ICOs are a type of funding using cryptocurrencies. Most of the processes are done by crowdfunding. However, private ICOs are becoming more and more popular. In an ICO, tokens are generated once a quantity of cryptocurrency sold to investors and speculators. You can exchange these tokens for legal tenders or other cryptocurrencies.
There are a few steps to consider for launching an ICO:
1) Find out if ICOs are suitable for your business
Not all ICOs are ideal for business. An ICO ethos is currently forming, and industries have begun to adopt the free standards.
Every startup considering an ICO should be able to integrate the digital tokens in a meaningful way seamlessly.
You can expect a guarantee price crash if the only use for your ICOs is to trade on an exchange. As soon as the ICO is open to the market, the crypto community will place immense speculation to any token released during a campaign.
The only way to defend it is for the token to have a strong demand produced by a real utility.
2) Building an actual product
Creating an actual product for an ICO is the most crucial step in launching an ICO. Hustlers often ignore this step as they get lost in trying to increase the capital as fast as possible.
You need to spend a decent amount of time in creating a stable, robust, scalable product on the blockchain before revealing it to the public eye. You could probably get away with launching an MVP or beta and then conducting your token sales. However, it’s safer for most startups to get their business off the ground by raising a little equity investment.
You must create a valuable product, and that product must use your token.
3) Construct a token
Creating a token might be the most straightforward part of the ICO process. In simple terms, you have to create an asset that is necessary for your business to survive.
These assets can be any goods which you can trade with other people such as in-game items, digital coins, loyalty points etc. You can think of tokens as the company’s shares sold to the investors in an IPO transaction.
You can simplify your work by visiting one of the many platforms that offer token creation without having to build a blockchain from scratch.
Smart contracts control the token sales. According to Investopedia, smart contracts are “self-executing contracts with the terms of the agreement between buyer and seller is directly written into lines of code. The code and the agreements contained therein exist across a distributed, decentralised blockchain network“.
4) Acquiring a formal legal opinion
The primary intention here is to make sure that others should not see your ICOs or tokens as security and to ensure that there are no signs of deception.
The pre-sale and legal planning process mark the start of ICOs. Getting the formal legal opinion and the ICO’s legal description is mandatory to avoid any troubles with the SEC.
One country may have completely different laws related to launching an ICO than the other. Thus, make sure that you abide by all the relevant rules and regulations of your state before initiating it.
5) Draft a whitepaper
According to Investopedia, a whitepaper is “an informational document, issued by a company or not-for-profit organisation, to promote or highlight the features of a solution, product, or service“.
You can think of it as a pitch deck, a business plan, a marketing plan and a technical manual all in one. Drafting a whitepaper is never an easy task.
The document is very complex, and many companies have not invested in proper writers and marketers for this component.
Having good content writers will force the founders to be more strict, accurate and thorough with the process. Meanwhile, bad vendors will attempt to evade the gaps in thinking and product inefficiencies entirely with jargon and oversights.
Despite all this, a working proof-of-work will hold more weight than any whitepaper or business collateral.
6) Engaging with the community and create hype
It is undeniable that your ICOs won’t go anywhere until an adequate amount of investors know of its existence. Crypto community engagement and hype creation are the second most essential processes in launching an ICO.
The initial hype is where the majority of the token sales happen. The community of investors should support you and your ICO/tokens and should not sell it at the first opportunity. These investors must be capable of helping the company to boost the generated hype.
7) Launching your tokens on the exchanges
Once you completed the above six steps, then it is time for you to reach out to exchange to launch your ICO. Exchanges are essentially websites for cryptocurrencies that allows people to buy and sell tokens or ICOs on the open market.
If your ICO needs to have that potential staying power, then it is essential to get the ICO validated on a secure and established exchange. Many exchanges would ban your tokens if the exchange identified it as security.