Last year was a big year for the blockchain industry, and possibly the most significant one since the technology was first developed. The immense rise in the price of Bitcoin, Ethereum and NFTs blockchain technology into the cross-hairs of the media and onto the radar of investors all over the world. At the same time, along with the growing popularity of blockchain technology, we’ve seen a record number of Initial Coin Offerings (ICOs) hit the Stock market.
However, many scams, hacks and risks have surrounded ICOs. In many ways, this makes it difficult to talk about them in a positive light. In the wake of such a huge bubble, it is also natural for imitations and scams to pop up. While this might put many serious investors off it’s also an indication of the potential of the blockchain space. After all, no one would bother attacking an industry that wasn’t promising.
With every new project, these ICOs and the money that is put into them further the infrastructure and mainstream attention.
An Extensive Guide to Launching an ICO
As we are still in the early age of blockchain technology, cryptocurrency is not prominent as more conventional currencies. This means that as entrepreneurs, we need to be careful how we proceed with these projects. Every business leader must act responsibly and professionally with the proceeds of their ICO. Transparency is crucial, as is the ability to deliver on promises. Not only does this help solidify ICOs as a legitimate funding mechanism, but it also creates traction with your investors.
With this in mind, we’ve developed this guide to help you navigate the blockchain industry and release your own ICO:
So What Exactly is an ICO?
An ICO is an unregulated method of raising funds for a new cryptocurrency venture. Otherwise known as an Initial Coin Offering, an ICO is used by entrepreneurs to circumvent the heavily regulated capital-raising process. The ICO process takes the power out of the hands of venture capitalists or banks and puts it into the hands of entrepreneurs.
How an ICO campaign works
In an ICO campaign, a small amount of the cryptocurrency is offered to early investors of the project in exchange for money or other cryptocurrencies (often Bitcoin). Due to a lack of regulatory compliance and middlemen, ICOs are often a very high risk for investors.
When a cryptocurrency startup attempts to raise money through an ICO, they will initially create a white paper that details the plan for releasing an ICO. The white paper contains information about what the project is about, the aim of the project, any needs fulfilled by the project once completed and how many virtual coins the entrepreneurs will retain. The whitepaper also details what type of money or cryptocurrency is accepted, the length of the ICO campaign and how much money is required to carry out the project.
Throughout the ICO campaign, supporters of the firm buy the initial crypto coins offered in the ICO with legal tender or virtual currency. These coins are called tokens and are akin to shares of a company sold during an IPO (initial public offering) transaction.
If the amount of funds raised does not equate to the minimum required for the project, the money is refunded to the investors and the ICO is considered a failure. If the money reaches the required amount within the set time frame, then the funds are given to the entrepreneurs to either initiate a new scheme or complete the previous project.
Most investors in the early stages of a cryptocurrency buy the crypto coins in the hopes that the ICO will be successful and the project will go off without a hitch after it launches. This in turn dramatically raises the crypto coin value, turning a large profit for the investors.
An Example – Ethereum
A good example of a successful ICO that has shared a huge profit with its investors is the smart contracts platform Ethereum, which uses Ethers as its coin tokens. In 2014, Ethereum launched its ICO and raised $18 million in Bitcoins, which equates to $0.40 per Ether. The project went live a year later and a year after that, the tokens had a value as high as $14 each. As of today, one Ethereum coin is worth $2,468.88.
Funding and Regulations
ICOs are essentially a type of crowd-funding. Like IPOs or other methods of crowd-funding, a share or stake of the startup is sold to amass funds that will help the company in those tenuous first years of trading. However, while an IPO deals with investors, an ICO sells shares to any supporters who desire to see the business develop, much like crowd-funding. Even so, supporters of an ICO often want to see a sizable return on their investment. Since ICOs generally fall between crowd-funding and selling shares, they are known as crowd-sales.
Many ICOs have been successful and the future for ICOs looks promising as well as innovative. Investors are consistently warned to be careful when dealing with ICOs, and with valid reason. This is because a significant number of crowd-sale campaigns are in fact scams. Given that the fund-raising channels are not regulated by financial authorities, any funds that are lost to fraudsters may never be recovered. As such, you have to reassure your potential investors of both your credibility and your reliability. We’ll cover that a bit more later.
At the start of September 2017, the People’s Bank of China made ICOs illegal, stating that they are disruptive to the nation’s economy and financial stability. The central bank believes that tokens cannot be used as currency on the global market and that ICOs have no place in the banking world. As a result, both Bitcoin and Ethereum plummeted in value. Many cryptocurrency investors viewed China’s ban as a forewarning that cryptocurrencies will soon be regulated.
To carry out a successful ICO, you need to do extensive preparation. You need to be aware of any regulations and navigate them whilst ensuring your ICO is as valuable to both you and your investors.
There are two points to focus on when you launch your ICO to garner support from the media, public and, finally, investors.
– Authenticity – Be genuine. Those that work within and invest in the cryptocurrency industry are not stupid people – far from it. The cryptocurrency community quickly sees through fraudulent ICOs and is able to identify honest projects to support.
– Transparency – people love honesty. As the owner of an ICO, if you conceal information, then you create mistrust between the community that will invest in your project and your project itself.
So now that you are clued up on what Initial Coin Offerings are and their place in startup companies, you need to start making a plan for launch. But where do you start? Rest assured we have prepared a step-by-step guide to launch your ICO, right from your whitepaper to your press release. Check out the steps below:
A Step by Step Guide for Setting up your ICO
Part 1: Setting Up Your ICO
– Step.1: Do you need an ICO?
– Step.2: Familiarize Yourself with Global Legal Challenges
– Step.3: Write your Whitepaper
-Step.4: Choose your Token Type
-Step.5: State your Terms and Conditions
-Step.6: Scout your ICO Team
-Step.7: Choose your Blockchain Platform for the ICO
-Step.8: Set up your Website
-Step.9: Create your Issue Calendar
-Step.10: Smart Contracts
-Step.11: Setting up the Hardware
Part 2: Marketing
-Step.1: Legal Loopholes
-Step.2: Brand Identity
-Step.3: Develop a Story for your Coin
-Step.4: Reach out to Journalists and Develop a Press Release
-Step.5: Spreading your Media Coverage
Part 3: Launch!
Part 1: Setting up your ICO
Here we’ll be focusing on the nitty-gritty of launching your ICO. We’ll also talk about how to create a coin, which platforms to use, any legalities you should be aware of. Creating an ICO campaign is a lot of work. You’re creating your own cryptocurrency, essentially a balanced economy or digital framework for trade. Consider Bitcoin or Ethereum and imagine creating those tokens. Well, you are about to do the same. So get a good team together, boot up your laptop and have a notebook ready. This is where your ICO starts…
Step 1: Do You Need an ICO?
Remember, almost half of all ICOs sold in 2019 eventually failed by the start of 2020. There are a number of reasons for this. High on that list of reasons is mistrust between the investors and project managers. But even more important is the fact that many of these projects weren’t suitable for an ICO in the first place.
Many cryptocurrency experts remind us that an ICO is not a tool to raise a large amount of funds in a short amount of time for just any business. ICOs shouldn’t be considered the same as an IPO. While ICOs might have been a quick and easy way of raising funds without any regulation when they first hit the market just a few years ago, things are beginning to change. As ICOs become more and more formal, the cryptocurrency community is starting to install informal standards that all ICOs should respect if they wish to see success.
The main thing every startup should consider when discussing an ICO launch is whether the digital token, that is the coin that they are offering, can be successfully integrated into the business model. To put it simply, if the only use for the coin is to trade on the cryptocurrency market, then there is no point for an investor to support it. It doesn’t stand for anything and can’t be backed up by something tangible. This is a sure-fire way to guarantee your coin will crash after the ICO is launched.
Any token that hits the market during an ICO campaign will be scrutinized by the cryptocurrency community immediately. The only thing that will give your coin a chance is if it has practical use in the real world. In other words, if a decentralized cryptocurrency will not increase the value of your product or service, then you can stop reading now.
Step 2: Familiarize Yourself with Global Legal Challenges
This essential research should be undertaken as soon as possible. In fact, if you’re reading this article, it might be worth looking into it now. In the wake of China’s ICO ban in September 2017, more and more countries are looking to start either regulating this fund-raising strategy or ban it together. At the moment, the most important thing is that you know the countries that have already implemented regulations. In China, ICOs are banned and successful projects are being forced to refund any tokens bought. In Russia, coins must be registered and taxed, and in the United States, it varies depending on the state. South Korea has banned ICOs entirely and Australia has also issued some regulations.
You can find a more extensive list of regulations by country here.
Step 3: Write your Whitepaper
The first and potentially most crucial step because at this point, you’ll be concreting your idea and sharing it with your prospective supporters. In these initial plans, your project won’t be as solid and tangible as it needs to be, and so you’ll likely need significant research into areas related to your business. Once you identify the niche that your ICO will target and hopefully fulfill a need within, you must try to portray exactly what your ICO will deliver, and provide evidence to back up your claims.
Many whitepapers are available online, and it might be worth reading through them to see how they are written and what points they attempt to address. Make sure that you never try to replicate ideas or plagiarize whitepapers. That will only undermine your authority and transparency, creating an unstable foundation for your project. Your whitepaper should tell the story of your ICO. This narrative should be concise while clearly communicating your vision for your project. You need to establish where you are coming from, why you are undertaking your project and how it can change the world. We’ll look into creating a narrative a little later.
Start your whitepaper by explaining the problem that your project will solve or begin with your project’s mission. After the introduction, lead into how your project will work, the features of your token and any benefits that supporting the ICO will bring to contributors. Begin backing up your claims with any progress that you’ve already made and lay out a detailed plan of future actions. Be specific with any information you already have, making note of key dates, team members and how the token will be commercialized.
Step 4: Choose Your Token Type
This is where you can start getting creative. You need to begin considering the purpose of your token (hopefully it will represent something tangible and could be considered a “security”) and what kind of digital token it will be. Make a decision on an abbreviation to represent your token. Don’t go for anything fancy – this symbol should be easy to remember and quickly identifiable. For example, Ethereum’s tokens Ether has a symbol of “ETH”. It’s pronounceable, it’s short, it’s clear and you even find these combinations of letters in a lot of words. If you create something succinct, it’ll be memorable. Don’t go for something like “RYJSSJ” because honestly, no one will remember that after seeing it on an exchange.
You have to decide how the token will be used to incentivize your investors and supporters. Set the worth of your token in the real world, and decide whether it will be exchanged for a physical product or represent a share in the business. At this point, you should also set token caps. Some ICOs are uncapped, but the public is more favorable towards ICOs with clearly cut soft and hard caps.
Step 5: State Your Terms and Conditions
In this step, you have to research the legalities surrounding the ICO world. You should put into writing certain legalities and formalities. Firstly, you should lay out the name of your project and outlay any terms likely to reappear throughout the T&Cs. You then want to define the token and describe the rights associated with the token. Include prices and timing of the ICO (this should also be on your website, but it never hurts to write it twice). State whether or not all the coins will be available at once, or whether the release will be staggered. Finally, make sure lay out how you will use the proceeds of the ICO. You may want to outsource writing the terms and conditions to a lawyer.
Step 6: Scout for Your ICO Team
This is extremely important for any Initial Coin Offering. A decent team will help you spread the news of your ICO further than you previously thought and ensure that it is carried out efficiently. You need to bring together a team made up of people with significant experience and expertise.
Ideally, your peers should share the same values and ethos as the project. Try to keep the team small and skilled. When choosing staff, you always want quality over quantity. Make sure you hire people who are knowledgeable about blockchain technology and various cryptocurrencies. LinkedIn can be a great resource for networking and hunting for the perfect team members.
Step 7: Choose Your Blockchain Platform for the ICO
After you have your team together, a whitepaper drafted up, your terms and conditions laid out and any big legal hurdles far behind you, it’s time to decide which blockchain platform you use to launch your tokens. There are a number of platforms you can use, including:
- Ethereum
- Waves
- NXT
- Neo
- NEM
All of these platforms provide a multitude of solutions for your ICO. The most popular platform is Ethereum’s ERC-20 token, which is quickly becoming the industry standard. It’s advisable to ensure someone on your team is familiar with one of the major blockchain platforms.
Step 8: Set up Your Website
If you don’t already have a website, then you should set up one before reading any further. Any cryptocurrency project relies on the internet so your online presence is of the utmost importance. As your digital footprint/calling card, a badly designed website screams unprofessional and can start raising eyebrows among a community that has grown out of technology. Your website gives your supporters the chance to interact with the project and learn more about your ICO. Ensure your website is streamlined and delivers all the information that prospective supporters require. All navigation aspects of the website must be clear and concise.
Step 9: Create the Issue Calendar
Create a write-up detailing how and when your coin will be issued. It’s very common to have a presale for a small, dedicated number of supporters. Subsequently, you can host a private sale, the principal coin offering to the public and then a general sale. You can base the number of sales you have on your project’s requirements. You should announce your calendar on multiple platforms, including your website, forums or through a press release.
Step 10: Smart Contracts
You’ll need to create the token sale contracts for the ICO. Essentially, supporters send the Ethereum or Bitcoin to specific wallets before the smart contracts execute themselves. These contracts, in turn, send you the funds. The supporters receive the token coins during the process. Throughout the exchange, you’ll have to perform rigorous testing to make sure that everything is totally secure. If your transactions are hacked, both you and your supporters can potentially lose everything and your reputation will be permanently damaged.
Step 11: Setting up the Hardware
Right, now it should all be coming together. Your team has hashed out most of the ICO and your plan is just about ready to go. The last piece of infrastructure you need before launching your ICO is the hardware itself. You need a dedicated computer, a digital wallet and a node.
– Your Computer is essential for hosting the ICO website. As a rule of thumb, you should be looking at powerful computers for anything blockchain-related. You can use a VPN for Windows on your computer to protect your data from online threats.
– A node should sync with the test and the primary net of the ICO platform. It is best to delegate setting this up to your ICO platform expert. The node will come in handy when launching and testing your smart contracts.
– A Wallet for safely storing your digital tokens is essential. Go for multi-signature cold storage for optimal security.
At this point, you should test all of the hardware diligently before thinking about a launch and then move on to the marketing and PR.
Part 2: Marketing an ICO
Good marketing is everything. People need to know about your project if they are going to support it. Outsourcing a marketing strategy can be extremely profitable if you have the capability and initial funds to pay for it. If you can’t afford to pay someone for marketing, you can promote yourself with a little hard work. Ultimately, you want to use multiple channels to influence other people to spread the word about your coin. Reach out to the media and create an online community to generate a buzz around your ICO. The tips below should get you started on drafting your own marketing strategy. However, these steps are not exhaustive. Spend time on your marketing plan and promote your product comprehensively to ensure that you generate as much hype as possible before the release of your coin.
Step 1: Legal Loopholes
Firstly, be careful of marketing or advertising bans in your target countries. Advertising laws can be very forceful around the world and you might have to jump through a few legal loopholes. Consulting an advertising lawyer or legal expert can speed up this process, though admittedly at a price.
Additionally, don’t risk running adverts on social media platforms that have banned cryptocurrency ads. Rather, use platforms like Telegram which have embraced crpyto projects.
Step 2: Brand Identity
Develop your brand image and advertising campaign. You have to get the public excited about your project, and the majority of your token sales will be driven by how memorable your brand is. If you successfully create an online community of enthusiastic supporters who believe in your brand, word of your ICO campaign will spread through the vast reaches of the internet to more investors than you can dream of encountering.
Step 3: Develop a Story for your Coin
Every marketing expert will agree that an effective story sells products. If you can develop a narrative for your project then you’ll rake in more interest and as a result, more investors. In the beginning, the narrative creates a need for the product. You then meet this need by introducing your product. Pressfarm encourages entrepreneurs to create an engaging story before starting any media outreach. A press release will greatly help journalists in publishing a meaningful news story or review. Essentially, creating a decent narrative will help you get journalists, prospective supporters and contributors interested in your ICO.
PR firms like Pressfarm exist to help companies to create newsworthy content to generate media coverage. Pressfarm also provides companies with access to their PR database of over 1 million media professionals so they can find their perfect media match. The company’s PR experts understand the current digital landscape and use this understanding to help brands gain more online visibility by creating and distributing content that guarantees high-ranking search results on various search engines.
With a professional press release, a few compelling guest posts and a creative media kit from Pressfarm, you can make a splash in your industry and stand out from the competition. As a client, you also have access to Pressfarm’s media database of over 1 million contacts for up to a year. This allows you to keep doing media outreach for your brand, long after Pressfarm has wrapped your campaign up.
Step 4: Reach out to Journalists and Develop A Press Release
Once you’ve set up your website and created a strong brand identity you can take the narrative that we mentioned in the last step and approach a journalist. There’s a huge number of technology journalists who are hungry for stories regarding cryptocurrencies at the moment. Moreover, a lot of them are constantly looking for the next big ICO to write about. If you can convince a journalist with links to the cryptocurrency community that your project is going to be a major hit, then they’ll open the flood gates to all kinds of positive press. You can find a list of journalists at Pressfarm, or by looking on cryptocurrency forums. It’s always advisable to contact journalists directly with a succinct description of your ICO and your narrative.
Step 5: Spreading your Media Coverage
If you’ve done every step thoroughly up until this point, then hopefully this step won’t be necessary. Even so, you need all the help you can get when launching your ICO and this is no time to be lazy. You’re at the final stretch now. If you pull this off, then your ICO could even be oversubscribed and some potential supporters could be left out. Once you have a press release ready and you receive some positive press reports, you need to share those articles as widely as you can. Most potential supporters will already be comfortable in the cryptocurrency world and it’s probably best to target people who have backed ICOs before. Target websites like Twitter, ICO news websites and Reddit.
Support positive news stories with videos, meet-ups and public talks and – for heaven’s sake – control your own blog on your ICO website and repost any articles about your token sale. Use the full force of all the social media at your disposal. Ask friends to share your articles. But be careful not to breach any advertising regulations or rules (a lot of social media websites have them!). A list of social media platforms that have imposed regulations on ICO advertisements include:
- Snapchat
- Mailchimp
Unfortunately, this is due to a large number of ICOs that turned out be scams. Make sure that you’re one of the good guys who can actually deliver on promises and avoid any website-related scams. Guilty by association is a very real worry in the early days of an ICO. For this reason, you need to make absolutely sure that you aren’t associated – even loosely – with any scams. Research some of the bigger scams so you know what to avoid.
Develop an active presence on well-known forums. Social media extends further than Facebook and Twitter. Blockchain is still a relatively new and niche industry. There are plenty of extremely active forums you can reach out to. Bitcointalk and Reddit are popular forums for ICO news and information. Telegram is also a popular platform for crypto projects that want to advertise to the public while also building an online community.
Part 3: Launch!
So you’ve got your team together, created your coin, published a whitepaper. Drawn up a marketing strategy and started to generate a sizable buzz with the media and forums. Everything is live and ready to go, all you need to do, is say the word and your ICO is underway.
At this point, you have to reach out to ICO exchanges and request them to carry your coin. ICO exchanges host your coin and enable supporters to buy and sell your cryptocurrency on the open market. This is why it’s essential to get your coin onto the most established and trusted exchanges available. Hopefully, if your media hype is loud enough, the people running the exchanges will know about your coin before you even make the request!
You can find a list of exchanges on Best Bitcoin Exchange. On the other hand, tokens will list on CoinMarketCap, which tracks sales of various digital tokens. ICOs that fail will find themselves at the bottom of CoinMarketCap’s list or deleted from it entirely.
The process of listing a coin on exchange depends on which exchange you have applied to. Some exchanges like Bittrex and Poloniex refuse to host tokens that might be considered a security. It may be best to avoid these exchanges. Most exchanges will request an ICO to provide:
- The coin name
- A trading symbol
- A description of the project and token
- The logo for the coin
- A launch date
- A Github link
- Third-party reviewed source code
- A compliance fee
Another option is to check out the Coin list and this popular spin-off from Angellist is a host for digital token companies. As you might expect coin list can connect you with investors and help you navigate some of the trickier regulations.
Are you getting started? We have the tools and the know-how to kickstart your ICO! If you’d like us to help you promote your project as you launch, don’t hesitate to reach out.