Merklion Agency

We share insights & agency-side experience of running ICOs.

Why so DAICO?

As Initial Coin Offering Model popularity literally raised to the moon in recent years and the blockchain projects segment continued the constant development, new ideas regarding the future of this model arised. Back in January 2018 one of the the crypto industry top known persons, Vitalik Buterin, had suggested the DAICO model use in order to further advance the security measures.

The initial idea concept makes it possible to develop a more accessible way to manage the initial coin offering (ICO). This could be possible by combining the more traditional ICO concept with a decentralized autonomous organization (DAO) features, which is governed by the rules strictly enforced in the code.

ICOs allow the team to find investors who believe in the idea (or speculation) and directly invest in it. This allows developers to bypass traditional methods of fundraising, such as IPOs and venture investments.

Up to date, almost $4 billion is involved in the ICO market.

So, how does it work? First of all, it starts off as a Smart Contract in contribution mode. However, the DAICO contract features a specific mechanism for the contributors to send funds into the project in exchange for particular tokens of the network. Point is, after the final crowdsale date this contract will prevent any further contributing attempts.

That could be done by involving the investors in the initial project development process. The scheme looks the followings: to further enable token holders to vote for the refund of the contributed funds if they are not happy with the progress being made by developers.For projects that implement the DAICO concept, it will force a level of accountability on developers and give token holders additional assurance that they are guaranteed to either see at least a minimum viable product or get their money back.

The model difference

The main point that shows the DAICO supremacy over the traditional ICO model is the access to funds. Basically, it begins with the distribution, which allows the team to raise funds. Investors can send ETH to DAICO and get project tokens in exchange for their investments.The tokensale may have several conditions, such as: limited sale,auction,interactive offer of coins,sale to resellers.Once the distribution period ends, tokens can be traded.

First, at no point is complete trust placed entirely on a centralized team. Decisions on funds from the get-go are decided by a democratic voting system.Second, funding is not released in a lump sum, but a mechanism is implemented to spread it over time.
And finally, there is an opportunity to refund the contributed money. This decision is based on the ‘wisdom of the crowds,’ i.e., the contributors can vote for a refund of the remaining finances, if the team fails to implement the project.

While with ICO model, once the token sale finishes, developers have complete access to all the contributed funds. Developers have to calculate in advance how much is necessary to produce a minimum viable product and once they reach this amount, called ‘the soft cap’, they can start to work on the product and spend the money on whatever they deem necessary. If they don’t reach this initial soft cap, they have to refund the money. But if they do, there’s no further real obligation. With a DAICO, contributors can vote on resolutions (during the development phase) to either increase the tap or to return the remaining contributed funds (self-destructing of the contract).

Benefits of usage

The promising DAICO financial model basically puts more control in the hands of investors, contributors have much more options and influence possibilities during the development stage of the project. In case the majority of them are not agreed on project progressing, they can set the contract to withdraw and get a refund.
It definitely can make the risk of scam ICOs absent, where developers hold a token sale and then run away with the money as soon as the ICO is finished, without producing any product, MVP or even a prototype.

With an ICO, once the team raises tens of millions of dollars, it suffers deterioration in its motivation to implement the project; or, at least, the activity decreases significantly. With DAICO model increases slightly the team’s motivation to bring the idea to life, – to deliver the final product, is sustained over a lifetime period. What are some of the potential challenges with DAICO’s shortly?

-If developers hold a large chunk of the distributed tokens, they potentially only have to influence a small percentage of contributors to sway their vote and get more funds released from the Smart Contract.

-Contributors’ education is also crucial. They need to understand why the price of a specific token is rising or falling to make the right decision when voting on increasing the tap amount, or returning the funds. The best decision is one based on the facts relating to the project itself, not on emotions connected to the price of a particular token.
-Finally, contributors can also completely disengage by putting all their trust in the DAICO concept itself and therefore feel it’s not necessary for them to actually partake in votes and resolutions, reducing the majority threshold and weakening the security of the mechanism.
The ultimate goal of DACIO implementation is to establish control over the budget intelligently, to achieve the goal, not throwing away other people’s money and increasing the overall responsibility of the team. For example, while the team is on the road map creation stage, the amount of funds issued can be increased so that the team continues to grow. If the team is irresponsible or seems to be scammers, investors can cancel DAICO and minimize their losses.

DAICO Security

The common knowledge is that, any voting on a decentralized network is subject to 51% attacks. However, DAICO minimizes risks in several ways.If during the manipulation of voting the amount of funds is increased at a time, the team has the opportunity to reduce it.

As the amount of funds that gets released from the Smart Contract is limited and strictly controlled, it will reduce the occurrence of 51% attacks. Even if a 51% attack takes place, where an attacker wants to send funds to a chosen third-party, the consequences will be contained to the amount that was authorized to be released by the contributors (or the developing team) at any one point (the so-called tap).
If the team does not work according to the initial planned, you can vote for fund self-destruction.If the hackers/ network attackers manipulate votes in favor of canceling the project, investors return their money. The team can create a new DAICO, and investors simply re-send their initial investment back to the team. Although this model is for those who invest in the project, and not those who invest for the sake of quick sale after entering the exchange.
Please note that two of the potentially most dangerous types of 51% attack: sending funds to a third party chosen by the attacker, and reducing the tap to keep funds pledged in a smart contract are simply prohibited.

To DAICO or not to DAICO?

Vitalik Buterin himself gave several ways to enhance and optimize the process further:

Use ETH instead of internal tokens,
Use a “crane” with dollars per second,
Develop and introduce new consensus mechanisms beside simple voting system.

Considering all this, the 2018 may be the year of DAICO rise. Improved levels of  security can attract investors who previously feared the ICO or those who suffered from fraudsters/scammers/hackers while being involved to ICOs previously and therefore, got a negative experience in this field. The established control mechanisms must filter the scum projects and fraudsters, clearing the way for a real, innovative and useful projects as well as perspective developers teams.

Initial Coin Offering vs Crowdfunding model

The modern digital world had seen the creation and development of the fundraising platforms due to rising need of an individual availability of the real opportunities and small private businesses development as well as innovative ideas financing via the Internet.

Even long before the Initial Coin Offering model came into big-time market play, the popularity of those largest platforms had been more noticeable, which had provided the chance to promote and finance the project online, like the most significant players of this business – Kickstarter and IndieGoGo.

Nowadays, the promising startups of independent projects have the opportunity and alternative to the classic venture capital funds. Anyway, both models do exist in parallel at the moment, each of them having apparent advantages and disadvantages, cons, and pros. Let’s have a closer look at the ICO and crowdfunding models, considering their best and worst current features.

The rise and fall of crowdfunding: from first success to the major problems.
The first example of the successful fundraising by the public network had been made 20 years ago – in 1997 the British band Marillion successfully raised $60,000 for its American tour, which was a significant event at the time.

However, this model of financing had gone mainstream only after more than a decade – with the advent of specialized websites like Kickstarter and IndieGoGo. Gradually, the private business shifted to the Internet, and yet, despite the popularity of such money investments grow even year, the main problem is still not resolved – the number of technological solutions of development had only increased the competition run, but it had not created fundamentally different mechanisms of financing for independent projects.

Right now, the undisputed market leader among the crowdfunding projects is the Kickstarter for sure. The platform, launched back in 2010, had shown consistent growth of almost 200% every year, but since 2014 the situation began to change, and it began to show serious problems.

Moreover, as the number of ambitious projects grew, eventually the attracted volumes of funds had reached tens of millions of dollars. Unfortunately, some of the extremely expensive projects had become an excellent example of the high-profile scams either dissatisfaction with the final product after the release date shown by many investors.

Here is the most striking example of such phenomena – at the time the project team behind the refrigerator Coolest Cooler creation, which raised $13 million, had not fulfilled its promises, and backers supporting the project lost severe investments. Another excellent case of the significant losses – a video game micro-console Ouya, which had cost its investors nearly $9 million. The project had been successfully funded, but in the final prototype was something much less than expected – beyond the user’s hope, as well as its sales were unsatisfactory.

An infamous project of Zano drone that devastated pockets of its bakers by as much as $3 million is also worth mentioning. At its time, it had been one of the most successful European project platforms, but with 12,000 investors extreme dissatisfaction of the unfulfilled promises by developers and the final poorly working prototype, general disappointment in the platform Kickstarter and crowdfunding had come along.

Video game developer had undoubtedly liked the crowdfunding model – a lot of teams collected vast amounts of funds, but the projects often did not reach even the stages of beta versions. Someone had focused their efforts for simple theft of tiny amounts– the indie project “Mansion Lord” developer had just disappeared a few years ago, after collecting a total of $30,000 from his project contributors.
These factors had a significant influence on the popularity of Kickstarter at all: if during 2013 more than 44,000 campaigns had been created, in 2014 the number raised to 67,000, 2015 had already started to show the growth rate slowing down – only 77,000. In 2016 the number of created campaigns decreased to the total number of 58,000, which gives a very negative outlook for future if the rules of the game on the platform stay the safe in forthcoming future.

Next, another serious problem is that the original essence of the platform created for the development and funding of the independent projects had somehow become smudged and almost lost. After the waves of success of particular small projects on the platform, the stable big-budget companies with colossal funding came into play. It is a fact that significant investments lead to significantly higher losses.

The fraud schemes involving the use of several hundred or more users appeared, which meant that companies had funded the successful launch of the campaigns from their own pockets – only to have real backers joined after noticing the sky-high start of a particular project on the platform. Because of such dishonest practices, the chances for the small developers and enthusiasts had been reduced slightly – without proper investments in PR-campaigns and Internet traffic, they risked to collect absolutely nothing or fail while being half-way to success.

According to all-time official statistics of the platform, over $ 3.3 billion of investment had been raised since launch, 13.6 million users had supported at least one campaign, and the total number of successfully funded projects is now more than 132,000.

If in the nearest future arrangements for the regulation of domestic competition are not introduced, the major players from the world of business will continue to reduce the number of advanced independent projects even more. Also, such things as fraud, deceit, and failure of obligations of the campaign organizer of the project are still present at large.

With the growth of demand for independent financing, the number of websites for crowdfunding is growing, but they mostly just copy the functionality with the addition of minor features to the existing and heightened competition. With the development of blockchain technologies and the emergence of ICOs independent entrepreneurs had gotten a real chance.

ICO features

Initial Coin Offering is a crowdfunding campaign based on the blockchain technology, it has a lot in common with the traditional crowdfunding, but there are also significant differences. Initially, ICO was one of the crowdfunding variants specified for cryptocurrency projects that did not want to work with traditional venture funds and capital – because it would, in fact, mean the loss of desired independence.

The most important difference between the ICO-crowdsale and crowdfunding lies like a financial asset that investor acquires. The crowdfunding campaigns get the real, Fiat money from its sponsors and that is, actually a payment in advance for the final product of a particular project. ICO, in turn, involves the purchase of a digital token for use by the client of the service project after its launch. In most cases, these tokens can be traded on the stock exchange, and some investors have the opportunity to obtain exclusive rights of a shareholder.

The ICOs organizers seek to obtain investments in the project by the concerned community, where funding is likely to be done with the use of Bitcoin or other cryptocurrencies. The nature of these digital assets allows one to send them to the recipient anywhere in the world, quickly and almost without any cost, as well as avoiding the traditional banking system. No doubt, such advantages will be appreciated by those who had ever transferred money overseas.

It should also be noted that, over time, the collection of money has ceased to be the single most crucial part of the ICO often tokens of the project are used as the local currency for various actions on a specially created platform. 2017 showed a real boom in the growth of the ICO projects. According to CoinSchedule, compared with 2016, the number of successful and active ICOs in the past year increased significantly from 46 to several hundred. As at the end of 2017, the funds raised during the ICO investments in the USA exceeded $4 billion, reports Bloomberg, citing data from Autonomous Research LLP.

Unfortunately, there is still a shortage of solutions allowing investors and startups find each other because the technological complexity sometimes is beyond the understanding of project participants and the conducting of its developers and organizers.

Besides the funding approaches, there are other significant differences. The ICOs and crowdfunding project principles of conduct are not the same, so is their audience.
The main differences between ICO and crowdfunding are:

1)The Product:

While investing in crowdfunding projects, backers pay for the result of the job of the specific team that they are interested in – final products, merely saying.
Cryptocurrency projects investors are mainly driven by the motivation of fast earnings or promotion of the new technologies in specific areas. In the first case, the prepayment is made for the product, in another – it is the financing of an idea or concept.

2) Campaign length:

Crowdfunding projects take too much time to prepare and conduct the campaign. For example, it took the LHV Company 2 long years to develop its campaign. It is not the tool that is best suitable for independent startups – the only exceptions are those campaigns that are funded by the venture capital investors. ICOs, in turn, can be carried out much faster – from weeks to minutes and seconds even.

Some striking examples of it:

Based on blockchain technology internet browser Brave raised $35 million, and although it’s not much for the modern ICO market, the fact is the full amount had been collected in only 24 seconds, and after a week the benefit of the investors of the project came to astonishing 676%. The most recent example – on Dec. 27 the Singularity Net startup, designed to create a decentralized framework for AI-based blockchain, during only 66 seconds collected $36 million for its developer company.

3) Financial features:

Top projects crowdfunding with multi-million dollar budget, as mentioned above, can often fail or merely turn out to be a Scam. With traditional crowdfunding, users can risk of losing investments of Fiat money – besides, the investor should invest their money, wait until the company begins to create the product, but if the development does not succeed, the money can be lost in many cases. In case of ICO, the investor can track what is happening with the project. The potential benefit for the future investors grows in many times.

4) Investor accessibility:

Nowadays, most crowdfunding projects are restricted to a particular region or a specific country that is native to the people behind the project. While some of the projects are global, not all apply to a broader scope, unlike ICOs.
In turn, many would be able to participate in coin offerings as the accessibility for it falls on a broader range. A lot of ICOs have gathered investors from all over the world as they are more accessible for people around the globe as they are advertised well in social media.

Besides that, they offer something much more that would attract the eye of the masses. Although some of the newer token sales set restrictions to be able to join, a lot of people still pass those restrictions and can participate in the mentioned ICO.

5) The contributor’s confidence:

In contrast to the dynamically growing ICO project markets, the crowdfunding platform like Kickstarter, in particular, is inferior not only regarding the growth rate but also in steadily decreasing of the number of completed projects. Pure statistics: back in 2015 this figure was 22,000 projects, and – already 18,800 in 2016. The share of successful projects from 2011 to 2014, on average, ranged from 45 to 50%, and this fell to 20-25% in some categories. Slightly better things are with the budget projects with funding of up to $10,000 – 69% of current success, according to the recent statistics Kickstarter campaign.

6) Regulations

Fact is, existing crowdfunding platforms are registered and regulated by the law.
This perspective market is expected to reach $96 billion by 2025. Anyway, some countries governments have already come up with regulations that set requirements for crowdfunding projects and define liabilities. One of such regulations is JOBS Act, issued in the US in 2012. Only qualified investors could invest in startup projects due to it, and France is the only country to perform government control over crowdfunding in the European sector.

Nowadays, ICOs are still usually unregulated. In consequence, ICO investors and project enthusiasts are subjected to some risks. Of course, the investors in ICO startups cannot be fully protected. As a result, many lost their money. According to Chainalysis, for the year 2017, fraudsters appropriated about 14% of the funds raised by projects using the Ethereum-based ICO, namely approximately $ 225 million out of $ 1.6 billion. As a result of fraudulent activity, about 30,000 investors suffered losses with an average of $7,500. Cybercrime concerning investors’ financial resources is growing faster than the number of investments attracted within ICO. The jump in both these indicators has become especially noticeable since March 2017.

Security and Exchange Commission had recently imposed first charges on companies that went on ICO for fraud. Among other risks are technical mistakes in smart-contracts that lie underneath ICO processes – one of the most infamous examples of it is the DAO that raised over $150 m and lost one-third of its funding due to the exploited by hackers vulnerabilities in smart-contracts. Filecoin ICO, for example, had become the first regulated ICO ever and raised record-breaking $252 million in less than an hour.

7) The rewards

Traditional crowdfunding model bakers don’t expect some decent rewards. Companies or enthusiasts who launch campaigns may offer fancy, but useless stuff like T-shirts, a copy of the final product upon the release or pure gratitude in credits. Other case sees reward models offer the possibility to pre-order the product.

The Initial Coin Offering participants receive tokens in return according to the amount contributed. Some issued tokens give access to the services that platform will offer in the future. An ICO might involve attributing equity to a token so that ownership provides voting privileges and access to future dividends. The typical use case of a token issued in an ICO is the creation of an asset that gives access to the features of a particular project. Besides, some view tokens as an investment opportunity as they hope that the price will go up sooner or later.

Both models, ICOs and CF, have a lot of advantages and significant features. Initial Coin Offering and Crowdfunding may seem to have a similar nature, at first sight, but they do differ in many key aspects. Traditional crowdfunding is regulated and is less risky for investors and the blockchain project, and ICOs is the fastest and easiest way to raise money. In some cases, the amount of money raised may surpass the sum required to launch a project.

Therefore, technical progress always wins, and there is no doubt about the future triumph of the new technologies such as blockchain startups.

ICO Regulations: Asia

Asian market of emerging ICO start-ups had always been one of the most popular and lucrative ones. The market volumes in these countries rise constantly. Let’s consider the current governmental position on ICO in main countries of the Asian region.

1)China

Last year had seen the pressure on ICO market tightening as many major regulators including China had decided to take ultimate steps regarding the use of this economic model. Nonetheless, the ground behind such serious actions had been present – as the major checking’s had shown the fraudulent nature of the most digital start-ups.

An official document issued by the People’s Bank of China had indicated the number of 90% of start-ups being present as a scam. As a result, the

decision was to ban all the ICOs from China, either targeting domestic or an international market.

As a result, the world’s largest token sale market had been taken out of the picture. Moreover, the special directive statement had ordered all the Chinese companies not only to stop any ongoing and future projects, but also to fully return funds to their investors. These events led to Bitcoin and Ethereum market crash on 11 and 16 percent respectively, as the announcement went worldwide.

2)Hong-Kong

The regulators in this autonomy, presented by the Securities and Futures Commission (SFC), had been less straightforward. Instead of simple and total ICO ban, a certain set of rules for the ICO launching companies and entrepreneurs had been issued.

The approach taken by the SFC had been the following: ICO start-ups tokens could be considered as securities and had to comply with the Hong-Kong securities law. As a result, the ICOs are viewed as the activities regulated by the law and the teams launching them hold full legal responsibility. No matter which location these start-ups are registered in, the companies that are participating in such ventures must obtain specific licenses and to register in the SFC.

The legal statement indicated that tokens as an investment instruments should be considered depending on liability options, which are: the debt instrument use; corporate rights and property provision, collective investment scheme for token shares.

Summing that up, the current ICO market state in Hong-Kong could be considered quite liberal.

3)Japan

At the moment, the cryptocurrency market in Japan is the largest in the world – the country holds nearly 35% of the global volume of bitcoin trading according to the cryptocompare.com data. This is facilitated by various factors – the loyalty of the government of the country to new technologies and Bitcoin as well as the lack of a legislative framework for the direct ICO regulation.

Japan is one of the leading countries in terms of technology, and digital currencies are no exception – this country was one of the first to legalize cryptocurrencies, which occurred on April 1, 2017.

as means of payment for individuals and companies. The country controls approximately 65% of the world Bitcoin market at the moment and leads in the number of legal cryptocurrency exchanges.

Nevertheless, there are certain difficulties that prevent Japan from becoming a place of pilgrimage for ICO companies. For example, in order to conduct the business, the company must pay a license and to keep a reserve of funds in the amount of at least $100,000 and be ready for regular audits. Any incomes from cryptocurrency operations are taxed the same as Fiat profit.

At the moment, there is no legislative framework for the direct regulation of ICO in Japan, but the “law on virtual currencies” has been adopted recently. This law defines the legal status of how to attract investments in Japan – in particular, according to this collection of regulations, any company that is going to conduct Initial Coin Offering and issue its own digital currency, must be officially registered.

According to the latest Pony JFSA information, at the end of December 2017 the Bitocean Corporation specializing exclusively in bitcoin Toras. At the moment, she was 16 at the expense of officially sanctioned Burj in Japan, right – of pollute applicants over the past year. This bra since 2013 works in China and Japan, is engaged in the development of a trading platform and bitcoin Bank for operations on the period of cryptocurrency in Fiat funds.

In 2017 the Japanese finance regulator issued 15 rights totally – 11 at the end of September for the following exchanges: Money Partners, Quoine, Bitflyer, Bit Bank, SBI Virtual Currencies, GMO Coin, Bittrade, Btcbox, Bitpoint, Fisco Virtual Currency, и Zaif., and another 4 – in December 2017:Tokyo Bitcoin exchange, a bit of Arg stock Exchange, Tokyo, FTT corporations and Xtheta Corporation.

Another interesting point- it is curious that until recently, the FSA has never disclosed the names of companies that provided a legality application and are under review. The financial published a list of 32 exchanges on February 1, which are currently the object of attention of this organization, and it also includes 16 cryptoexchanges that have not yet obtained the license.

In addition to the above 16 exchanges currently working, another 16 are not currently licensed, but classified as “considered the Virtual value traders”, while their analytical FSA is being conducted, the Agency explained. Among them is Coincheck, one of the largest cryptocurrency exchanges in the country. Interestingly, at the same time, the application of the second crispy pans of crypto currency exchange Coincheck, which had water in the FSA in mid-September are still under consideration by the regulator.

Another 15 are: Minnano Bitcoin, Payward Japan, Lemuria Bitcoin Exchange (Bitcrements), Campfire Corporation, Tokyo Gateway, Lastroots Corporation, Debit, Eternal Link, FSHO Corporation, Kirin Corporation, Bit Station, Blue Dream Japan, Mr. Exchange, Bmex Corporation and Bitexpress Corporation.

The Agency published this list in response to the recent hacking of Coincheck, Japan’s largest cryptocurrency exchange at the moment. On Friday, January 26, the Coincheck platform announced the theft of 58 billion yen ($533 million) in NEM crypto currency (XEM). Even earlier, Coincheck suspended operations with NEM and other altcoins, after more than 100 million XRP tokens had been withdrawn from the company’s wallet in an unknown direction (about $123.5 million at the rate).

At the same time, although the exchange promises to repay the debts of its 260,000 affected clients from the company’s wallet, no timeframe for payments has yet been established. In addition, the FSA has ordered to conduct internal audits of all other cryptocurrency exchanges in Japan on the basis of a checklist of 43 items, according to Jiji Press. They must report on their risk management systems, such as the details of their systems for asset management clients and offer countermeasures cyber-attack prevention.

According to Reuters, the FSA ordered Coincheck to submit an “ incident report and measures to prevent recurrence” by February 13, 2018. In addition, the Agency can “conduct on-site inspections of other exchanges», the press service said. In addition, the Tokyo police Department will soon investigate the stock exchange hack.

At the moment, the government of Japan is not likely going to ban the ICO. Nevertheless, it is planned to create a legislative framework for regulation, the main priorities of which will be the fight against fraudulent projects and the protection of investors ’ funds, the inability to launder money during the ICO, as well as the creation of a set of rules for processing cryptocurrency transactions.

JFSA also issued a statement about the risks of investing in the ICO for the citizens of the country from 27/10/2017.It follows the trend of tightening ICO regulation by the governments of the Asian region countries.

In a statement, the Japanese FSA warns the citizens of the country about the possible risks of a sharp decline in token prices, as well as the risks of potential fraud conducted by the ICO companies: the opportunities of the token described in the White Paper projects may not be planned for implementation at all, and goods and services may not be intended to be provided for the platform tokens.

The financial regulator also reported that the ICO could fall under the law on payment services on securities market and stock exchange legislation depending on the legal registration of the ICO. In this case, the organizing companies of the ICO must comply with the requirements of a specific law, including mandatory registration.

In addition, the regular provision of services related to the exchange of cryptocurrencies will require a separate registration with the local financial Bureau. JFSA also specifically noted that carrying out these activities without registration is a crime in Japan.

To sum up, on the one hand, the JFSA and the authorities of the country encourage the production and use of cryptocurrencies, including through the adoption of a special law that enshrines the regime of virtual currencies as a monetary value used in the performance of obligations.

On the other hand, not all the tokens are cryptocurrency at large, and not all the token functions are limited to the means of exchange. That’s why the JFSA position is rather guided on the elimination of uncertainty than tighter ICO regulation.

These points, as well as all the above laws are included in the official document of the Japanese Blockchain Union of November 18, 2017 – ‘guide to ICO sale marker for residents of Japan.’

Koji Higashi, the co-founder of the digital token wallet IndieSquare and a very prominent figure on the Japanese cryptocurrency scene, believes that despite recent steps, there is still uncertainty about the country’s position regarding the ICO. Contrary to popular belief, many industries Japan is not risk-averse and conservative, and he believes that the suppression of the new amount of cryptocoins JFSA is still ‘certainly possible.’

‘Japan, in fact, is not very friendly to the ICO. Regulators are simply more loyal than in other countries. They are trying to find out whether it will be good or bad,’ he said during a visit to Seoul”. This does not mean that the JFSA will not begin to regulate the ICO more actively in the future when serious problems begin to arise.”

However, while the issue of ICO regulation is in limbo, some Japanese companies take advantage of the model. For example, at the end of November 2017, the administration of the village of Nishiavakura distinguished itself, which thanks to ICO successfully raised money for the revival of the economy in the region.

The recent events in Japan shows that the country will not become a new Mecca for the ICO campaigns in a short run as the latest trends, including a tightening of the rules JFSA hacking exchange Coincheck, an additional review of the exchanges does not improve the investment climate of the country.

4)South Korea

The country regulator called the Financial Supervisory Service (FSS) had taken the cardinal approach to the ICO emerging market. While nearly two million people trading digital assets, South Korea is considered the world’s third-largest cryptocurrency market accounting for some 15% of daily global trade volume. Many analysts believe the unusual popularity of cryptocurrency in South Korea may be attributable to a unique mixture of geopolitical and cultural factors.

The digital currency meeting in Seoul had seen the declaration of the full ban of the all forms of virtual currencies fundraising. The reasons behind this had been clarified quite simple – the investors safety as the legal examination had revealed the unprecedented number SCAM projects. This event had put many in despair as before the controversial decision, the South Korean market had been viewed alongside Japan as one of the most favorable for an overall crypto industry development and ICO start-ups launch.

5)Singapore

Speaking about the best directions for ICO market development, this city-state is definitely aimed to become the most attractive one.

Certain factors could explain this phenomenon, though the main things is a government attitude as it results in convenient taxation rules and the government funding of the best digital start-ups.

Back In August 2017, the Monetary Authority of Singapore (MAS) issued its first guidance note on ICOs that stated “the function of digital tokens has evolved beyond just being a virtual currency” to the point that some coins “may represent ownership or a security interest over an issuer’s assets or property.”

In result, sellers of tokens with these characteristics are required to register a prospectus with MAS prior to their ICO. Along with secondary market operators set to trade the tokens, these sellers are also subject to Singaporean licensing requirements for securities vendors and need regulatory approval from MAS. This closely follows the line adopted by the US Securities & Exchange Commission.

In regard to ICOs, the Authority wishes to hold the Singapore reputation as a financial center and at the same to prevent money laundering. Already in August MAS claimed that tokens of certain ICO projects may be subject to the Securities and Futures Authority regulations. The stance was shared right after the similar announcement by the US SEC: tokens will be considered as securities depending on the context of their issue.

After revealing its position on tokens, together with the Consumer Advisory on Investment Schemes of Singapore Police Force, MAC has issued the statement on potential risks of digital token and virtual currency-related investment schemes. Among the factors to consider are the incorporation within Singapore territory, credible and reliable information on the issuer and token sales, and token liquidity
guarantees on the secondary markets. Moreover, investors should be worried in case the rocketing returns are promised or there are grounds to suspect criminal money laundering.

The authority is certain that not the restrictions but the right regulations will be a magic pill that will cure the ICO market. With relevant regulations investors will be protected by law and more people will be able to participate in ICO projects. MAS advised investors to mitigate risks when possible and in case of questions, do not hesitate to turn to MAS for assistance and clarifications. The authority promised to provide full information on the ICO projects, which have presence in Singapore.

6)Malaysia

Speaking about this country, the beginning of September 2017, the Securities Commission Malaysia has also published the press release warning ICO investors. The commission warned the companies that potentially the initial coin offerings could be a subject to securities regulations. As many others, the Malaysian regulator warned also the investors “to be mindful of the potential risks involved in ICO schemes”, resulted, in particular, from secondary market high price volatility and lack of legal protection for investors. The statement concludes “as the terms and features of ICO schemes may differ in each case, investors who wish to engage or invest in ICO schemes are reminded to seek legal or other professional advice if there are doubts on the legitimacy of these schemes”.

It is worth noticing, that in its statement the Malaysian regulator remains neutral towards ICO itself. There are no directions in regards to fees or any other methods for crime suppression.

7)Taiwan

At the beginning of October 2017, Taiwan’s Financial Supervisory Commission chairman Wellington Koo has told during a joint session that Taiwan government intended to support the development and adoption of initial coin offerings and acknowledge blockchain technology and cryptocurrencies as lawful. Koo stated that Taiwan government is not planning to ban the blockchain and crypto-related activities. Moreover, the innovative startups were promised a government comprehensive support.

The legislator Jason HSU, a congressman from Taiwan’s Nationalist party, which has long adopted a deregulatory pro-FinTech stance, stated during the session:

“Just because China and South Korea are banning, doesn’t mean that Taiwan should follow suit – there is a huge opportunity for growth in the future. We should emulate Japan, where they treat cryptocurrency as a highly regulated, highly monitored industry like securities.”

8)Thailand

Thailand Securities and Exchange Commission (SEC) has issued its stance on ICO in the middle of September. With the development and growing popularity of ICO, the Thailand SEC has developed a concern that “in some cases, ICO may be deliberately used as a tool for fraud and scam”.The statement wording suggests that Thai regulator is striving to find the balance between protecting the investors and supporting digital innovations. The commission viewpoint is in many ways similar to Hong-Kong, Japan, and the US SEC stances:

“Since the digital tokens can diverge widely in design and representation, some may resemble financial returns, rights and obligations in similar ways to securities under the Securities and Exchange Act”.

As a final statement, the agency accentuated that the control over ICO market is the only way to gain the best value from the promising blockchain market, the development of which the Thai government does not plan to suppress in forthcoming future.

How to ensure ICO security from Ddos attacks

The security problem is among the top issues of the entrepreneurs which have chosen the Initial Coin Offering model to fund their project.

As for Q2 2018, the total amount of funds attracted using the ICO model stands at more than $2 Billion which indicates a steady market growth – for example; this number had risen from $26 million in 2014 to $225 million in 2016 and to $5,4 Billion in 2017. That undoubtedly high number still doesn’t include some significant future projects as Telegram’s planned $1 Billion ICO, or Overstock’s ICO and less perspective ones, so this year will definitely show new record heights.

Bold statistics show a visible increase in specific segments of business – Internet of Things and People, Financial Markets, Investments, Banking & Payments and Cryptocurrency sectors are the most popular at the current state.

In total, there are 225 crypto funds across seven strategy types (hey there Salt’s credit fund) and see assets in the space being between $3.5 billion and $5 billion.

As the number of ICO projects are rising steadily, the percentage of cybercrimes growth become disturbingly high. In 2017, for example, more than 10% of all the investments in Ethereum had been stolen by hackers and fraudsters.

This market is still a Wild West territory, specific measures are to be taken in order to protect the project before and during the ICO.

Nowadays a distributed denial of service (DDoS) attack is one of the most common, dangerous and hardest to prevent problems which gives a serious risk for any ICO. How does is basically work? During the DDoS attack, the project website is flooded with queries executed by a distributed network of malware-infected computers (botnet). Over time, eventually, the servers run out of resources and are down.

It is important to realize that the main reason behind the DDoS attacks which serves more as a smokescreen. While performing it, the hackers and internal attackers go for exploit the more serious security breaches and expose the most vital weak points. Usually, it refers to the access the control panel of the website either to mass mail spam of a link containing an attack vector to users and potential ICO token buyers.

Hackers go for complete control of the website and most likely change the purse addresses for the coin buyers. Next, fraudsters replace the content of the users’ page and use the original website address for the more effective phishing attack.

We outline the most typical and often attacks that take place:

1)Http flood attacks

This refers to the application level attacks, in case of which the main load is directed to the app server. In this case, the vital point is separating the real users from the bots. There are different ways to do it – installing cookies, JavaScript or flash flags.

2)Volume-based attacks

These kinds of network attacks are associated with the number of queries. When the number is too high, it can saturate the bandwidth of the targeted website and drain the network capacity.

3)Protocol attacks

The protocol attacks aimed at direct drain actual server resources, or the resources of firewalls and load balancers.

It’s also important to consider that:

-Be aware that the search engines to track the website activity as well as DDoS robots.

-JavaScript and cookies are not the ultimate solution for security as specific bots could be programmed to avoid these measures. To put it simply, they are implemented to basically increase the cost of attack for hackers.

-Important tip: the load from security measures should be lower compared to the case when the bot overcomes it.

Now, let’s consider the security measures that are to be taken in order to comply with the rising number of threats.

1) The main thing to do is to go for search and install the advanced anti-DDoS services. Particularly, such could be named as CloudFlare, Incapsula, Akamai, or DoS Arrest which are aimed at resolving issues with the volume-based attacks. Anyway, never forgot not to rely entirely on them as the third-party services are still may present a certain degree of danger. So, track their performance at times and look up for any unusual activity.

2) Web application firewall is a decent thing to use when it comes to security, so the impact of malicious payloads could be observed in real

time. In that case, a user should check up for any excessive rules not to be imposed.

3) Choose the reliable hosting with decent security features. Another major requirement for the hosting is the scalability options.

4) Check for any project code issues. The final quality control of the code and its scalability options is one of those things that should often be kept in mind at the last stages of development. Audits performed to double check the smart contracts and the website code would be of help as well.

5) The website. Nonetheless, it is essential to track your website always in order to notice even the slightest changes to the web pages, the size and content posted. The higher is the frequency of these check-ups from your side, the faster will the potential threat situation will be handled, and the control will be restored.

The final thing to keep in mind is your own ability to react to any rapidly emerging issues. No matter what measures are taken or implemented, that DDoS attack might still take place before or during your ICO. If a certain situation will happen despite all odds, a splash page must be used, to inform that the website is under attack, so the potential investors/visitors will be redirected to visit the social platforms and official chats to be appropriately informed.

ICO Market Progress – Q1

Despite the cryptocurrency market fluctuations, Initial Coin Offering market grows progressively as the number of specialists and enthusiasts involved in this industry only rises each month.

Due to the latest statistics, the market dynamic is definetly positive. The volume of funds attracted worldwide through the ICO for the first quarter of 2018 was $ 3.3 billion. For comparison, in 2017 with the help of ICOs, $ 6.1 billion was raised. The data was provided by the well-known rating agency ICORating.

However, as noted by the company’s specialists, the indicators take into account only the funds collected during the ICO. The statistics do not apply to the data of the unfinished sale rounds of funding, indicators of presale and round of the Telegram messenger private sale (the volume of funds attracted here is undoubtedly is the highest here).

In late 2017 and early 2018, many companies have entered the ICO work in the fields of financial services, exchanges, e-wallets, as well as in the blockchain infrastructure itself.

The average duration of all ICOs during the latest time varied from one to two months. At the same time, only half of the projects were able to attract more than $ 100,000 of capitalization.

As for geography – most of the ICOs were conducted under the United States jurisdiction – 59 projects totaled about $ 583.8 million; in Singapore – 34 projects raised about $ 468.1 million, and in the UK 26 projects raised $ 99.7 million. In Russia, 13 projects raised about $ 20.8 million.

Speaking about the stage of the product, analysts found out that 46.6% of the total number of ICO-projects did not have a finished product at the time of the token sales launch. This not obviously relates to the scam project nature (which reached the 90% level by the end of 2017), but for the funds required to develop a minimum viable product (MVP). According to ICORating, MVP was available only for 26.2% of projects, 15.5% created an alpha version of the product, 11.2% – a beta version, 0.5% of the projects had a primary code available only.

“When choosing similar projects that have nothing but an idea or concept, investors cannot in any way check the network performance, its bandwidth or other characteristics. Therefore, users are faced with a choice when they can either blindly trust or look for another project,” the researchers noted.

It was also noted that only 21% of new tokens had been added to the exchanges – by comparison at the end of 2017, this figure was 33%. Such a significant fall can be explained by the fact that 83% of coins issued from January to April 2018 are now lower than during the pre-sale period.

Back in 2017, the finance sector had become the most popular segment for ICO. This is still actual for early 2018, though, in total, there are 225 crypto funds across seven strategy types.

Why so serious? The reasons behind governments worldwide ICO regulations.

As more and more entrepreneurs do engage in worldwide ICO boom, the more extensive growth the popularity, which, of course, increase the governmental suspiciousness and alert level. As Initial Coin Offering model itself present a new way of attracting investments, which has been free of any legal rules at first place, the needed measures were to be taken in order to establish control.
Instead of shares in traditional IPO financial model, an ICO investor receives project tokens, that may one day present certain substantial value. The unmatched liberty of this market in recent years had caused the incredible rise in start-ups numbers, which had moved beyond the 1,500 figures as for Q2 2018.

Of course, such major market increase had attracted not only the initiative and smart entrepreneurs but the ones willing to succeed on the overall worldwide hype. The fraudsters’ actions on the creation of ICO bubbles and Ponzi schemes caused the rise of so-called scam project to the level of 90% by the end of the 2017 year, and in 2018 the situation ain’t much better.

As for Q2 2018, the total amount of funds attracted using the ICO model stands at more than $3 Billion which indicates a steady market growth – for example; this number had risen from $26 million in 2014 to $225 million in 2016 and to $5,4 Billion in 2017. That undoubtedly high number still doesn’t include some significant future projects as Telegram’s planned $1 Billion ICO, or Overstock’s ICO and fewer perspective ones, so this year will undoubtedly show new record heights.
Bold statistics show a visible increase in specific segments of business – Internet of Things and People, Financial Markets, Investments, Banking & Payments and Cryptocurrency sectors are the most popular in the current state of market.
In total, there are 225 crypto funds across seven strategy types and see assets in the space being between $3.5 billion and $5 billion.
More and more individuals and private companies became to recognize the convenience and perceptiveness of fundraising possibility of ICO.

The absolute absence of investment regulations and attractiveness of certain opportunities went hand to hand with no safeguard options for investors. The project documentation most of the time went on describing the promises in a white paper to solve the specific issue using the Blockchain as the most innovative and influential tool, and these promises quite often proved to be empty. However, holding them to those promises have not always worked.

At such circumstances, the political moves directed on ICO market were the matter of time. There are a lot of reason behind specific rules applied by different countries, so specific main reasons behind specific strict rules are worth mentioning below:

1)Fraud activities/SCAM project level rise

The percentage of scam project within the ICO fundraising models’ boundaries had risen drastically. For example, In June 2017, only 7% of total projects failed or turned out to be a scam, while in August-September this number had risen to 54%, and to 67% later in the following month. Financial reports indicated the rise up of SCAM-level up to 90% as of late 2017 and early 2018.

2)Pyramid/Ponzi schemes

The creation of more complex ventures explicitly made with one aim – to lure the investors’ money, had become a reality in ICO market quite a long time ago.
We can remember the infamous One Coin project – an actually MLM Ponzi scheme exposed worldwide. This project turned out to be much more sinister and ambitious as well as long-playing. Truth be told, the well known now Ponzi scheme of the OneCoin project should have met its demise many years ago. The amount of evidence contributing to One Coin’s status as a pyramid scheme is much more than considerable – its directors have previously been involved in other known scam operations, its resources contain no verifiable evidence for any of its business claims and documentation uploaded to support claims often conflicts with the claims themselves. Certain steps have been made by the many countries’ governmental organizations to put this project under the legal heat and stop it forever.

3) Fever ICO market nature

Some financial analysts had come up with the idea that the ICO market has specific indicators of a gold-rush feverish mentality, which harms both individual investors that follow the crypto market hype trends and both the companies.

4) Funding the terror organization cells

The absence of regulative and overwatch tools raised talks about the real danger of ICO model being used to support different worldwide terrorist groups and large organization even, although confirmations are hard to prove.

5) Manipulation

The United States SEC commission made the official statement alerting the public community that many companies can use the so-called “pump-and-dump” schemes with the goal to influence and fluctuate the market indicators and prices.

6) Money laundering

Last, but not the least point of justifiable governmental anxiety, is that the ICO model structure makes it perfect use for the good old way of money laundering.

Anyway, as ICOs itself present quite a new world phenomenon, regulators are about to formulate and create the new rules of tackling the incoming issues – in fact, most of the strict rules or official public statements had been done quite recently.
The legal base development is quite a time-consuming process as many governments try not to react on first notice but research the impact of the ICO on their economy as well as the country developments and effect causing ICO popularity growth on its citizens.

Top rating ICO platforms

The creation of the marketing campaign for ICO projects is the brand new fusion of the latest advanced informational resources and modern advertising tools. Right now, listing sites or trackers are the most convenient and useful means that are used to post information about upcoming or already running ICO projects. At the moment, only a few platforms offer free listing though, most of the trackers require their services to be paid and sometimes the charges maybe be quite high.

Let’s have a closer look and examine the largest and most popular platforms nowadays: CoinSchedule represents a popular platform with listing support, and discussion forum of potentially successful and exciting projects are provided along with ICO-crowdfunding. The main feature of this website is selectiveness regarding the projects — not every team can host their idea here. To get listed on the website, the plan must be successfully approved by the community regarding specific features: the Whitepaper and core team review, the website and roadmap checking. This web portal would be interesting to the contributors willing to invest at least $100,000 in certain ICO-project. The administration will also check the Whitepaper and the project team themselves.

The standard placement fee is usually around $300-$800, and premium slots will cost your company up to $2,000-$3,000 per month. Average monthly website attendance is between 800,000 to 1 million unique users with almost 2 million hits monthly. Nearly 25% of the visitors are from the United States, nearly 10% — from European countries, up to 5% and 4% from India and Turkey respectively. ICObench allows you to overview a large number of discussions regarding active and upcoming ICO/crowd sales, ICO-calendar and convenient to use website structure. This platform has a constant and active community; the website is also interesting for investors because of high worldwide popularity among developers.

Every month up to million unique users attend this website, and a total number of hits is estimated around 2–2, 5 million. Up to 20% of the visitors come from US market, 10% — from Europe, 7% users come Vietnam, 5% — from Japan. The standard listing here is free, priority package will cost you around 0.05 BTC, and the premium listing for seven days is 1 Bitcoin (Fiat currencies are not accepted). ICO Drops This platform is quite popular and well-known among the major investors from USA, Europe, Russia and Japan as it provides a large and continuously updated list of prominent ICO projects. At the moment, it’s in the top-3 listing website for the English-speaking audience. The platform has a user-friendly interface, supports a rating system of “Interest level” for potential investors, a comfortable ICO-calendar and Bounty-list.

At the moment, the website traffic reaches 1–2 million unique users per month, and total monthly hits of the platform reach nearly 3 million. Speaking about the countries — 20% of visitors log in from the United States, 15% — from Europe, 7% — from Russia and 6% from China. The platform hosts projects only after a careful check of Whitepaper, website, and ICO project team done by the administration. A premium listing is not provided, the accommodation here is free. ICOrating is also quite well-known resource that maintains the listing of current and future ICO projects, token sale and crowdsales. Projects are evaluated with consideration of many criteria, mainly in the advanced products or projects with unique features are listed here. Previews and comments on the upcoming ICOs are supported.

The attendance of the resource per month is nearly 500,000 unique users along with 1–1,5 million hits. Most users (17%) come to this platform from Vietnam, up 12% — from the USA, 7% -from Russia, 4% — from Japan.

Standard listing here is free, and priority package will cost nearly $50–500. ICOExaminer platform is mostly aimed at preview and evaluation of future and upcoming ICOs and review of current projects. It has an active forum with a large number of members. This resource is in the top 5 in attendance the international community in the network.

The platform also has a section of educational materials for ICO conduction and identification of fraudulent projects.

Every month website is viewed by almost 100,000–200,000 unique visitors with a total of 500,000 hits. The community consists of: 30% of visitors come to the USA, 10% — from Canada, 8% of the users are from Australia and up to 10% — from Europe. No fees required for the standard listing and the premium package will cost up to $ 500.

Top university blockchain courses

The IT-technologies had overtaken the world long ago. The currently available university courses most of the time tend to be behind the rapidly increasing wheel of progress. As the world develops quickly, sometimes the subjects are slightly changed even before the course is completed.

Nowadays, the blockchain technology is the spearhead of the world’s technological advancement and one of the most rapidly expanding industries. It is as ambitious as never before as it is aimed to increase the efficiency of all other existing industries while creating new markets, jobs and even fields of work.

Of course, the blockchain industry and Initial Coin Offering model, which has become recently popular, is changing so fast, that it is almost impossible to present up-to-date courses that will be relevant during a long time. Anyway, the demand for high-tech knowledge is astronomically high, and many students seek opportunities to study and develop themselves in this new industry. That creates a lot of options for the specialist who already exist in this area. The salaries are high, as the market has a growing need in highly-trained and experienced trainees, who can share their knowledge and vision of the increasingly developing technology.

There is an overview of the current leading and most public world universities, that can give you a brilliant insight into this marvelous technological world of innovations and help to make the first step in this industry by getting the right knowledge and skills necessary. So, the blockchain courses.

New York University – USA

Back In 2014, New York University was one of the first to start offering the blockchain classes. The primary course opened was – “The Law and Business of Bitcoin and Other Cryptocurrencies.” It is still available today and explains Bitcoin and other alternative payments mechanisms and future. NYU students can also sign up for “Digital Currency: Revolution in Money and Payments?”, the course which introduces participants to digital currencies and emerging mobile payment systems of this dynamic industry.

Stanford University – USA

This famous university currently offers a unique course known as Bitcoin Engineering. The primary purpose of this particular course is educating students on creating their Bitcoin-enabled applications. It might be a perfect ability to learn from industry professionals how to rewire internet services on the basis of Bitcoin. Prior background in Python within a Unix environment is recommended though, but no previous Bitcoin knowledge is necessary.

Duke University – USA

World famous Duke University is definitely one of the brightest universities in the U.S. Situated in Durham County of North Carolina institution is currently offers blockchain courses as well. The course titled “Innovation, Disruption and Cryptoventures” provides an in-depth insight into Bitcoin background and the technology future. The main idea is to give the students a deep understanding of this rising and disruptive technology and its business implications in the inevitable digital future.

Massachusetts Institute of Technology (MIT) – USA

When speaking about the technology, no wonder that the MIT is among the top leading world universities to offer the top-notch blockchain courses today.
In fact, MIT was one of the first of the top institution to develop the specific course, and it is also one of the current maintainers of the Bitcoin protocol.

Blockchain University – USA

One of the flagman’s of industry studies, the Blockchain University, is situated in California. The course offered by this institution include the academic instructions led by the most influential figures of the crypto world and blockchain ecosystem.
The teaching solutions are regarded as hands-on training to acquire fundamental knowledge as well as develop the solution-oriented design thinking.

This university offers blockchain technology education for the future developers, managers and entrepreneurs of this industry.

An immersive course is providing an overview and in-depth explorations of the emerging field of distributed digital assets using blockchain distributed ledger technologies.Designed with a multi-disciplinary approach, this course brings together and educates developers, product managers, attorneys, designers, builders, entrepreneurs.

Participants walk away owning bitcoin, understanding the continuously evolving blockchain landscape, and knowing basic cryptography, programming transactions to the Bitcoin blockchain (and other altcoin ledgers, e. g. Ethereum), understanding other related technologies (IPFS, DNSChain), scripting language, forking the bitcoin source, smart contracts… and much more.

B9 Lab Academy – United Kingdom

The top-notch B9 Lab, which based in a financial &scientific hub, is on the spearhead of the modern technology, offering the course of in-depth study and understanding of the technology behind the Bitcoin and blockchain technology. The academy now has blockchain course available for technology executives and analysts. They aimed at experienced technical stakeholders introducing everything needed to understand the work in this dynamically changing sector, smart contracts writing and both technical and social frameworks relating to this technology.
This online course teaches technical decision makers and CTOs the basics of blockchain technology. The course goes into the underlying theory of blockchain, covers Bitcoin, Ethereum and Hyperledger in depth and provides an overview of many other protocols both in public and managed networks.

IT University of Copenhagen – Denmark

One of the world leaders in University IT-courses had organised the first Blockchain Summer School in August 2017, which focused on education in the blockchain technology sector for future innovative solutions developments within three focal industries. The students learnt of how the blockchain technology had disrupted existing business models and gained insights into paradigmatic changes occurring from economic, organisational and computer science viewpoints.
Robin Baldwin, an educator for Academized attending this university, wrote:
“Denmark has always been a leader when it comes to technology and this university is one of the best; ideal for if you want to learn about the most up to date blockchain developments.” The current plans are to develop and maintain courses in the foreseeable future.

Princeton University – USA

Princeton is, no doubt is one of the most prestigious universities in the United States, and nowadays it offers a pioneering course entitled “Bitcoin and Cryptocurrency Technologies”.
This course is available online and answers many questions related to Bitcoin as well as foreseeing the future uses and implementations of the blockchain technology and its latest developments.

University of Nicosia – Cyprus

The most significant institution in Cyprus, an independent University of Nicosia had opened the new possibility for study with a Master of Science degree. The primary course is entitled “Introduction to Digital Currencies”, it is available online and can be obtained for free as an open enrollment MOOC course. Anyone interested in learning can study the fundamental principles of digital currencies from such renowned Bitcoin experts as Andreas Antonopoulos and Antonis Polemitis. The course includes 12 live online sessions.

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How much costs the Initial Coin Offering Campaign?

Consider that your company seriously takes advantage of rising crypto market and decides to fund the project using the Initial Coin Offering model, instead of going through the long and tensioned IPO-process or a complicated search of traditional venture investors. The ICO campaign complexity and cost depends on many factors.
In order to have a full and transparent understanding of the possible future budget needed for a specific project let’s take a closer look and examine each of the items of expenditure of this complicated venture separately.

1)Hiring a team of professionals

When you have already come up with an idea as well as clear working concept, the next thing in line is to gather a team of specialists. It will be the core, the heart of your project. A lot of professionals in different fields would be required for hiring: from the frontend and backend-programmers to community, HR- and PR-managers. You will also need financial and blockchain analytics, smart-contracts developers and more. It is essential for members of your project team to know at least one foreign language, English preferably because ICO projects are aimed to the worldwide market, so the communication and understanding of specific professional moments would be more comfortable for the whole team.

The salary of each position varies depending on specific factors as the development duration, project complexity and country of project origin. It may be a wise idea to use the hired developers outsourced from other countries which have less high incomes to lower the overall budget.

Here is the data of annual income of the key team members in ICO project in the US market according to the information of early 2018:

Frontend developer income varies from $45,000 to $150,000; Backend developer:$25,000 - $80,000; Blockchain analyst:$40,000 - $165,000; Cryptoeconomist:$45,000 - $150,000; Public Relation Manager:$35,000 - $100,000.

For example, the highest salaries in European market industry (and in the world pretty much at all) right now is observed in Switzerland, where the top blockchain companies base. The monthly income for Frontend and Backend developers in this country is around $10,000 - $15,000 which makes the annual earnings up to $120,000 and $180,000. PR-Manager can get up to $45,000-$120,000 annually working in Switzerland while the Blockchain analyst earns around $50,000 - $150,000.

According to Glassdoor data, the salaries on Asian market are not that high of course, but the industry is growing, and the situation changes dynamically here as the number of major crypto exchanges rises. Heads of Department blockchain development in Japan and South Korea can obtain up to $7,000-$10,000 monthly, approximately $100-$120,000 per year. PR-managers, in turn, earn an average of $3,500 per month – from $30,000 to $55,000 per year.

Frontend developers have an income in a range from $3,000 to $5,000 per month, the annual salary of an experienced programmer usually is around $60,000.
In Russia and the CIS countries, wages are somewhat lower, Frontend and Backend developers earn about $2,000 -$3,000 per month, which makes about $25,000-$36,000 per year. Technical Director with professional experience earns an average of $5,000-$6,000 monthly and $50,000-$70,000 per year, respectively. PR Manager usually earns from up to $2,000 per month and up to $24,000 annually. Email marketing specialist income ranges from $1,500 to $2,000 per month, $18,000 -24,000 per year. Head of development earns about $2,000 - $4,000 per month and $24,000 and $48,000 per year, respectively.

It is essential to ensure the presence of the well-known and reputed advisors from different areas and technical experts  in your team – sometimes their opinion may slightly influence not only the investor’s viewpoint whether to invest or not but the further direction of the project development at large.
This whole part cost is considered the most voluminous and can absorb up to 50–60% of total funding.

2) The technical developments

The next relevant of importance topic should be split into individual parts for easier comprehension:

The Token

For a start, your team will need to create a tradable token that your investors will use to fund your project. Most exchanges require that you have an ERC20 compliant token that will allow the transfer of tokens from one address to another.

At this stage, you will have to hire an ERC20 token developer. Although finding a good Ethereum developer is hard - an experienced freelance developer could be hired to work with for approximately $10,000 per month/project in the U.S. This cost will be up to $5,000-$7,000 in other countries.
The program for smart contracts execution is required to deliver tokens to investors in exchange for Ethereum. This part of work will need the presence of developer or a group of them to create a decent Smart Crowd Sale Contract; the process can take up to 3–4 weeks and cost you on average $15,000-$20,000.

Smart Contract Audits

To guarantee and ensure your investors in the complete security of their investments, you will need to perform an audit of your smart contracts. Frankly, the significance of this stage cannot be overestimated as you will expose any vulnerabilities in the project code. The cost of this service done by a reputable company ranges from $10,000 to $30,000 depending on country and the company reputation. This figure is steadily increasing due to the growing number of ICOs on the market.

3) ICO campaign preparation stage

On this milestone, your team will need to work hard to complete all parts of project’s presentation materials and more - that means creating a convenient and easy to comprehend website, complete the SEO-optimization, create the promo materials and highly engage in the media field.

• Website and SEO-optimization

Another important and responsible step. You must choose a reliable hosting and website structure (now favorite and user-friendly one-pagers come into consideration) that has a functional design and be user-friendly, as well as protected from possible DDoS attacks. Your website must list specific promo materials including the video presentation about the project, a transparent and easy-to-understand Whitepaper, Roadmap with clear milestones, the project team with photos and links to their social networks and LinkedIn, a list of partners and advisers involved contacts and active social network channels. Search Engine Optimization (SEO) also has the significant importance to improve positions in Google search system and, simply put, allow investors faster access to your project.

• Whitepaper & Roadmap

The whitepaper is the primary document that serves as a presentation of the project to potential investors, explaining the vision, objectives, implementation and milestones in the project development. Visualizing your concept vision to potential investors is essential, so the infographics should illustrate the main financial indicators that the company plans to achieve in the first place. Also, any signs of market research are better perceived in this format. But do not forget about the information value - you can come up even with a 100-page text document, but investors will find it simply not interesting to read and hard to understand. This document must have a transparent structure, support the statements with facts, clearly explain the concepts and potential benefits from participation in your project. Not all the project teams are capable of writing this document themselves; therefore, often a professional help may be required. Of course, it is possible not to spend money on this stage at all by making it by yourself. The cost of creating a Whitepaper with third parties companies’ involvement estimates from $2,000 and may even reach $10,000 in the USA and European countries, and this cost is growing.

• Publicity and Advertisement

You will also need a marketing team to create a buzz online so that you can capture the attention of investors and enthusiasts before the start of the pre-ICO and ICO stage.

The team should promote the project in traditional media and social media advertising, write articles and news about the project, make publications on crucial web resources. Some of them may be free; others will require part in the premium services (for example, the popular web platforms like Cointelegraph listing cost is estimated at thousand dollars).

In the United States, banner ads with a so-called “Hot-rate” will cost nearly $10,000- $15,000 for two weeks at the central website position, and mailing to the whole database of investors for the same “burning” rate will cost around $6,000-8,000.
The total cost of marketing and promotion can be slightly different — you can spend $5,000- $10,000 or even more than $100,000 at this stage, depending on how much your company can invest in the project. It includes interviews with the company founders and member, advisors, promotion through social media channels and forums. Many teams are willing to pay huge money to specialized advertising companies for the traffic to achieve contact with the target audience of the project. Marketing cost typically eats up to 30% - 50% of total budget depending on the project complexity, time limit and orientation.

4) Legal support and project security

This step includes ensuring the web security measures made to prevent project data and financial information leak and making hack risks as low as possible.
During the Initial Coin Offering campaign, a lot of investors make substantial financial donations to the project; this cannot go unnoticed by the fraudsters and government agencies of course. ICO regulations in most countries have not been appropriately developed on the legal stage yet, so the wise decision would be ensuring the assistance of lawyers to resolve contentious issues before they occur. Unregulated ICOs always stand at risk of being disavowed from legal inclusions. But just to be on the safe side, legal experts on the advisory board would still be a plus.
The cost of legal support varies depending on the level of experts involved — usually, the price ranges from $20,000 to $100,000 for the entire project (in the USA) and $10,000-$50,000 in other countries.

5) Logistics and live-conferences participation

Considering the magnitude of the ICO market and the growing number of specialized conferences with industry professionals throughout the world, many new and experienced developer teams often make journeys to other cities, countries and even continents with the aim of establishing business and professional contacts. The cost of participation in such events depends on a place, speakers level and prospective partners/investors. On average, the team may need $10,000-$20,000 during the project. Logistics costs can also assume the purchase or transportation of specialized equipment as required.

Conclusion:

Summing up the figures of crucial position salaries for 5–6 months of ICO-campaign project duration, approximately $100,000- $400,000 will be spent on the creation and ensuring of the team smooth workflow (depending on qualifications) in highly developed first world countries like USA, UK, Switzerland, etc.

In Asia, this number would be approximately $100,000-$250,000. In Russia and the CIS countries, cost of team hiring is nearly $50,000 - $150,000 respectively.
Moreover, software and tokens development, smart contracts, an audit performed by the professional company with a good reputation will cost your company up to $50,000-$80,000 in the U.S. market and $20,000-$50,000 in other countries. Functional website creation and proper SEO optimization, the Whitepaper done by the professional company will add the cost up to $20,000 mostly. Promotion in media varies greatly — on average, $50,000-$100,000 or eve more in the US market and $20,000-$50,000 for active work on the development of your platform in the Asian region or Russia/CIS countries.

Legal support of the project cost in the United States - $20,000 to $50,000 for the entire project timeline, $20,000-$50,000 in Asian countries and up to $10,000 in Russia or CIS countries.

Nearly 50–60% of a total budget will be spent on the salaries of the team and the project advisers as well as the technical development, and media promotion also gets a significant amount of the budget – to 20–30%, 15–20%  -  will also go for the for legal support of the project. It is possible to separately allocate 5% of this amount for logistics and worldwide conferences participation expenses.
Summarizing all these data, we get the estimated budget ranging from $300,000 to $700,000 and even reaching a $1 million (depending on PR-and media-coverage) needed for the successful launch of the ICO campaign in the United States. In Asia market, this number is estimated at $180,000 -$400,000, and in Russia/CIS countries, respectively, $70,000 to $250,000.

The total amount of costs is determined by the geographical area (country of origin) in which the project is planned to be launched and overall professionalism and competence of the team and project advisors.

You can also use the specialized services of companies to conduct the ICO. Typically, an infrastructure of Initial Coin Offering presented by the third party will cost the company about $40,000 to $100,000.

Top hedge funds of the cryptoworld

There can surely be no doubt that hedge funds have had a significant impact in the world of Bitcoin and cryptocurrencies over the past twelve months.

The growth in crypto hedge fund interest by investors is not a surprise as cryptocurrencies were the best-performing currency in 2015 and definitely the best performing asset class of 2017.

And that fact is not entirely surprising, considering the direction in which the cryptocurrency sector has evolved pretty much at all.

Although crypto mania continues to flourish, the amount of money flowing from hedge funds is still minuscule. In a $3-trillion hedge fund industry, currently, only more than $3 billion is allocated toward cryptocurrencies and blockchain technology, representing one-tenth of a percent of the total industry.

According to statistics, 35 cryptocurrencies ended the year 2017 at over $1 billion in value. Right now, the total number of hedge funds focused on cryptocurrency and blockchain projects is more than 150, and that number is expected to double or even triple within the next 12 months according to Agecroft Partners CEO Don Steinbrugge recent statement.

Institutional money is expected to flow into cryptocurrencies once Bitcoin is believed to have bottomed. A ton of capital has already been flowing into the exchange-traded funds business. Investors poured about $240 million into two blockchain-focused ETFs in the 1st week of their launch.
Moreover, the number of new Blockchain technology and cryptocurrency hedge funds could triple in 2018 as Wall St. shows up to the party. Several hedge funds had rushed into space in the second half of 2017 while seasoned Managers were cautious of the frenzy.

Given how many new crypto-millionaires had appeared in 2017, the new players with little understanding of the technology or investment experience rushed in to gain large profits. Many started funds with Bitcoin and other cryptocurrencies at or near all-time highs.

A reputable Agecroft Partners company predicts the top hedge funds and industry trends each year stemming from the contact with more than two thousand institutional investors and hundreds of hedge fund organizations. The hedge fund industry is dynamic, and participants are best at anticipating, rather than reacting to, change. Here are the top most trust and major hedge funds according to the AP and Steinbrugge.

1)Grayscale Investment Trust

The top player on this list, Grayscale, needs no introduction, as its legacy was cemented quite some time ago already.
At the moment this company currently runs three investment trusts focusing on Bitcoin, Ethereum Classic, and ZCash, respectively. It will be interesting to see whether Grayscale decides to add additional cryptocurrencies to its portfolio, as there are a lot of promising candidates out there right now. At the time of writing, the company controlled over $1.3 billion in funding.
Due to company officials’ statements, “Greyscale is focused on building transparent, familiar investment products that facilitate access to this burgeoning asset class and provide the springboard to investing in the new digital currency-powered ‘internet of money.’

2) Polychain Capital Fund

Many investors worldwide perfectly know the name of Polychain as well. This American-based hedge fund has been around since July 2016 had control over more than $130 million in funding due to latest data.
The company created by the Olaf Carlson-Wee manages a portfolio of blockchain assets, indicating that it keeps tabs on a lot of different cryptocurrencies, assets, and digital tokens.

Given the way the cryptocurrency industry has boomed in these past few years, it is expected that the company will make a lot of progress in the future due to such well-known investors’ attention as Danhua Capital’s Kevin Ding, co-founder of eDreams James Hare, CEO of BeeHive Cameron McLain, CEO of Connect NPay Patrick Kershaw aswell as Union Square Ventures and Andreessen Horowitz.

3) GALAXY DIGITAL ASSETS FUND

GDAF, for the Foundation of the cryptocurrency, which was launched only recently – in September 2017 – very quickly made a decent name for itself.
Galaxy Digital Assets Fund is the New York-based investment firm specialized in digital assets and blockchain technologies. Using a hybrid model, hedge/venture funding, the company is agnostic both on the stage and in geography with the aim of obtaining short-term and long-term profits. The GDAF founder is a former Fortress company financial expert with the Wall Street experience Michael Novogratz.
According to the estimates of financial analysis, this fund currently stands at about $130 million. According to the forecast of the company if, this figure will rise to $300 million in 2018, and will only increase in the coming months and years.
The focus of the company is multifaceted because it encompasses a cryptocurrency and token sales and startups.

4) LOGOS FUND

One of the older hedge funds associated with cryptocurrency goes by the name Logos Fund.
This German investment fund specializes in cryptocurrency mining, which has to be a lucrative venture if none of the coins sold in the process. Whether or not that is the case remains to be seen, though.
Logos Fund may have an interesting future ahead, depending on which currencies it decides to mine in the years to come. So far, it has around $120 million in estimated funding and a decent reputation among the international investors.

5)Blueyard

Blueyard company is another German venture capital fund with a very strong focus on blockchain ventures. The company invests in early-stage blockchain companies, which could yield some spectacular results if said companies make their visions come true.
Unfortunately, blockchain ventures have a history of failing in the early stages of development, making this fund a bit riskier than others.
The founders of the company are Ciaran O’Leary and Jason Whitmire. According to them, BlueYard is a small venture capital firm that assumes the risk of great players with the transformation of ideas on the early stages. They support founders of companies that decentralize markets, empower users and free data. BlueYard is based in Berlin, invests projects all across Europe and is closely tied to the United States.

Still, high risk can come with great reward. Due to the Agecroft Partners forecast, the Blueyard’s $100 million of funding will only grow to new heights in the future.

Conclusion

‘Still, crypto valuations are too high and retail investors should be careful, as fierce competition will ultimately put downward pressure on current frontrunners. A big misconception regarding bitcoin’s rise surrounds its limited supply and demand assumptions, but bitcoin is seeing significant competition from alt-coins. Institutional money will flow into blockchain technology and cryptocurrency, but many institutions are worried about the valuations. Those who can identify the future leaders can make a lot of money. Those who are investing in cryptocurrency do it in hope to get high dividends fast – mostly just like gambling.’, Steinbrugge said.
He is also sure that the market is evolving in the right direction, and money that’s been made in blockchain and crypto is being invested back into the sector, leading to increased competition and the creation of new coins and service providers.

World Blockchain Forum’18 Highlights

The popular annual conference in Dubai had finished just a week ago. The wide-known event took place on 16th and 17th of April, had again demonstrated another success of the industry market development and community interest growth. The two-days conference aimed at digital innovations sector had perfectly reflected the financial growth of Dubai as a crypto hub and its aiming to become the top blockchain oriented country of the world within the next few years.

As the year before, the latest major event had seen a lot of industry most important persons present, the big guns of the economy sector and top venture and crypto investors. Speaking in numbers, more than 40 of the most knowns and famous speakers were attracted, more than 350 of CEO’s took part aswell governmental officials and investors took part. This time, the hosting had been two days of non-stop, thought-provoking speeches about Blockchain and disruptive technologies, which had seen a lot of famous industry speakers.

All of it concentrates on the financial world which is getting fueled by disruptive technology. It offers an introduction to the impact which we will witness in the upcoming time by crypto-currencies on the global financial landscape.
The conference had been presented by the KeyNote, which had been engaged in the crypto-currency sector since 2014. The Forum is always highly focused making the top events in the financial world. Actually, the event was limited to only 750 attendees of investors and CEOs. The topics discussed on WBF will cover the vivid range of topics mingling from Blockchain, bitcoin, cryptocurrencies, investments, startups, disruption and much more.

The event had clearly displayed the strong network of blockchain industry. Moreover, it is noticeable everywhere that blockchain industry and bitcoin and the trendiest topic. Not just in the financial world but overall too ICOs are the quirky topics in the financial technology.
During the conference, each speaker will have a maximum of 20 minutes to present their ideas to the attending delegates. Besides the meeting, attendees will have a chance to tour the nearby expo where several exhibitors and sponsors will be selling their products and services.
The meeting’s venue was the “Madinat Jumeirah Mina A’ Salam”, a world-class restaurant located in Dubai along the shores of the Indian Ocean.
However, the latest conference had clearly presented a few trends that reflect minor changes in the conference relations and participators. Main highlights are certain:

• ICO market getting overcrowded

As the Initial Coin Offering market shows constant development, there is no shortage of new start-up project that wishes to take their piece of the crypto pie. As for Q2 2018, the total amount of funds attracted using the ICO model stands at more than $2 Billion which indicates a steady market growth – for example, this number had risen from $26 million in 2014 to $225 million in 2016 and $5,4 Billion in 2017. That undoubtedly big fund score still doesn’t include some significant future projects as Telegram’s planned $1 Billion ICO, or fewer less perspective ones, so this year will undoubtedly show new record heights.

In such a situation, more and more incoming digital start-ups create certain chaos, and the more teams engage in this industry, the harder it becomes to investor to choose the right project and make the final decision of whether to invest or not.

• Establishing personal relationships is vital

It also gets more complicated to get into the major investor’s sight, because of the problem stated previously. The importance of the relationship is essential as never before – the positive personal image is a thing to go for, as right now it is not so easy to become noticed by the industry fat-cats. In such circumstances, it is important to establish as many important connections within the community as possible, mainly – to become well-recognized in this sector.

• The speakers’ and pitches got less important

Pitching on the conferences had become of less significance since the key point is not creating the buzz over some project but establishing the investor connections to ensure the money flow to a certain ICO projects which emerge, literally, everywhere in the world nowadays. As a result, not much people willing to make pitches, as potential investors do value their time high and wish not to waste it to the potential scam projects or to listen to something that is of less importance. Industry well-known speakers are still at large though as the conference organizers are making buzz to attract the audience.

The ticket prices in such conferences are something that only grows every year while sometimes, this is a questionable step.

Overall, the World Blockchain Forum 2018 had clearly demonstrated the industry growth as well as people interest rising about the digital start-ups.Nowadays the blockchain wave has taken up a significant majority of the industries, transforming them in ways that were inconceivable not so long ago. To keep up with the evolving landscape, it is imperative to get involved as soon as possible.

Top crypto events: spring-summer 2018

The emerging crypto currency industry sees more and more interesting projects every year and there is no shortage of interesting conferences that apply to the rising world of crypto assets.

There are lots of events on all over the globe discussing the latest trends – with emerging perspective new startups, ICO’s, and blockchain future. We introduce you the most perspective crypto conferences and major meet-ups within the next few months.

1) Blockchain Nation
When: April 25-26
Where: Miami, USA

This even is hosted by the Crypto World Journal and will feature over 75 speakers. 3,000 attendees are expected, so it’ll be a networking bonanza. And as far as conferences go, it’s relatively affordable at $1,000 per ticket – less if you’ve got a government or student ID. For details, check out our feature on CoinReviews which outlines what’s to be expected.

2) World Satoshi Summit

When: May 12th — 13th 2018
Where: Marriott Hotel, Aerocity, New Delhi

To promote a vision of the world where every community, economy, organization, and country works in a trustless manner, free of corruption and inefficiency caused by human greed and errors, we have initiated a movement that brings everyone under one roof to ideate, discuss and innovate around blockchain and cryptocurrency.

3) Consensus 2018
When: May 14-16
Where: New York City, USA

Another long-running conference, this one put on by the respected blockchain news resource CoinDesk. With 3,000+ attendees, it’s going to be huge and promising. The speakers will be announced later, but with a conference of that size you can expect big names and incredible networking opportunities.

4) Blockshow Europe 2018
When: May 28th – 29th
Where: Berlin, Germany

Blockshow is one of the biggest conferences in the industry. It really is a ‘who’s who’ of the leaders in blockchain. They showcase solutions that blockchain technology is providing and always have hot annoucements on the latests ICO’s, startups, and new products being released. In addition, Blockshow also hosts the ICOscars, where selected startups compete by presenting their groundbreaking solutions. Previous winners of the award include: Bancor, Status, Etherisc and Solarchange (raising a combined $200mln in ICO funding).
They hold three events throughout the year with the first being Blockshow Europe. Blockshow USA will be held in August and Blockshow Asia will be held in November. The tickets price is ranged €1088 – €2488.

5) UnChain Bitcoin and Blockchain Convention

When: May 31st – June 1st
Where: Hamburg, Germany

Unchain is a two-day conference, featuring some of the world’s leading Cryptocurrency and Blockchain experts and entrepreneurs. At UnChain, they will discuss a range of topics–including technology and development, potential business opportunities, cryptocurrencies, and the impact of the industry on legislation, politics and society.
The main goal of the event is to connect the Bitcoin and Blockchain community with leading German companies of various industries. According to their website, the event will be creating a unique experience for speakers, sponsors, and ticket holders by setting the stage with a number of performance, parties, excursions and surprises.
Notable speakers include: Erik Voorhees, Founder and CEO of Shapeshift; Susanne Tarkowski Tempelhof, Founder and CEO of Bitnation; and Rosine Kadimani, the Founder of Blockchain Academy, Sao Paulo.

6) Money 20/20 Europe

When: June 4th to June 6th 2018
Where: Amsterdam, Netherlands

During this conference, nearly 150 unique and interactive content sessions will be available within about 11 sensational themes.
The certain companies will be available for observing:
Digital Transformation, Platforms & Payments, PSD2 and GDPR, Blockchain, Crypto and ICOs, The role of RegTech, Customer Centricity and UX, X Border Disruption, Financial Inclusion and Tech4Good and many more!

7)Crypto Valley Conference
When: June 20-22
Where: Zug (Switzerland)

This conference has a particular focus on research and innovation, so expect a good mix of academics and researchers in with the blockchain entrepreneurs. This would also be an excellent choice if you’ve got a good blockchain idea; there’s a pitch competition with a $30,000 prize.

8) Blockchain Expo Europe
When: June 27-28

Where: Amsterdam (the Netherlands)
Europe’s biggest blockchain conference is almost certain to be a can’t miss for anybody with any interest in the scene. Previous speakers have included a great mix of mainstream financial folks and blockchain innovators, and with more than 6,000 attendees, you’ll be able to find basically anyone you might want to network with.

Apr 24   2018   Crypto conferences   ICO

What key points should ICO project investors keep in mind?

ICO projects market in 2018, shows no decline despite the scam projects number right now had risen to an incredible rate. It becomes harder and harder to survive in this storming sea for project developers as the investors, unlike a year ago, are often scared to put money even in a decent idea of a particular project.

Let’s consider you have chosen the Initial Coin Offering funding model for your idea, had found investors and is ready to present your, undoubtedly, revolutionary project. There are a lot of things that come to attention, so you need to be sure in certain particular points:

The team

The core and heart of the project. Future investors always need to be sure that the project team consists of industry professionals, competent and reliable people who are aware of the actual market situation, events and significant investors.

Product implementation timing

According to the latest bold statistics, nearly 25% of the top-100 most successful ICO’s teams were unable to specify precisely the timing of the product release – and it’s not the best option for the investor for sure.

Actually, not much efforts are required to prove investors faith in a particular project – an already working service, website, active team in social networks or at least a decent project prototype made to impress, usually work out well, because 84% of the current ICO projects can’t provide even that.

Investments

If your project has already gained individual investments from the classical venture investors, the total chances of ICO success slightly increase. More than 50% of the projects from those that collected $50 million at ICO market had obtained venture capital before using the Initial Coin Offering fundraising model.

The Token economic model

Investors are interested in the risks associated with token functions and security, as well as how far the project’s reaction to these risks is planned. Basically, one should state maximum information about the token in the project Whitepaper to exclude possible doubts.

Exchange options for your project Token

Frankly speaking, if the token is only available on the internal exchange, it may be not very interesting for the investors. But the appearance on a major cryptocurrency exchange may raise the cost of the token by up to 25%. Therefore, even at the ICO preparation stage, it is crucial for investors to understand where the token will be listed – of course, the perfect solution would be cooperation with the major players of the business such as Bittrex, Cryptopia, Evercoin, Coinexchange or other well-known exchanges.

Moreover, it is also vital that the most usual main mistakes and hardships to go through should also be mentioned, which the developer teams face during the preparation stage for ICO – to avoid these failures in your future developments and not to copy mistakes of other failed projects:

1) Overcomplicated ICO plan

Unfortunately, many ICO-players act like they still are on the venture market– during the rounds organization, they plan a small round set with a significant discount, then another round – now more significant, but also with a high discount. The wrong way. Sometimes an extended period between these rounds also has terrible side effects. The central fact to take into account is that the ICO market has its own rules, and cryptocurrency investors are often scared with high discounts. When calculating the possible token cost, it is recommended to focus attention on the venture round amounts – due to high-risk pre-seed round it implies substantial discounts.When conducting a pre-ICO, for example, a discount should not be more significant than 20-25% of the initial ICO round.

2) Poor project presentation

Of course, not every team is capable of presenting your project as profitable and efficient, to create an active community and to share the idea worldwide. Right here experienced PR – and Community-managers may help – one need to pick people with serious positive background in IT, financial and project governance sector. Besides, it is essential to make an efficiently composed and easy for understanding Whitepaper, its images and schemes, as well as the visual materials and videos for YouTube promotion. If your investor is not able to get the idea straight or gets confused, money is sure to be lost.

3) Lack of communication with the community and possible investors

During the work on the technical part of the project, the organizers need to work on the creation of an active community aswell, an international one, which would be full of materials translated into English and other popular world languages. The more – the merrier: it is also essential to work with the database, media sources and social networks regularly and take into account the characteristics of the community of individual regions like Northern America, Europe, Asia. The necessary agreements with potential investors might come in hand so that they will not neglect their obligations at the last moment. Otherwise, you may face financial problems in case of a sudden funding withdrawal of the major investor right at the start of your ICO.

4) Insufficient media-PR

Besides, the investor must have sources from which he learns about the project. It is essential to place articles and project news on the well-known website or specialised forum that is well recognised by ICO-community. The work of PR-managers should be initiated at least several weeks– months even before the ICO start. It will help to efficiently use the money and not to waste it on buying outsource help at the last moment. A perfect and efficient way of promotion will be the participation of project team or its representatives in a variety of world top meetups and scheduled blockchain conferences, where the industry leaders and major investors are eager to meet and establish business contacts.

5) Team selection and the choice of advisors

A strong team of professionals and advisors, which are known to the public and media, is an excellent part of future success. It is essential that all team members to be real people with existing social network and LinkedIn profiles, as well as consultants, are best to be chosen from was the CEO’s of successful ICO companies, top managers of crypto companies, prominent investors and financial analytics.

6) Maximum project hard cap

Finally, possible investors will undoubtedly be critical in the evaluation of the number of funds planned to attract during the ICO period. Right here, ambition should not exceed the capabilities and market realities. If even six months ago a proposal to collect $50 million within the single ICO seemed to be a fitting idea, today the public is already afraid to invest such amounts of money in a large scale project.

With ever new ICO team step into play, the competition on the market only grows. It becomes more and more expensive to stand out from the large crowd of similar projects – if six months ago specialists assisted in the creation of Whitepaper charged nearly $5,000 for their services, right now it can cost up to 10 times more. The cost of any ICO conduction had doubled and, in some cases, approaching even $1 million or even more.

Top ICO Risks

The Initial Coin Offering is one of the most popular and trendy way of funding the independent projects and entrepreneur startups nowadays. During the last year, the broad public opinion of ICO role had significantly changed – from an innovative but rarely used model it had gone to a real mainstream.

Even despite the idea had attracted millions of people – as entrepreneurs with numerous projects so the ones willing to invest, the regulations are still something rare to be seen as the legislative base for ICOs and cryptocurrencies are still in development in many world countries.

Many people and even popular investors are trying to get on ICO hype train in order to get fat profits, being unaware of numerous risks associated with this new and highly perspective kind of investments.
Considering these hardships and risks, a particular effort is required to protect investors money from the possible risks.

1)Regulations risks

Sooner or later, the governmental regulatory bodies all over the world will apply serious grasp at ICO model. Considering this, no one knows what might happen to the wide range of tokens from the previous Initial Coin Offering campaigns. Moreover, it is hard to say whether the contributors will have difficulty in selling their ICO tokens to others when the new regulations arrive and how can it influence the overall rising successful market of startups at large. Tightening regulations from SEC and other world governmental bodies already have serious effects worldwide, and there is more to come, no doubt.

2) Taxes risks

As the crypto industry continue to rise, the world countries will have to define whether contributing in a particular ICO is a taxable event in their tax domicile. In these conditions, many potential bakers will probably try to avoid trouble with the taxes by avoiding the ICO participation. Also, unclear is should taxes be paid when receiving “dividends” from a crypto token. And, none of the least vital questions is what may happen if contributors resident in a certain jurisdiction contribute, even though they were not allowed to invest according to.

3) Legality risks

Nowadays, it is also which court can accept such official ICO document as whitepaper as a basis for litigation. Moreover, the ICO project can fall under the different jurisdiction, and it is unclear – would it be under the country of incorporation of the holding company or where the investment was made at first place. Also, there is no mechanism present at the moment, for token holders challenge the white paper’s authors legally if the white paper and roadmap are not followed through the milestones? Speaking about the tokens, it is not clear, what happens if the company which issued the tokens is sold and whether token holders have any rights under the new management.

4) Risks for businesses

Within the model popularity rising, a lot of people with bright ideas try to get into emerging business opportunities and get their think slice of pie.
Sadly enough, many projects underestimate the Regulatory challenges and commercial licenses needed to convert their business model into a viable legal business. The absence of these should definitely be a red flag to the potential ICO contributor.

5) Risks for investors/contributor

And of course, there is a lot of possible dangers and risks for the future investors: basic lack of knowledge from an investor/contributor on how to value, buy and sell the ICO tokens.
Not to mention such an unpleasant and infamous factor as FOMO – Fear of missing out. This definition had become quite popular during last year as the crypto market begun the seemingly unstoppable victory march. The idea of being left out from the ICO hype train can result in insanely large investment decisions and, as a result, significant losses. Contributing to one ICO, means these funds are not available for other kinds of investments and many contributors are not aware that there are different regulated ways to invest in startups other than ICOs.
And there is more to mention – the so-called Whales or “major contributors” are using their technical prowess to get into the ICO before other investors, merely to buy low and sell high without any view of the fundamentals of the ICO itself. And this discourages a rational conversation about the viability of these ideas and the trustworthiness of the team behind them.

6) ICO Structure Risks

Most projects try to give the bright insight for the future contributors/investors and provide a transparent scheme of ICO funds usage after the campaign is over. But in most times, specific points of funds usage are mixed. The founders’ reward can come along with the legal marketing costs and salaries – all of it complicates and makes harder for an investor to realize of on how much money exactly will be working for the contributors and how much will go into the founders’ pockets. Moreover, the token holders cannot vote out the management of the token issuer.
The absence of the vital financial documents, in regard, makes it extremely difficult for the token holders to analyze what is happening behind the scenes of the specific project and it, of course, reduces the chances for interest among investors.
The ICO project structure often raises the FOMO factor (Fear of Missing Out). That means that the initial contributors will have a vested interest in pumping the ICO in future. The late-stage involvement into ICO can be expensive as this structure is tilted in favour of early contributors, at the expense of the late ones. This reduces the opportunities for a rational discussion on the actual fundamentals, risks and opportunities of an ICO.
In theory, the token issuers could use ICO funds from previous ICO waves themselves to buy their own token on the open market or during subsequent ICO waves, this drives up prices and creates additional artificial interest to the ICO project.

7) ICO Team Risks

A decent project cannot be organized, developed and maintained by the weak team with insufficient experience. A team is the heart of the project. Those teams which do not have the real-world business experience organizing an ICO are mostly going to fail in the short or long run regardless as there is a difference between creating a crypto project and real-world business.
The most documents including white papers are based on the future possibilities of the project and of course, not the current success or positive market performance. The reputation and experience of the project founders and the observed success of rival companies on the particular market are the only things that could drag the interest of the investor. Of course, the practice of making unsupported claims are quite often within this industry as well as setting multiple fake LinkedIn profiles and bold statements about past success which cannot be verified in any way.

8) ICO Token Risks

And none of the least, a lot of risks associated with the project tokens.
-Tokens can be lost in specific ways

  • Tokens may be just stolen.
  • Many kinds of online and offline cryptocurrency wallets can be hacked and the tokens inside are stolen.
  • Certain challenges and hardship as DDoS-attacks, the excessively high fees, and unforeseen manner of work and upcoming regulations are those challenges that can project face which tokens are based on blockchains (like Ethereum and so on).
  • The token liquidity is reduced over time as tokens are not instantly listed on exchanges.

9) Risks after the ICO campaign

After the successful ICO campaign, many company may do the undoubtedly wrong step and rapidly reduce their communication. Every day that goes by without news, internal reports or some stories about the project, reduce the overall value of the issued tokens as a result.

Top ICO Scams

The meteoric popularity of Initial Coin Offering model of project financing in 2017 had a significant impact on worldwide financial markets. Hackers and fraudsters could not stay away from world trends and not compete in getting their slice of crypto pie.
The percentage of failed and fraudulent projects had risen to the levels of 90-95% in effect as of late 2017- early 2018.
It is worth remembering the most famous and extraordinary cases in this field in recent years.

1) Tezos – a multimillion dollar bubble.

The authors of this large-scale and ambitious Swiss project actively tried to attract investors with the help of massive advertising campaign, including luring the Ethereum advocates. The team initially promised to create a more advanced blockchain platform and a network protocol of secure smart contracts. Among the investors was even a well – known venture investor Tim Draper, who, however, left away over time with his significantly increased share – even before the beginning of serious problems.

Following the results of the July ICO campaign, the project collected more than $232 million, thus, being second only after the Filecoin in the list of the most funded projects of 2017.

The huge money was involved, and a sharp rise of Bitcoin value increased the overall amount of total funding received. Despite this, the launch of the platform was postponed continuously for an indefinite period. In California, even a group lawsuit had been filled against the creators and promoters of the controversial blockchain project. The internal struggle for power became public and caused broad criticism of the project, raising the question of whether the Tezos network will ever work at all. According to the lawsuit by October 25, 2017, to the Supreme court of California in San Francisco, several people had been accused, including the Breitman couple and  Johann Gevers. The accused also included Dynamic Ledger Solutions, Inc., located in Delaware (the company owned by Breitman); Tezos Foundation; the PR-the firm of strategic Brew Strategies, responsible for the PR of the project during the ICO. More lawsuits followed, and at the moment there are suspicions about violation of the legislation in the field of securities.

Moreover, the case against Tezos could set critical legal precedents, and in remarks, lawyers surveyed appeared to already be thinking about how to demonstrate that token offerings like those by Tezos could be deemed securities.

2)BitCad – changing the world together

For now, discussions about the BitCad are not so hot as before. Many investors are lost a lot of money no matter what the real reason is, and there is no way to reimburse the lost funds.

The BitCad platform raised $5 million in past year, while promising to become the platform of the cardinal changes in many existing sectors. The BitCad ICO project aimed at replacing nearly every component of modern business, government, trading and transaction facilitation.

Sadly enough, it had very few insights into how it was going to make that happen. In the end, despite having boasted a pretty large team initially, once the ICO took place, the project saw team members leave quite rapidly, and announcements from the group halted.

Initially, the project team was supposed to deliver the working prototype of their platform back in May 2017, including a smart contract constructor and biometric verification. Of coruse, it did not happen. By October 2017, they were also supposed to launch a dispute resolution department, a multistakeholder token model and a decentralised trade engine.

None of these happened, and it is weird, that some people are still anticipating the news about the BitCad platform. Others, however, realise that the team took a project that was way over their heads.

3) Confido – apparent ICO scam case

The crypto-currency startup Confido is one of the top examples of a deliberate Scam and various issues confronted in the ICO market due to the lack of regulations covering the sector. After successfully collecting $375,000 during the ICO, it disappeared from the grid along with its creators.

Initially, the project startup aim was to create a blockchain-apps for tracking deliveries and process transactions through smart contracts. Traditional terms of such operations include the mandatory presence of a third party. Smart contracts, in turn, can be executed automatically when both parties meet certain conditions, eliminating the need for this very third party.

The platform ICO was held in November 2017 using a platform called Token Lot to facilitate the collection of funds. Finally, nearly $375,000 was raised, and the company’s capitalisation back then reached more than $ 10 million. Investors received tokens “contract for difference”. These tokens were trading at $ 1.20 back on November 14, but after the disappearance of the Confido team, the price fell by as much as 95% – just up to 2 cents, according to Coinmarketcap.The final was predictable then – few days after receiving funding online resources and profiles of the creators and developers of the Confido team were removed, that included all the accounts on social networks.
At the moment, the return of investors ’ money and the search for scammers was not successful – the LinkedIn profiles also provided false information, and the fraudsters had disappeared.

4) Opair – one of the first ICO market scandals

Another infamous example, the Opair ICO, used to be the one earliest noted scams in ICO history back in 2016. More than $1 million had been raised with the promise to create the decentralised debit cards.

Anyway, it should have been pretty apparent from the start of it, that an ambitious noname group of individuals could not overhaul and make a triumph over the world banking system and provide decentralised debit cards that would work anywhere. Of course, with more and more exciting new Blockchain technologies hitting the markets, people were understandably hopeful.

Unpleasant things started to surface when certain users pointed out that the Opair team seemed to have fake LinkedIn profiles despite a lot of personal information and pictures provided. They also refused to attend crypto world events either accept video calls for some reasons.

So, after the Opair token was listed on exchanges, lots of coins were rapidly dumped, the main website went offline, and the team became silent about the next steps. It is worth paying tribute to fraudster’s arrogance and self-confidence – a couple of months later, the same group of scams created another Scam project called EBITZ ( the Zcash clone). Now users have been on alert though and thanks to the investigation of investors and specialised forums like Bitcountalk.org the scheme was exposed before the beginning of significant fund drain.

5) The Exxor project  – use of the famous brand name

The Exxor project at large turned out to be a well crafted and executed scam plan that issued a coin created to imitate the famous“IOTA”. Its creators were so confident that sometimes they had even imitated an official partnership with Samsung company brand.

The project team went missing after the end of the ICO campaign.
The Exxor project was announced as the accounting technology based on Directed Acyclic Graphs. The technology aimed at a multi-billion dollar Internet of Things industry and promised to be much more scalable than the standard Blockchain technology.

Unfortunately, too many questionable and shady moments during the organisational approach had been evident from the start of it: a fake Youtube account, where some Nexus ICO published the official video about the project to confuse investors with hints about actual and real NEXUS Social Media ICO.The project team had also claimed to have an official partnership with Samsung Corporation, but later this statement cannot be verified anywhere. Even the name of the project – EXXOR – had been chosen to ensure that users could get confused with it and the EXOR.com – the real investment company, which indeed works with Samsung.

We go further from here – the technical side also had many flaws. The project website was developed quite scrubby – it lacked in SSL (HTTPS) and not even the login page did have one.

In fact, Samsung had created a real project on the blockchain called NexLedger. In the future, the corporation officially denied cooperation with the scammers.

EXXOR had all the necessary known elements to classify this project as a SCAM including:

  • False partnership claims with no proof of it;
  • Fictional team photo from different Google sources and no verification of the team;
  • A poorly built website without SSL – not even on the ICO page;
  • Copying the names of already existing projects;
  • No news appearance on Coindesk at all;
  • Paid false press releases on countless websites.

Lots of mainstream and even non-mainstream media were on board of this big-budget scam. Sadly enough, they put a disclaimer saying media do not endorse any of the content in the press release nor are they affiliated with the project.

The core team looked like the perfect “scam squad” – apparently the images were picked randomly from across the internet with vanity LinkedIn accounts created for them. The advisers had no Samsung executive or director among them as well.

Well, like most other scams, the pre-ICO went live the very same day the idea was conceived. To join the ICO, one had to log in to their website, which had no SSL(not HTTPS even supported).

The whitepaper of the project was pretty long – 95 pages of pure text with only a few pages of illustrations. In fact, their whitepaper is just a report on the technology of the cryptocurrencies, their advantages and disadvantages as well as talk of Internet of Things. The document was written so cleverly that by the time a future investor finished reading, he had been hypnotized to forget everything.

Oddly enough, the Exxor though it was necessary to include its company registration information in its Whitepaper to enforce its credibility. The company EXONIC LTD by the number 10939583 was registered in the UK to Kelvin Rodgers with 75% voting power. The thing is, there are many proxies services to use to register a business in the UK. The scammers in Exxor might have fooled the entire world, but even your even primary checking shows the real scam background of this project.

The Directed Acyclic Graphs technology, in fact, could be excellent and prominent to be useful in the future thanks to the better scalability than the Blockchain, but the team that will bring it to life must be the real professionals.

6) Eros.Vision – love for tokens

The first warnings for the future investors about the infamous Eros.Vision project had appeared on the Hacked.com page long before its ICO campaign even.

Currently, this project, which involved the creation of a decentralised marketplace for employees as well as clients of the sex industry, had come through the full circle of misadventures. Scammers successfully raised more than $ 10 million of investments and accused another company, Eros.com, for their failures, before finally disappearing from the sight of its investors forever.

In fact, Eros.Vision is a registered trademark, so making the use of it had been a bright violation in such case for these fraudsters. And although it does not always indicate the nature of the Scam, at the same time it is clear that the absence of a domain often becomes an excuse never to deliver a product (which in essence was about a million legal consequences).

The primary factor that raised suspiciousness of investors again had been the statement made by the project team on August 5, 2017. They stated that the tokens “Eros” issue had been postponed for some time. Even after the successful ICO, the tokens remained in the hands of a few holders, who later disappeared from the grid and all investors lost their money.

After all, the Eros.Vision had many other distinctive qualities of the project of a scam nature. Here is the full set: basic copy / paste of another projects’ Whitepaper with minor changes (the link was later removed from the website), zero activity on social networks and poor communicating with its community, suspicious website hosting as well as the maxed hardcap of 10 million, which allows you not to be noticed by the major players, but to get enough money anyway.

In fact, the irony of the situation is that the company which fomented prostitution in markets where it is not expected the legal system to help them violate a successful trademark. Anyway, the scam creator team disappeared along with the money, amount of which clearly exceeds the stated $ 10 million – their funding accounts and contacts had been changed several times, so no one can say how much investors had lost in fact.

7) One Coin project – MLM Ponzi scheme exposed worldwide

Another scam project turned out to be much more sinister and ambitious as well as long-playing. Truth be told, the well known nowadays Ponzi scheme of the OneCoin project should have met its demise many years ago.

The amount of evidence contributing to OneCoin’s status as a pyramid scheme is much more than considerable – its directors have previously been involved in other known scam operations, its resources contain no verifiable evidence for any of its business claims and the documentation uploaded to support claims often conflicts the claims itself.

Also, the quality of hosted content, including standards of English and website construction, are noticeably poor for an alleged international operation run by native speakers.

The OneCoin Founder, Owner and Chief Operating Officer ‘Dr. Ruja Ignatova’ is the subject of a host of claims seemingly designed to demonstrate experience and business acumen. Information uploaded to OneCoin.eu states that she received degrees from the University of Oxford and Konstanz, and is the former CEO of Bulgarian private investment firm CSIF. To many investors and players of the market, it has been evident from the first day of launching of this project that the company is selling nothing but air. They claimed to issue a cryptocurrency which doesn’t exist on a blockchain and make people rich in the process.

Like in all of these similar pyramid scheme-based cases, some people had undoubtedly made a lot of money by actively recruiting new investors, but the vast majority of contributors will never get their money out now.

The team of OneCoin had made some very bold claims, and most of those backfired. Good thing is, now it is evident that no government or authority will ever recognize this Ponzi scheme as a legitimate investment opportunity – OneCoin is giving Bitcoin and other real cryptocurrencies a very bad name. Misleading people is a pure art, that much is evident.In recent months, it appears that many governments and law enforcement agencies are taking notice of the problems posed by OneCoin. The notorious Ponzi scheme has gotten into some hot legal waters around the world, with multiple countries actively investigating what this project claims to offer. That situation is only getting worse, with other countries launching official investigations – a lot of experts say that it is just a matter of time until this project collapses, and when that happens, a lot of people will lose their money in the process forever now.

Moreover, OneCoin is under the heat in India and Vietnam right now. Counterfeiting official government licenses is an absolute no-go in every part of the world. In Vietnam, these issues are taken even more seriously, and an official investigation

The first official ICO investigation

At the beginning of October 2017 SEC, the American Commission on Securities and Stock Exchanges, has lodged an official complaint against Maxim Zaslavsky and his two companies – And Diamond World Reserve Club (DRC World) and REcoin Group Foundation.

The peculiarity of the situation is that this was the first official case in the history of fraud during the ICO campaigns history. According to the SEC, the company sold unregistered securities, and the tokens are not secured by the assets. Buyers of tokens were promised to invest in real estate and diamonds, but in fact, the companies did not conduct the declared activities at all. The Board also found no evidence of the staffing of the professionals employed by the companies.

In addition, it was announced that investments at the ICO amounted to $4 million – in reality, this amount had not exceed $ 300,000. Now Zaslavsky’s assets are frozen by the Federal court of New York, and companies will have to pay a fine and return the funds received from investors. The entrepreneur himself, who also faces deprivation of the right to hold senior positions and participate in the placement of digital assets, still does not admit his guilt.

Conclusion

Quite fast ICOs had become a popular and effective way to collect financial investments, but this area is more and more dangerous for potential investors every year. A large number of people from the world of crypto-currencies and technologies continue to criticize the ICO.

For example, Brad Garlinghouse, CEO of Ripple, at the moment, which is one of the most popular largest market capitalizations of cryptocurrency, told CNBC in a recent interview – “much of what is happening in the market ICO is actually a deliberate fraud”. Ethereum co-founder Joseph Lubin told CNBC that there is an” irrational abundance “ on the ICO market, although he believes that the technology will eventually mature and remain in demand.

Now, some Scam projects are possible to expose based on many factors even without a deep analysis on the lack of informativeness of materials, lack of specificity of the proposals, free hosting resources. This also includes the primitive design and absence or fake personal data in social networks. Others may not be suspicious and may look like a decent ICO campaign. Not to get caught in the trap, be aware of the risks in working with the ICO, with caution, to analyze projects and to read relevant forums.

Apr 19   Fraud projects   ICO   ICO Scams

ICO vs IPO: Classics vs Innovations

The private business development and third-party investments attracting required a lot of efforts and time usually. Stock investors and other interested parties are well aware of what the IPO stands for. When carrying out the Initial Public Offering, the buyers of shares can often become co-owners of the company, and it receives considerable sums from sales – sometimes these amounts are so vast that they overlap even annual profits. With the advent of the blockchain technologies, cryptocurrencies markets and the emergence of Initial Coin Offerings worldwide, there is a turning point in established organizational approach, time frames, and investments of existing fundraising models.

ICO and IPO financial models

In both cases, the commonality of these financial models lies in the fact that they are private cases of crowdfunding – in fact, the collection of funds from an unlimited number of persons for a particular project and with clearly defined promises for possible sponsors.

It is worth noting that the interests of the sponsors in crowdfunding sector are often different – money can be collected even merely as donations only to investors pure satisfaction. Helping an exciting project without guarantees that the initial idea will be embodied in the end at all is risky of course. Some investors are chasing even the related bonuses – the authors of projects on Kickstarter and other crowdfunding platforms promise unique gifts. For example the first copy of the product, a T-shirt, a fancy souvenir, a name in the list of sponsors (for example, in the credits of the film shot with the collected money), etc.

Stock IPO is the most respectable form of crowdfunding so far with the prospect of a commercial return for its sponsor. In this case, the investor pays money not just for the development and prosperity of the company or a sweet, but a useless bonus, but to return them in the future – and with significant benefits for himself.

The organizational approach differences

The downside of these respectable IPOs is a high entry threshold for both the sponsor and, primarily, the organizing company. The sponsor must access the exchange through a broker, and the company – to undergo a complicated listing procedure.

The creation of an ICO itself is an attempt to apply exchange IPO rules in a more democratic environment of the cryptocurrency market, taking its specific features into account. If there is a strict difference between the shares and currencies at the classical exchange, this distinction is almost absent on the crypto market. During an ICO procedure, the company does not place shares, but so-called tokens instead, which are regarded the same as cryptocurrencies in the future. In fact, tokens are new currencies, but tied to a specific project and usually do not represent anything new technically. Another essential difference between the token and the share is that it does not give the investor the right to share in the company.

The ICO market contributors and model popularity growth analysis

Due to the higher democracy of the ICO procedure in comparison with the more traditional IPOs, it usually involves more independent and small players. There are no such participants among investors comparable with Vanguard, and among the issuers – for example, with Amazon. ICOs are being used not by the top companies with a well-known and good reputation, but mainly by startups of high-tech firms and teams, whose business is sometimes only at the stage of a promising idea.

Their investors, mainly, are the fans of various forms of crowdfunding. One of the well – known cases of successful ICO is the creation of Ethereum cryptocurrency. In 2014, the company issued tokens for everyone, and after a while, these tokens have risen radically. In 2014, $31 million was collected for various ICO projects, in 2016 this figure amounted to $210 million, and 2017 broke all records with the total capitalization of the market.

In 2016 through traditional venture capital funding about $500 million was raised – only 2.5 times more than during the ICOs. At the end of 2017, this figure has changed a lot – sharply rising ICO-projects had attracted a lot of investments. Only in the first half of the past year, the blockchain-based projects had drawn as much as $797 million, whereas, with the “traditionally accepted” venture investment cases, this figure was already three times lower – only $235 million.

Compared with 2016, the average size of investments in late 2017-early 2018 increased by up to 15 times. This fact indicates that the market is overloaded with capital already, which will inevitably soon lead to less potential benefit for possible ICO-investors.

Current ICO issues

While the ICO market is still at the stage of formation, it does have its growth problems. The risks for potential investors are especially critical now. Undoubtedly, among the current variety of startups, there are many promising ones. At the same time there are many fraudulent, or just failed, even after a successful ICO campaign, projects.

An excellent example of ICO with scandalous and negative consequences was the establishment of the DAO Fund – the first decentralized venture capital Fund on Ethereum cryptocurrency basis. During the ICO, the developers attracted $ 160 million, but technically the project was significantly underperformed. The flaw in the legality rules was used by a hacker, who created a subsidiary Fund, to which token worth of $60 million was transferred. The community had faced a difficult choice back then: either to leave everything as it is, allowing investors funds to be stolen, or to perform an actually reboot (hard fork) – not even the Fund system, but the Ethereum cryptocurrency at large. The reluctance to lose money won of course. After the successful fork everyone had their savings back, and the Fund ceased to exist.

Another great example is the Matchpool scandal, a new online Dating app. In early April 2017, its organizers received $5,8 million with the help of ICO investors. However, a couple of days later the Technical Director left his position – he was suspected of illegal money withdrawal from company’s account. So, how to distinguish decent projects from a Scam? Of course, it is not easy, primarily since in 2017 the number of fraudulent projects increased, according to various estimates, to 90-95%.

The solutions

Numerous participants of the ICO process are puzzled and offer different solutions to an existing problem.

There are rating agencies nowadays that evaluate the prospects of the platform that is on ICO stage. ICORating, for example, works like a classic rating Agency, conducting an independent evaluation of the projects. Today, no sources of systematic assessment and analysis of blockchain or benchmark project data exist. Such agencies analyse the technical characteristics of the platform, business model, team and many other factors. As a result, the investor gets at least some idea about the risks and prospects of the company. ICORating publishes a brief projects overview and marks them with specific rating scale ranging from “Stable+” to “Negative” and comments. Other firms are also engaged in private audits. There are even ICOs conducted for the projects analysis tools development.

The European company Outlier Ventures, investing in the blockchain tech, admits that in the nearest future the financial authorities of the different countries will develop ICO standards and begin to regulate this segment in about the same way as the traditional stock market. Though, the ICO market risks losing a significant part of the current freedoms and benefits then – the ultimate goal of Initial Coin Offerings at large.

The cryptocurrency environment has fundamental differences from the traditional economy, and it is hardly necessary for the state to deal with its regulations. Specific methods and solutions to bring the reliability of crypto-investments closer to the standards of the classic stock market are required but – with the maximum democratic rules. And, probably, they will be developed by the market participants themselves over time.

IPO or ICO?

Despite the overall attractiveness of the ICO mechanism, the significant omission is present. It is suitable for raising funds and launching the project, but a tool for distributing profits to shareholders from the economic activities of the project, that is, distribution of dividends, is still not present.

It often happens that the ICO supporters make their plans only until the stage of money gathering. The strategy of reimbursement to shareholders in the ICO also has two significant drawbacks: in the tokens repurchase mechanism, there is a change of ownership shares, which does not exist in the classical system, where shares are separated from the dividends. Secondly, the liquidity of any ICO – tokens is lower than the liquidity of fiat money from the very beginning, because the coins are derived from a particular project of the company, and the real money is a derivative of the economy, that is, all companies combined.

In the latter case, the company has to pay a margin for the difference between the purchase and the sale of the ICO-coin to conduct the repurchase. Due to the low liquidity of the ICO-coin tied to a specific project, the cost of margin will be high. Also, the liquidity of the ICO-coin is lower than the liquidity of the universal coin tied to the economy as a whole.

Summing that up, we see that the ICO model is suitable for starting a risky independent project, which has no profit and, accordingly, dividends. It is known that 80% of such startups go bankrupt during the first three years, and specific mechanism of investment cannot influence these statistics cardinally.

For a real project that leads economic activity, has a constant turnover and income, as well as regularly distributed profits in the form of dividends – the IPO mechanism is more preferable.

Besides, it should be noted that the mechanism of IPO registered records in the case of legal disputes can be reduced to a mechanism of debt receipts like bonds and thus, if necessary, transfer property disputes to classical jurisdiction. The law has not yet defined the mechanism of the ICO, and an investor, in this case, is not legally protected. Under the IPO model, the history of each unique record can be traced, and in case of unauthorized transfer of the share detection, the issuing company may refuse its service by releasing a replacement of another share in favor of the legitimate owner. In case of anonymous token-ICO, it is impossible at all.

How to use blockchain tech in your favor: top 5 business ideas to benefit in 2018

The blockchain technology is becoming more and more adopted for wider implementation in different areas, many businessmen and entrepreneurs are in often search for more possibilities to make profits from using the this rising sector of latest technologies. Of course, it goes far beside just crypto assets purchase, ICO organizing or crypto trading.

No doubt, all those mentioned ideas are profitable, but the perspective implementation cases do not just end there. The year 2018 will be definitely successful for those who plan to make use of blockchain tech widespread and technology innovations.
Let’s outline the top ideas that can make you profit in 2018:

1) Retail businesses take advantages of blockchain technology

The crypto currencies adoption grows worldwide and every day the crypto assets become heavily involved in the daily lives. At such circumstances, entrepreneurs can make profits by aiming at selling different goods, items and real value products.

The huge benefits are definitely achievable in this segment as the ordinary people use the digital money more and more often when making a purchase. A strong tendency arises, as more traditional fiat or physical money will be less popular in the future and the digital currencies will become the main method of payment.

Top world’s technologically developed countries see a lot of buyers that are already willing to pay for their goods in crypto assets.
So, the trend is worth following, while carefully choosing the country for setting or development the business venture. Currently, the payments and crypto currencies usage are heavily tied to the legislation rules of particular state and the crypto market development conditions.

One of first things to do could be setting the vending machines accepting currencies and crypto ATMs. No doubt, that would cost more than a dime to launch such business. But, on the other hand, setting the crypto currencies ATMs are relatively easy as the machines are quite small in size and easy to use&operate.

Due to recent researches, the investments usually return within a year or even less. The owner can get profits of 1-10% or even more for the transactions provided. Also, the one of these machines pros – is an ability to connect to the crypto exchanges. This results in more options choice, better operation performance and funds saving. And here we come to the next related idea.

2) The crypto currency exchanges develop big time

This one is already popular and common in these days of highly popular online trading. And as the digital assets exchange for fiat currencies and other altcoins is one the surest ways to get profit for the people involved, the marketplaces number increases fast.

The cryptocurrency exchange platforms are similar to the more traditional stock exchanges with the live order book and price fluctuations. The prices change depending on the trading volumes and users profit from these changes, and the owner gets a certain percent from all the transactions conducted.

Setting up the exchange requires the implementation of an approach already used by the major operating whales of this business: the trading network design that allows to buy/sell among themselves to balance the price fluctuations – these way speculators won’t be able to push the price windows at the exchange out of balance and obtain all the funds as cheap as possible. The major concern regarding the exchange creation lies in different governmental newly-issued regulation rules; implement the new restrictions such as additional ID-verification and double-checking.

Well, another issue crypto exchanges currently face is complexity of working with the assets from the users’ side — multiple applications are usually required for an effective work, which is certainly time-consuming and confusing. The traditional exchanges tend to have huge commission fees which don’t incentivize the user.

These factors lead to search for an alternative concept that will make the trading more efficient and simple to implement, as well as easy for new investors stepping in play.

3) The casino gambling industry steps in crypto world

Despite the overall excitement for the crypto currencies and particular coins hype trains, the digital assets industry is still on the early stage of development. However, they are not constrained by legal regulations like fiat money – and that had created certain opportunities for the gambling industry as well.

The crypto casinos are on the rise nowadays as the crypto currencies are not constrained by legal regulations like fiat money and the legislation bases around the world are only in development.

The gambling industry sharks could not stay blind to that, of course. Huge profits, coming from the sports betting, poker games and online gambling had now gotten the new opportunities with blockchain technologies.

The crypto gambling emergence is out of question, though it is not so popular as more traditional online gambling industry right now. Mentioning the bold statistic numbers, back in year 2013 – just over 50% of all Bitcoin transactions were related to gambling. Since 2014 however, roughly 3,7 million BTC had been wagered equating to $37 billion.

Nowadays more and more perspective projects step in to make a stand. For example, the upcoming ZeroEdge gambling platform offers players equal odds of winning against the house, i.e. 0% house edge casino games such as Blackjack, Video Poker, Roulette, and many more.

However, this market is not so easy to enter and become a “King of the Hill”, as the entry bar is already raised quite high. Not only have the new players joined the race, of course. KamaGames, for example, already represents the major profitable business and a well-known brand – due to the latest official data, more than 100 million users are already registered within the company’ system. The brand is the Europe’s largest operator of online social casino games with a gross revenue of $ 57,5 million in 2017. The current estimated value of the company is about $ 500 million. The last year had seen a 63% increase in company’s overall revenue. KamaGames has a significant list of confirmed nominations and achievements in the gaming industry throughout the years of active work and development aimed on advancing its services and making them more attractive and convenient for the players.

The company will use the Initial Coin Offering model of funding in order to further increase the quality of new gaming products development and expanding its client’s network, delivering the first-class gaming experience and services worldwide. The brand plans to raise the bar even further, making their games more convenient and technologically advanced.

4) The online gaming trading marketplaces pursue blockchain

Online gaming is already one of the most popular kind of entertainment in the digital age. The number of games utilizing online modes and their popularity rise every year. The highly valuable items and loot boxes had already become one of the latest things to keep an eye on for the developers and community.

Most popular online games had already implemented this feature, enabling different built-in mechanics for random rewarding and exchanging between the players. Some companies had already managed to gain profit from it and even organized black market trades. Of course, most players do enjoy the overall game reward systems as they are supposed to be played and sometimes just buy so-called “booster packs” for increased chances of getting the rewards. The others use the real, fiat money, for their advantage on the online battlefields. Anyway, the growing popularity of these items between the players seen the trading rise on the black markets. In this case, the crypto currencies already do play a part in trades, as in-game valuable items are already selling for different digital assets and even certain platform tokens.

Nowadays, over 2,3 billion people play games every day on different platforms and devices. The gaming industry reached $100 billion of revenue in 2016 and is still booming. Only around 4,000 pro gamers are making profits out of their time spent in games and pursued skills. Just a couple of games with 6% auditory already turn over close to $4 billion trading in-game items. Selling virtual items can also include: Currency or gold; Virtual items such as armor, weapons, mounts, etc; Boosting services such as PvP, leveling, items drop rate increase; Game account selling. And the most expensive items ever include $330,000 for the Crystal Palace in “Entropia Universe” as well as $635,000 for Club Neverdie in “Entropia Universe”. One will have a tough time finding a virtual item selling for these massive amounts, but these five games are helping people swell their bank accounts to this day: “Entropia Universe”, “Eve Online”, “Counterstrike Global Offensive”, “Dota 2”, and “World of Warcraft”.

When speaking about the blockchain-based startups, an Ethereum-powered strategy PC-game “Beyond-the-Void” should be mentioned.
Another example is “WAX” – a decentralized platform that enables anyone to operate a fully functional virtual marketplace with zero investments in security, infrastructure or payment processing. WAX is developed by the OPSkins company founders and it’s designed to serve the 400+ million online players who already collect, buy and sell in-game items.“D-Market” is the marketplace that allows its users turning every virtual item into a real asset. Though, it is known that, 94% of gamers are not involved in global trading at all yet.

5) The blockchain scalability developments & security advancements

This applies to tech enthusiasts and companies aimed to advancing the overall industry progress by offering the much-needed solutions available in the nearest future.

The current existing blockchains suffer numerous problems due to technology imperfection, lack of scalability, security problems, low transactions speed and so on.

There is more to come in the nearest future as the quantum computers rapid development promises new security breach problems and it definitely poses a forthcoming and serious threat.

Ambitious “Kelvin Blockchain” project, for example, is being developed to enhance the current situation. It brings together the best features from the currently existing block chains and merge them, while advancing and developing the ideas further.

Kelvin Blockchain itself is quantum resistant blockchain based on 100% original C-code optimized for high load. The certain features are announced to be implemented from the start – such as ring signatures, variability in different encryption and wallet types, multichain & sharding support, enchanced speed, Smart Contracts and Open API for 3rd party coins and projects and so on.
Kelvin itself is a flexible to implementing cryptographic algorithms which will make it the one of the safest blockchains ever existed with 10+ signature available from the start.

The multichain technology allows creating almost an unlimited potential of speed and productivity. Kelvin Blockchain can launch up to 65536 parallel subchains, and the transactions can be placed in any block the parallel chain. More subchains – more tx throughput. Every subchain can have its own attributes (type of consensys, size and speed of block etc.).

Apr 12