ICOs have come under fire after some were involved in scams – Google the word "Giza" to find a recent one. Facebook has also banned ICO ads, as has Google. But it’s likely over time they will become more mature and an accepted way for an early stage venture, especially those based on...
ICOs have come under fire after some were involved in scams – Google the word “Giza” to find a recent one. Facebook has also banned ICO ads, as has Google.
But it’s likely over time they will become more mature and an accepted way for an early stage venture, especially those based on distributed ledger or blockchain technology, to raise money.
While some see ICOs as unregulated, that’s not necessarily the case, especially if the token or share used in the offer could be viewed as a share or derivative and traded on an exchange. This could require the issuer to hold an Australian Financial Services Licence. You can read more about this on ASIC’s website.
Digital marketing consultant Adriana Belotti says the ICO landscape is changing.
“At the beginning, ICO investors were mostly from within the tech community. Now, traditional investment funds have pools of money for clients with a high-risk appetite.”
She also says the market is becoming more sophisticated. “Last year, people were less informed and buying into all sorts of bad projects. Now, regulators are looking to understand this new economy to create rules that protect the consumer without stopping innovation.”
Belotti says the main challenge of an ICO is getting attention. “There are at least a dozen ICOs happening every week. If you want to be successful, you need to understand your target audience and future users of your coin.”
Derek Meyers is the chief executive of the Zero Carbon Project and is soon to formally launch his ICO.
The Zero Carbon Project aims to deliver lower energy prices to consumers by leveraging international carbon credits. It runs a ‘zero carbon’ marketplace and hopes to attract 500 energy businesses to the market over time. It has used blockchain to create tokens, which users accrue by buying zero-carbon power through the project.
Zero-carbon energy includes green energy sources, such as solar and wind.
The underlying technology is the Ethereum blockchain, which is a cryptocurrency like bitcoin. It provides a software platform with global reach, a distributed ledger and a smart contract facility.
“We have grown reasonably well over 15 years without any external funding. Recently our green energy tenders have become competitive with those from the fossil fuel industry. The ICO provides the opportunity to raise funds from customers who can see the merits of our blockchain-based solution,” Meyers says.
Organisations such as governments ask energy businesses to tender to provide energy for large projects.
Half the funds raised will be used to market the project, and Meyers says his aim is to roll out zero-carbon markets in all national competitive electricity markets, followed by a market service to regulated markets where consumers can’t switch suppliers.
“We will launch the market service in the UK in October followed by Australia by the end of this year. In 2019 we will launch in competitive markets in North America, Europe and Asia,” he says.
The rest of the funds will be used to build operations in, for instance, customer service capabilities, as well as services and systems.
Meyers says investors are likely to be future customers, mainly household energy consumers, who want to buy their Energis tokens at a discounted price. The tokens can be used to pay the market’s transaction fees. They can also be sold to other customers.
Christopher Quinlan, chief executive of Krios, is right in the middle of his ICO, having sold 200 million tokens so far.
They are priced in US dollars at 10¢ each, but there are also bonuses and giveaways in the offer. He says it’s not possible to give an exact amount for the funds raised so far because cryptocurrency values fluctuate so much. But each token is valued at 10¢ at time of purchase.
Krios is a marketing platform that connects businesses with people working in marketing like ad managers, graphic designers and copywriters.
Funds raised will go into product development, marketing, and running and growing Krios.
Investors have been marketing people, businesses likely to use the platform in the future and people involved in cryptocurrencies.
The offer is being marketed through social media. Quinlan says he has been happy with the response so far, although the project has had hurdles.
“Facebook banning advertising of ICOs did have a significant effect as it happened right in the middle of our first offering. We had to shift to marketing through cryptocurrency channels and their databases,” Quinlan says.
Another issue is the constantly evolving landscape. “A night of bad press around cryptocurrency could have significant effects on the whole industry, and would be reflected in our marketing results at the end of that day.”
Being such a new space, there is constantly evolving regulatory and compliance issues. As such, Quinlan has to constantly readjust his focus to comply with new rules. “We always go above and beyond with our compliance,” he says.
Quinlan’s advice to people thinking about launching an ICO is to spend time building a community before launching the offer.
“YouTube videos, and getting involved in cryptocurrency groups and forums are great ways to build your community,” he says. “Also build your team. The more pedigree you bring to it, the more successful your business will be, and that will be reflected in the overall success of your offering.”
It’s still the Wild West out there in crypto-land – and ICOs won’t replace IPOs any time soon – but the area is growing and it’s worth keeping a watching brief on this space.
What do you think? Is bitcoin the Myspace of our time or the new currency frontier? Post your comments below.
Morning & Afternoon Newsletter
How to Automate Video Content Marketing in Under 1 Hour
5 Easy Video Lessons +
Bonus Free Toolkit