How do I start an ICO?
The landscape around ICOs is maturing. Investors are becoming more cautious and critical while regulation enforces compliance. What is the current status of blockchain in the Gartner Hype Cycle and how do you lay the foundation of an ICO that also has to withstand stricter regulation in the future?
When considering starting an ICO, it is good to be aware of blockchain’s current status in the Gartner Hype Cycle.
Gartner Hype Cycle
The Gartner Hype Cycle maps how a new technology goes through the entire cycle from promise to accepted product. After the ‘Technology Trigger’ in which blockchain first attracted attention as a new technology, blockchain was on ‘Peak of Inflated Expectations’ in mid-2017. This phase saw great expectations raised to the absurd around the concept of blockchain.
Meanwhile, blockchain is heading towards the third phase ‘Trough of Desillusionment’. This is a phase that all new technologies go through, as was the case with the emergence of the first trains in the 19th century.
In the end, blockchain will also pass through the “Slope of Enlightenment” and finally enter the fifth and final phase: “Plateau of Productivity”. This is the phase in which blockchain technology becomes productive and starts generating returns. Exceptions are solutions that are already productive and solutions that will never produce a return.
ICO in three steps
Step 1: determine in which category the value falls
The choice between a utility or security token, for example, has an impact on the regulations that must be taken into account. It is therefore a good idea to research this from the very first moment so that the further course can be determined.
Step 2: create a whitepaper
A white paper has many similarities with a business plan. There are five important aspects to this:
- The need / the problem – why would someone need a new cryptocurrency? How does it solve an existing problem or make our lives better?
- The solution – how do we solve the problem and why do we do it with cryptocurrency (or blockchain in general)?
- The team – who are we, why are we uniquely qualified to do this?
- The market – who is using our solution, how big is the market? How many users are there? How are they segmented?
- The competition – what other solutions can solve the same problem? How do we do better?
- technical, business, economic and financial issues.
Step 3: Create a legal team.
When you start an ICO, you will have to deal with many legal issues in both known and unknown areas which are also changing due to the stricter regulation of cryptocurrencies. For the long term it is advisable not only to look at the current legislation, but also to be prepared for what is possibly still to come. Here are a number of legal aspects which professional ICOs need to delve into and arm themselves with if they are to ensure long-term continuity:
- Law for the prevention of money laundering and the financing of terrorism;
- Financial Markets Authority;
- Authority of the Netherlands
- Legal structure and contracts;
- Legal structure and contracts
Intellectual property law;
Click here for more information on the Gartner Hype Cycle