies in getting listed on an exchange. Some people even invest in ICOs simply to “flip” them if they know that the token is being listed on an exchange in a reasonable time frame.


Choosing an exchange

As history shows us, listing a token on an exchange can, on average, increase its value by 15% – 20%. However, infrastructure providers of crypto listings are also aware of this fact. That’s why listing an ICO on a known crypto exchange can cost up to $3million. To cover these astronomical fees, startups are spending money raised through an ICO instead of using the funds for developing their product. But what are these companies getting out of the process and how they pick the right exchange? With more than 500 exchanges to choose from today, it is not an easy decision.

Factors to consider when choosing the right exchange:

  • Safety
  • Exchange fee
  • Liquidity
  • Exchange customer support
  • Different payment options
  • Is the exchange beginner friendly?
  • Does it accept fiat currency?
  • Centralization

1. Safety factor

Choosing a safe exchange is clearly a “must do.” With all the security breaches that happened to various cryptocurrency exchanges over time, one must be very careful when picking the right one. Choosing a decentralized exchange will certainly be much safer than choosing a centralized one. However, that might bring other problems. With that said, everything needs to be balanced out, but safety is certainly one of the biggest factors when choosing the right exchange.

2. Exchange fees

Various exchanges have various fees. Depending on how many people support the project, how desired it is, and how “revolutionizing” the exchange thinks the project is, different cryptocurrency projects will get different offers. Most exchanges currently do not have a fixed listing price, but rather set their price based on various conditions. Choosing an exchange that fits the budget is certainly a goal, but not at the expense of safety and integrity.

3. Liquidity

Liquidity and volume measure how big an exchange actually is. The more liquid the exchange is, the more volume listed coins have on average. With the correlation between liquidity of the exchange and token liquidity being clear, we can safely assume that exchanges with more liquidity will be better for the token. However, they usually have bigger listing fees or higher standards in terms of coin development.

4. Exchange customer support

Exchanges are often rated by their users (both token projects and traders). Based on the reviews, both good and bad, a project should decide on whether the exchange is suitable for them or not. Getting honest and detailed reviews can be hard, but it is doable. Companies should not be afraid to approach already listed token projects to seek advice when it comes to a particular exchange.

5. Different payment options

Most exchanges have the same payment options but should be checked just in case. Centralized exchanges, on average, have a wider variety of payment options.
Even though all of the payment options should be considered, they should not be an important factor when choosing the right exchange.

6. User-friendliness of the exchange

Depending on the project’s target audience, this factor might be more or less important. However, having a user-friendly exchange for your token is always a good thing!

7. Fiat currency trading pairs

If a token gets listed on an exchange which also supports trading fiat currencies, it might rise in price much more. Those exchanges are usually more regulated, but also more reputable.
The fact that a particular exchange supports fiat currency trading should not be important to the project from any technical side, but it does bring additional integrity and a positive reputation.

8. Exchange centralization

Choosing a centralized or decentralized exchange can be a big thing. They both carry a lot of positives and negatives.
Overall, decentralized exchanges are safer, but are currently lacking in every other department. Even though they are the future, it might be better to (at least for now) stick with centralized exchanges due to higher liquidity and user-friendliness.


Listing timing

Lastly, we need to mention token listing timing. Many people tried to debate whether it matters when the token is listed or not. However, there is no debate that whenever cryptocurrencies are in a bearish market/trend, smaller altcoins perform worse on average. This is because of mass fear and people exiting their positions to save themselves from the potential downswings. Therefore, timing plays a big role when it comes to token listing.
There are no formulas or clear guidelines when it comes to proper timing, but the general rule is that the more bullish market looks, the better chance a token has to succeed as soon as it gets listed.

Conclusion

Choosing the right exchange for the project is by no means an easy task. However, each project has an enormous choice of exchanges, which will ultimately allow them to pick the most suitable exchange for their needs.

Categories
Crypto Daily Topic

Tips to Trading Cryptocurrencies

Cryptocurrencies present a world of possibilities. Trading in cryptos can be a thrilling endeavor, not just because of their novelty but also their volatility. Many traders and investors – new

Cryptocurrencies present a world of possibilities. Trading in cryptos can be a thrilling endeavor, not just because of their novelty but also their volatility. Many traders and investors – new

Cryptocurrencies present a world of possibilities. Trading in cryptos can be a thrilling endeavor, not just because of their novelty but also their volatility. Many traders and investors – new and experienced alike, are moving in to try their hand at crypto trading.

While trading in cryptos can be profitable, it’s also really easy to lose your money – thanks in part to their wild volatility and unpredictability. A single mistake in crypto trading can be very costly, and that’s why you should go in with a strategy.

With that, the tips below should set you in the right direction in crypto trading; whether you’re looking to dip your toe in the water or have been in the game for a while. 

Research and Research More

Before diving headfirst into what is usually a murky world of cryptocurrency trading, it’s important to arm yourself with its very basic concepts. This starts with knowing the terminologies mostly thrown around and understanding what they might mean for you. Understand what cryptocurrencies are, the technology powering them (blockchain), how to be safe while trading cryptocurrencies, and so on.

You will also need to read up on the language used in crypto trading, such as limit order, bullish, bearish, market depth, all-time lows, all-time highs, etc. It’ll also be essential to keep tabs on what is happening in the cryptocurrency world. This means knowing new cryptocurrencies, which cryptos are increasing or falling in prices, the market value of different cryptos, etc.

Knowing how different cryptocurrencies have performed in the past, their all-time lows and all-time highs is also necessary. It will help you assess the volatility of cryptos you’re interested in and determine if they’re worth investing in. It might even give you an inkling of their probable future market trends.

Bear in mind that things keep changing in cryptoverse, so one single sitting of research is not nearly enough. What was true six weeks ago may not be true today. The regulation, technology, news, and pretty much everything concerning cryptos is always changing at a fast pace.

Understand Arbitrage

Arbitrage is the difference in the price of the same commodity in two different exchanges – like, say, Bitcoin trading at a slightly lower price on Coinbase than on Binance. Understanding this and acting accordingly can be profitable for you, the trader. But keeping track of the different prices on crypto exchanges is a difficult and time-consuming thing to do.

Other factors that may affect your trading are current volumes of the currencies, variation prices, network fees. To stay on top of these elements, resources such as CoinScanner and other similar tools should be of help. They can help you understand arbitrage better and how to capitalize on it, as well as trade cryptos at the cheapest prices and gain profits.

Be Safe

The first safety rule is to find out the safest places for buying cryptos. The second is to know how to protect them once you’ve bought them. Cryptos, in particular, tend to attract scammers, hackers, phishing attacks, impostors, etc. Take precautions. Always double-check before you enter passcodes/private keys or send money to accounts. Disable any unnecessary extensions in your browser and be careful before opening any URLs.

Protection also means knowing how to store your crypto coins. There are several purpose-built crypto wallets designed with security as a priority. Ledger Nano S, TREZOR, Atomic Wallet, Abra, are some of the most trusted wallets out there.

Crypto Exchanges Are For Just That – Exchanging

Even if you’re a pro at crypto trading, you could lose your money if you’re not careful enough. Cryptocurrency has no insurance, and the responsibility of protecting your coins is yours only.

Many people make the mistake of leaving their fiat holdings on crypto exchanges after they make profitable trades. Yet, exchanges are not a secure place to store your assets. The story of Mt. Gox illustrates this too well. The former world’s leading Bitcoin exchange was put out of business, and thousands of customer coins stolen after a cyber-attack.

The best way to avoid losing your assets on exchanges is to keep your coins in a secure wallet. Also, don’t use the device that contains your assets over public Wi-Fi. Apply other precautions detailed on the safety tip above.

Don’t Ignore the Market Cap

Most inexperienced traders are prone to making trading decisions based solely on the current coin price of a crypto. The reality is the value of a crypto includes the current circulating supply. So when you’re considering whether to buy a cryptocurrency, try to look beyond the current going price and look at the percentage of the total market cap for the currency. The closer a cryptocurrency is to its market cap, the likelier its demand will rise in the near future. 

Beware of Pump and Dump, FOMO and FUD

FOMO is an abbreviation for fear of missing out. FOMO is one of the reasons many crypto traders fail in the art. This a trick that most ‘whales’ use. Whales are people who are holding massive volumes of crypto coins. Some whales buy (pump) the coins in an attempt to show that the currency is in such high demand, only to come and sell it at high prices (dump) after many people have bought the lie. But once they’ve bought it, they may never get the opportunity to trade it for profit, making losses.

When you see a sudden euphoric rush by many traders to buy a crypto, don’t jump in too because of FOMO. Always do your research and rely on your gut to make decisions – following the crowd might cost you big time.

FUD, on the other hand, stands for fear, uncertainty, and disinformation/doubt. Some people deliberately spread FUD with fake news, fake social media accounts, and manipulated facts just to dump some coins. Always verify the sources and intentions of any crypto news before being driven by FUD to make trading decisions.

Invest With Money You Can Afford To Lose

This goes without saying. The first thing to know is: the only predictable thing about crypto prices is their unpredictability. While this might actually be a good thing for crypto trading, it also might mean that nothing’s ever really assured.

Cases abound of many who have emptied their savings in cryptos, took loans, and lost most of those savings. The bottom line: never invest too much money in a very high-risk market (like cryptos).

Diversify Your Portfolio

The reason why it’s important to diversify your portfolio when trading in cryptos comes down to their unpredictability, again. Don’t be tempted to “hold all your eggs in one basket” and invest in one crypto only.

Also, many people think they should spread risk across several cryptos so that in case one tanks, the rest will turn a profit. But what they need to know is all cryptos seem to follow the pattern set by Bitcoin. When Bitcoin decreases in value against the dollar, all other coins almost always follow suit. So, diversifying among different cryptos may not be enough to cushion you against losses. The idea here is to trade in other types of assets as well.

Know Which Altcoins to Trade In

The truth about many altcoins (all other cryptos besides Bitcoin) is they end up losing value over time, sometimes unexpectedly. This means you shouldn’t hold on to an altcoin for too long.

One way to know if an altcoin is ideal for long term investment is to check the daily trading volumes. If a crypto has a high daily trading volume, then chances are it’s a good option for HODLing to sell in the future. Ethereum. Monero, Litecoin, and Dash are some of the currencies that have displayed consistent daily trading volumes.

Also, check regularly the charts of these cryptos and note spikes in price. The patterns can help to identify the perfect time to sell or buy a coin.

Have a Reason for Your Trades

You need to have a purpose for entering any crypto trade. This is because in cryptocurrency trading, someone always wins, and another one always correspondingly loses.

The crypto market is unfortunately controlled by whales who wait for the ‘small fish’ to make a mistake that will land more money on their hands.

Whether you’re a casual or active trader, sometimes it’s better to cool off and not gain anything than rush in and lose. It may seem counterproductive, but sometimes not trading at all is the only way to stay profitable.

Set Profit Targets and Stop Losses

Trading in any asset requires us to determine a point when we’ll exit the market, whether we’re profiting or losing. The target level is an upper limit where you will close the trade after you have reached a certain profit. If you had set a particular profit target and have achieved that target, it’s time to exit the market.

Also, a stop loss level can help you not lose more than you’re willing to lose. A stop-loss is the limit at which you close out your position if the price is falling. For example, if you bought a coin at $600, you can set that as the minimum point you’re willing to trade it. So if the market doesn’t go as expected, you can walk away without losing much. 

The crypto market is exceptionally volatile, and prices can fall any time. Don’t let greed or emotion guide your decision making.

Do Your Due Diligence on Initial Coin Offerings (ICOs)

ICOs offer the public a way to invest in a crypto coin and make a profit when the coin is listed on an exchange. Since they promise high returns, many traders rush in without conducting some due diligence. This is a mistake because some ICOs have turned out to be scams, and many people have lost money this way.

‘‘Trust, but verify’’ is true when it comes to ICOs. Do your own research about the project. Who are the people behind it? Analyze, based on your research, if they really have the ability to deliver on their promise. Analyze, too, the feasibility of the project. Scrutinize the white paper and seek answers where it doesn’t add up. If by the end, you still doubt the credibility of the project, you’d instead give it a pass than sink your money into it.

Don’t Buy Just Because the Price Is Low

Some beginner traders make the mistake of buying a coin just because it has a low price or is “affordable.” But the decision to buy a coin shouldn’t be determined by its affordability, but rather its market cap.

It’s just like with conventional stocks – they’re evaluated with this formula: Current Market Price multiplied by the Total Number of Outstanding Shares. This same formula applies to cryptocurrencies.

Thus, it’s better to determine a coin’s worth based on its market cap than its market price. The larger a coin’s market cap, the more it is worth to invest in.

Find a Community

It can be challenging to keep up with cryptoverse. There is a lot of information about it, and everything is always changing. To stay on top of things, find a reliable group of fellow traders with whom you can share trends, ideas, strategies, and analyses. And whether it’s on Facebook, Reddit, WhatsApp, or Telegram, remember not everyone is worth listening to.

Conclusion

Crypto trading can turn handsome profits, but the opposite is also true. The very aspect that makes cryptocurrencies an attractive trading option is the same one that requires you to tread carefully when dealing with them. Before you invest your hard-earned money in cryptocurrency, remember these cardinal tips. Also, remember trading in any asset requires a cool and sober head – whether you’re winning or losing. Good luck.

 

Categories
Crypto Videos

What Is A STO & How Is It Different From An ICO?

https://youtu.be/VJBM8X5p-mY

 
What is an STO?
STO is an acronym that stands for security token offering. Crowdfunding in cryptocurrencies started with ICOs, while STOs came as a necessity. Similar

https://youtu.be/VJBM8X5p-mY

 
What is an STO?
STO is an acronym that stands for security token offering. Crowdfunding in cryptocurrencies started with ICOs, while STOs came as a necessity. Similar

 

What is an STO?

STO is an acronym that stands for security token offering. Crowdfunding in cryptocurrencies started with ICOs, while STOs came as a necessity. Similar to an ICO, an investor exchanges their funds and gets a token in return. However, there are differences between ICOs and STOs. Unlike an ICO, a security token represents an investment contract in an underlying investment asset, such as stocks, bonds, funds, real estate investment trusts (REIT), or even other cryptocurrencies.

Any financial instrument that bears some type of monetary value is considered a security. This means that, simply put, securities are investment products that are backed by real-world assets. A security token, therefore, represents the ownership information of the aforementioned investment product, rather than having inherent value by itself. Investing in traditional assets can now be improved by recording the investments on the blockchain rather than being written on a document.
As many people try to describe ICOs and STOs by comparing them to the IPOs, we will do the same. STOs are a hybrid between ICOs and the more traditional IPOs because of their overlap with both methods of investment fundraising.

STO vs. ICO

These two offerings are quite the same, but the token characteristics are different. STOs are asset-backed and are required to comply with regulatory governance. Most ICOs, on the other hand, have their tokens declared as a utility token. Tokens utility gives users access to the native platform or their decentralized applications. The purpose of the coin, therefore, is its utility and not its investment properties.
Due to not having to comply with any regulation whatsoever, the barrier to entry for companies to launch an ICO is much lower. Launching an STO can be quite a difficult task, as the intention is to offer an investment contract under securities law. Therefore, the platforms launching the STO have to have their project comply with the regulators from day one.

STO vs. IPO

STOs and IPOs have quite a similar process (once again), but STOs issue tokens on a blockchain while IPOs issue share certificates on traditional markets. Although both IPOs and STOs are regulated offerings, IPOs happen only when private companies that want to go public. Through the IPO process, they raise funds by issuing their company shares to accredited investors.

When it comes to STOs, tokens that represent a share of an underlying asset are issued on the blockchain to accredited investors. These assets can very well be shares of a company, but they can also be any other form of asset, such as a share in the ownership of a property, fine art, investment funds, etc.

STOs are also more cost-effective than IPOs, as they do not have to deal with brokerages and investment banker fees. IPOs, however, have to. STOs would still need to pay lawyers and advisors, but they wouldn’t have to pay people for access to the market. The administration that happens after the STOs fund-raising finishes is also more cost-effective than those of an IPO.

STO regulation

As with ICOs, STO regulation very much depends on individual jurisdictions. The United States Securities and Exchange Commission (SEC) is surely the biggest and most vocal regulator on the issue of how a security token is defined. They are also one of the key factors in deciding whether or not certain tokens are utility or security tokens.

ICOs will be considered a security if they fall under the definition of an investment contract, the SEC stated. This definition comes from the Howey test, which states that:

“An investment contract is (1) an investment of money (2) in a common enterprise (3) with a reasonable expectation of profits (4) to be derived from the entrepreneurial or managerial efforts of others.”

Tokens that pass this test by qualifying for all of the attributes are security tokens. If they fail the test, they are utility tokens.

The world’s outlook on STOs

The world has not agreed on its stance on STOs yet. Many countries have even banned STOs, while other countries are not yet clear on how to regulate STOs.
As an example, Thailand’s Securities and Exchange Commission concluded that Thai-related STOs launched in an international market break the law. However, in an article by the Bangkok Post, deputy secretary of the Thai SEC indicated that the commission has not yet decided how (and if) to regulate STOs.

Conclusion

Tokenization of securities is certainly a step forward in terms of technological progress. However, the road will not be a smooth one. Countries will have to decide on how to regulate STOs for them to reach their maximum potential.

Categories
Crypto Videos

What is an ICO – How To Know If It’s Worth An Investment

https://youtu.be/q-CZPKHlvY4

 
What is an ICO?
An Initial Coin Offering (ICO) is a crowdfunding method where idea creators issue a cryptocurrency and offer it to the general public in

https://youtu.be/q-CZPKHlvY4

 
What is an ICO?
An Initial Coin Offering (ICO) is a crowdfunding method where idea creators issue a cryptocurrency and offer it to the general public in

 

What is an ICO?

An Initial Coin Offering (ICO) is a crowdfunding method where idea creators issue a cryptocurrency and offer it to the general public in return for the project funding. ICOs are mostly used in underfunded projects. Investors usually have the option to pick Bitcoin or Ethereum as a payment method. However, in some cases, fiat currency is also accepted.
People invest in Initial Coin Offerings when they believe in the project and what it could do for the world. On top of that, successful projects would have the demand for their token increased, causing the price to increase. In other words, investors are hoping to get a good return on investment (ROI) as early supporters of that particular cryptocurrency project. Most ICOs offer their tokens at a discounted price to the early investors.

ICOs are compared to IPOs (Initial Public Offerings) on a regular basis. However, this comparison is quite deceptive and untrue. IPOs happen when established businesses go public and sell partial ownership shares in their company to raise additional funds. On the other hand, ICOs are mainly used as a fundraising mechanism for projects that have an idea but no funding or development (or they are at early development stages). Additionally, buying tokens during an ICO does not grant ownership of the company.

How does an ICO work?

ICO tokens are created on a cryptocurrency platform (in most cases, the Ethereum platform), and they have to follow the platform’s guidelines. In Ethereum’s case, following the ERC-20 token standard is obligatory. Along with Ethereum, other platforms support the creation and issuance of digital tokens, such as Stellar, NEM, NEO, Waves…

Taking the ERC-20 tokens as an example, a company will use the Ethereum’s smart-contract feature to create and issue its digital token. The token will have to fully comply with the ERC-20 protocol, which defines a set of rules for it.
The ICO starts once the tokens are created. The founders now need to convince the general public to invest in their project by participating in the ICO. The technical characteristics of the token, as well as the company’s goal, are described in a whitepaper, which is completely public and free for anyone to read.

Why do ICOs exist?

An ICO can be a very effective method of crowdfunding to reach a certain development goal. Startups can now have a project idea and no funds to start with, but an ICO will (if the project is good enough) help raise sufficient funds for the project to start. This gives a chance for good ideas to thrive even without enough capital, just by making it public and letting people choose whether to support it or not.
While new companies and startups represent the majority of ICOs, this does not have to be the case every time. Many large companies are just realizing how interesting the ICO market is. The public is also slowly beginning to understand the power of decentralization offered by cryptocurrencies. For these reasons, big companies are now doing their own ICOs to launch new projects on a blockchain-based system. They do it to decentralize their business as well as raise capital. This particular practice is better known as a “reverse ICO.”

ICO regulation

The growing number of ICOs (especially during the ICO boom of 2017) attracted the attention of regulators all over the world. They are trying to see how to classify ICOs and which regulations they should impose. If we are talking about the US, the SEC (US Securities and Exchange Commission), as well as CFTC (Commodity Futures Trading Commission), are trying to conclude how to approach the regulatory framework for ICOs and cryptocurrencies.
ICO sector regulation is still in the early stages, and most countries are uncertain on how to approach the subject. That’s the reason that there is no uniformity across countries. Some people argue that more regulation will bring legitimacy to the industry and make it even better, while others say that regulation goes again everything that cryptocurrencies are and that ICOs should be unregulated.
Some jurisdictions have declared all ICOs illegal, while other issued warnings to all potential investors to perform their due diligence before investing.

Conclusion

After the ICO boom of 2017, the number of ICOs has drastically reduced. However, the ICO industry is not a dying one. ICOs will continue to be a new and great way of funding new projects with great problem-solving ideas.

Categories
Crypto Guides

What Is Market Capitalization? Top Cryptocurrencies With Highest Market Cap!

Introduction
Market capitalization is estimated for publicly traded companies in general to determine the value of that company. The value is calculated based on the total number of outstanding shares

Introduction
Market capitalization is estimated for publicly traded companies in general to determine the value of that company. The value is calculated based on the total number of outstanding shares

Introduction

Market capitalization is estimated for publicly traded companies in general to determine the value of that company. The value is calculated based on the total number of outstanding shares in the market multiplied by the individual share price. In simple words, the market cap is nothing but the market value of a publicly trading company.

Initial Public Offering (IPO)

Initial Public Offering or IPO’s are widely known. Companys which issue IPOs are publicly trading companies willing to raise capital for investing in the business to diversify and expand the company. When a company issues IPO, it agrees to sell a certain stake of the company to the public to raise the company. There are many successful IPO’s since 1602, when the first-ever IPO was recorded. Global companies like Amazon and Apple crossed one trillion-dollar in market cap, making them powerful than some smaller countries.

Initial Coin Offering (ICO)

Similar to IPOs, we have ICOs called Initial Coin offering with regards to cryptocurrencies. ICOs help crypto companies to raise funds that will be invested in creating a new coin, service, or dApps. These companies generally release a white paper detailing the aim of the ICO, minimum capital they intend to raise, and the basic design and properties of the product they are trying to create. Many investors plan to invest in ICOs to make quick bucks and earn tremendous profits. The result of some of the prominent ICOs promises the same.

Hence, the market cap of a cryptocurrency is determined by the number of outstanding coins in the market multiplied by the individual value of a coin.

Now, let’s look at the top 10 cryptocurrencies in terms of market capitalization.

  1. Bitcoin (Market Cap – $146.1 BN)

Bitcoin is the first-ever cryptocurrency, and it is obvious that this crypto tops the list in terms of market cap. The market cap of Bitcoin is $146,141,293,771, with the total number of coins in circulation being almost 18 million. As we all know, only 21 million Bitcoins can ever be mined.

  1. Ethereum (Market Cap – $19.1 BN)

Ethereum rightly earned its second place as it was developed to overcome the limitations of bitcoin, and it has become the second favorite amongst the investors. The market cap of Ethereum is around $19,191,075,792 with 108,182,195 coins in circulation.

  1. Ripple (Market Cap – $12.8 BN)

Ripples XRP takes third place with $12,833,995,058 as a market cap. The total number of coins in circulation is around 43,166,787,298. This crypto earned its credibility by gaining support from some of the most powerful centralized institutions like Federal Reserva.

  1. Tether (Market Cap – $4.1 BN)

Tether has been developed to be a stable coin, i.e., the price will always be maintained as one dollar. This coin has been developed to have the stability of fiat currency while having the key properties of cryptocurrency. The market cap of Tether is $4,121,497,986, with 4,108,044,456 coins being circulated in the market.

  1. Bitcoin Cash (Market Cap – $3.9 BN)

Bitcoin cash is created by forking the main Bitcoin platform. The market cap is around $3,956,035,700 with 18,061,950 number of coins in the market.

  1. Litecoin (Market Cap – $3.4 BN)

Litecoin is a spinoff of Bitcoin, thus earning the name of altcoin, which means alternate coin (to bitcoin). Around 63,484,804 Litecoins are currently circulating in the market.

Some of the other cryptos with high market cap include

Binance Coin (Market Cap – $2.8 BN)

EOS (Market Cap – $2.7 BN)

Bitcoin SV (Market Cap – $1.5 BN)

Stellar (Market Cap – $1.3 BN)

All the above information is as of 16th October 2019. For real-time figures, you can visit this website.

The adoption and usage of cryptocurrencies will only increase in the future as they are here to stay. At the peak of the bitcoin price in December 2017, the market cap of all the cryptocurrencies was around 125 billion dollars, and as of today, it is 221.3 billion dollars. Given the history, the market cap of all the cryptocurrencies can quickly reach a trillion dollars in the near future.

Categories
Cryptocurrencies

Investing in an Early Stage of an ICO

Are projects (ICOs) worth looking at in early stages?

This article will show you that while investing, one does not have to follow the crowd in order to be successful.

Are projects (ICOs) worth looking at in early stages?

This article will show you that while investing, one does not have to follow the crowd in order to be successful.

Are projects (ICOs) worth looking at in the early stages?

This article will show you that while investing, one does not have to follow the crowd in order to be successful. During times where market timing is not in the best spot (with the whole crypto market going down) and people not wanting to diversify gains, as they rarely have any, people are scared of investing in ICOs. Most people just follow the crowd and the hype when it comes to ICOs. There are, however, many more factors that need to be included in the analysis. My previous articles have shown that an ICO needs to be looked at from many perspectives (token economics, team, social media, SEO part of the website…). But, what happens when an ICO is in the early stages?

Early-stage ICOs

Investing in the early stages of an ICO might be the way to acquire the best bonuses. But it is also a big risk, as there is usually not enough data for a conclusive analysis. So how do we determine if a project is worth investing in?

1. Project Idea – the most important thing with every ICO is the idea. It’s a problem they are trying to solve and the lifeline of their project. You can always judge the potential acceptance of the idea when it comes to ICOs, no matter how early it is in the project.

2. Team –it’s what makes the idea go from vision to reality. If we are looking at early-stage ICOs, this becomes even more important, as this is one of the few things we can just get it on. Both team and advisory board need to be impeccable.

3. Roadmap – Less value than the first, too, but is used to estimate the investment time frame.

4. Potential social media coverage – this part will probably be non-existent as the project is in the very early stages. However, some influencers might be on it as fast as you are.

5. The X factor – something that will intrigue other people. It is usually some part of the idea or their monetization plan.

What is important and noticeable here is: I didn’t list token economics or Hype/market traction anywhere. This is because we are looking at a potential gem project way too early for them to have these.

Conclusion

Early-stage ICOs are potential moneymakers and can bring you amazing returns. However, we are operating with insufficient data in the ICO analysis, so it brings a lot more risk. This means that compromising on any of the factors analyzed will cost people their investments. I would advise picking only the best of the best ICOs to invest in early on, or just keep an eye on them and wait for the data to present and the investment to be safer (and reliable).

Categories
Crypto Market Analysis

Today´s Crypto Events 05.07.2018

Here you can find all the news about the upcoming hard fork, releases, exchange listings, updates, conferences, new launches, etc. We gather the most relevant events and conferences for you to pick from.

Today´s Crypto Events 05.07.2018

Cardano (ADA) — Roadmap Update

Edgeless (EDG) — World Gaming Executive Summit in Barcelona

Loopring [NEO] (LRN) — Airdrop

EagleCoin (EAGLE) — Master Node Public Activation Test

FidentiaX (FDX) — InsurTech Elevate Asia Conference in Singapore

Rise (RISE) — RightBTC Exchange Listing

IronCoin (PRN) — Airdrop Campaign Starts

Loopring (LRC) — Airdrop to LRC Holders

Peculium (PCL) — Webinar

Power Ledger (POWR) — Meetup in Seoul

Rupee (RUP) — New Website Release

Waves (WAVES) — Bitcoin Wednesday Conference in Amsterdam

Chainium (CHX) — Platform Release

Super Game Chain (SGCC) — FCoin Exchange Listing

Pundi X (NPXS) — Wanchain Meetup in Jakarta

Categories
Crypto Market Analysis

Today´s Crypto Events 28.6.2018

Here you can find all the news about the upcoming hard fork, releases, exchange listings, updates, conferences, new launches, etc. We gather the most relevant events and conferences for you to pick from.

Today´s Events 28/6/2018

Electra (ECA) — ATM & POS Partnership Announcement

Loopring (LRC) — AMA on Reddit

Dragon Coins (DRG) — Dragon Exchange Open Beta Release

Dignity (DIG) — Press Conference

Wings WINGS Wings (WINGS) — Ethereum Japan Meetup in Tokyo

AirSwap AST AirSwap (AST) — Ethereum Japan Meetup in Tokyo

IoTeX (IOTX) — Testnet Alpha

IOTA MIOTA IOTA (MIOTA) — Blockchain Expo Europe 2018 in Amsterdam

Covesting COV Covesting (COV) — Community Contest Begins

Gifto (GTO) — Blockchain Open Forum in Seoul

FundRequest FND FundRequest (FND) — BuildETH Conference in San
Francisco

Credits CS Credits (CS) — 2018 Blockchain Open Forum in Seoul

NEM (XEM) — 2018 Blockchain Open Forum in Seoul

Ripple XRP Ripple (XRP) — 2018 Blockchain Open Forum in Seoul

Monaco MCO Monaco (MCO) — 2018 Blockchain Open Forum in Seoul

SIRIN LABS Token (SRN) — 2018 Blockchain Open Forum in Seoul

Cobinhood COB Cobinhood (COB) — 2018 Blockchain Open Forum in Seoul

Lisk LSK Lisk (LSK) — Distribute 2018 in Hamburg

Vice Industry Token (VIT) — Platform Launch

PolicyPal Network PAL PolicyPal Network (PAL) — Echelon Asia Summit
in Singapore

TenX PAY TenX (PAY) — Echelon Asia Summit in Singapore

TenX (PAY) — Q&A on Reddit

Lisk LSK Lisk (LSK) — Meetup in Moscow

Bluzelle BLZ Bluzelle (BLZ) — Echelon Asia Summit

Storiqa (STQ) — Echelon Asia Summit in Singapore

Civic CVC Civic (CVC) — TokenMarket 2018 Summit in Gibraltar

Gnosis GNO Gnosis (GNO) — TokenMarket 2018 Summit in Gibraltar

Rivetz (RVT) — TokenMarket 2018 Summit in Gibraltar

Endor Protocol EDR Endor Protocol (EDR) — Blockchain in Shared
Services Summit in Dallas

Gulden NLG Gulden (NLG) — PoW² Release

Achain (ACT) — Achain 101 Roadshow in Ubud

Linker Coin LNC Linker Coin (LNC) — BitNaru Exchange Listing

Ink Protocol XNK Ink Protocol (XNK) — Ink Pay Public Beta

XinFin Network (XDCE) — Echelon Asia Summit in Singapore

POA Network POA POA Network (POA) — Blockchain Networking Party in
Amsterdam

POA Network POA POA Network (POA) — BuildETH Conference in San
Francisco

Alphacat (ACAT) — Shanghai Financial Services Fair

Lisk LSK Lisk (LSK) — Core 1.0.0 Public Testnet

Categories
Forex Educational Library

Source Evaluation Template For The Cryptocurrencies Market

Cryptocurrency market is still in its infancy stage. That means that the industry around it is too. People all around the world are jumping at the opportunity to take the piece of the pie, and whoever gets it first is his. This results in a great influx of financial layman’s offering advice, bringing news and teaching you how to trade, especially on youtube where people first come for information because it’s easier to accept it in a video format.

A sentence I commonly hear among those who offer this information is: This is not financial advice, do your own research. They say this in order to legally protect themselves, yet they do offer financial advice. That’s why doing your own due diligence in the cryptocurrency market is crucial. And to assist you in that I’ve created a template for you to evaluate your source of information.

I’ve divided them into three categories: news, ico’s and analysis.

Regarding news:

  1. Directness:

1.1 Is it a direct source (e.g., projects website or other social media outlets such as medium, (sub)Reddit, Twitter) (good)

1.2 Is it indirect source (news website) (neutral)

  1. Agenda:

2.1 Entertainment (neutral)

2.2 To inform (good)

2.3  Advertisement and/or interest (bad)

Your goal should be to be the closest to the source as possible. If you are interested in latest developments of your favourite crypto project, join their telegram group, or slack channel. Every established project has one. If not go to Reddit and find their subreddit, where admins are the official community managers for the project. Many of them also have a blog on Medium where they update their readers on a regular basis.

 

Regarding ICO recommendation:

  1. Who is it coming from:

1.1 Does it come from someone within the space (good)

1.2 Does it come from someone outside the space (neutral)

  1. Why is he recommending it

2.2.1 To promote because of his interest (bad)

2.2.1 Is it just a fresh topic (neutral)

2.2.3 Because he believes it’s a good idea (good)

Cross-reference that will other people recommending the same thing, and/or ask people for their opinion.

As an example, you don’t want to take your ICO recommendations from the CNBC’s show Crypto Trader. Why? Because those are sponsored, and the show is for entertainment purposes.

Analysis:

  1. Experience:

1.1 Success track record:

1.1.1 no track record (bad)

1.1.2 vague track record (neutral)

1.1.3 clear track record (good)

1.2 Prior (before crypto) engagement in financial markets

1.2.1 yes (good)

1.2.2 no (bad)

  1. Expertise:

2.1 Only crypto market (neutral)

2.2. Broad understanding of financial markets (good)

 

In the crypto world, everybody’s a trader or knows a thing or two about technical analysis. And that’s a good thing, but chose carefully who you are listening to when it comes to putting your money on the line. Ideally, you shouldn’t be listening to anybody. You should learn how to do your own analysis or higher a certified financial analyst to consult you on your investments.

That’s it. Now next time you are searching for information you have a way to validate them. I encourage you to expand on this template and create your own. Incorporate things that you find important when it comes to evaluating your source. And remember: always do your own research.