How do to an ICO if you have a startup idea?
If I have an idea and I want to raise money using ICO, what should be the roadmap?
11 comments
(1) Copy a coin that already exists (filecoin, etc.)
(2) Get wealthy investors.. be good at powerpoint and bullshitting.
(3) Pre-mine a bunch of your coin. Don't respond to anyone that calls you out on this.
(4) Hype the shit out of it using puppet accounts, russian botnets, instagram advertisements.. pay for publicity.
(5) Use your wealthy investors to make your coin worth X amount of BTC at launch. Cash out a large portion of your coin quickly after launch just in case, and then wait for other people to buy your coin because general investors are clueless.. if you ride that wave, cash out more over time.
(6) Open a hamburger stand or charity.. something to give back to society and to decrease boredom.
(2) Get wealthy investors.. be good at powerpoint and bullshitting.
(3) Pre-mine a bunch of your coin. Don't respond to anyone that calls you out on this.
(4) Hype the shit out of it using puppet accounts, russian botnets, instagram advertisements.. pay for publicity.
(5) Use your wealthy investors to make your coin worth X amount of BTC at launch. Cash out a large portion of your coin quickly after launch just in case, and then wait for other people to buy your coin because general investors are clueless.. if you ride that wave, cash out more over time.
(6) Open a hamburger stand or charity.. something to give back to society and to decrease boredom.
Based on recent statements and enforcement actions from the SEC, I would highly recommend against considering "ICOs" as a way to "raise money".
ICOs for the purpose of raising money are likely to an investment contract under SEC rules. If your offering is an investment contract, then the transaction is considered a security and is subject to SEC requirements.
In other words, don't expect an ICO to be a simpler or easier or better way to raise money. It's not. Start by reading the SEC bulletin on Coin Initial Offerings:
https://www.sec.gov/oiea/investor-alerts-and-bulletins/ib_co...
Not all coin offerings are necessarily securities, but if you're viewing it as a way to raise money, then it almost certainly will be. To determine whether an offering is likely to be a security, consider the Howey Test, which is a test created by the US Supreme Court for whether a transaction represents an investment (and thus may be regulated by the SEC). The test is whether:
(1) It is an investment of money (2) There is an expectation of profits from the investment (3) The investment of money is in a common enterprise (4) Any profit comes from the efforts of a promoter or third party
If you are selling coins in an ICO with the promise of profit for the coin holders; if the money will be invested in your enterprise; if the coin holders are expecting to profit based on your efforts or those of others, then the ICO is likely to be a security.
Here is one example of an investigation by the SEC into one coin offering (the DAO), where it was determined to be a security: https://www.sec.gov/litigation/investreport/34-81207.pdf
ICOs for the purpose of raising money are likely to an investment contract under SEC rules. If your offering is an investment contract, then the transaction is considered a security and is subject to SEC requirements.
In other words, don't expect an ICO to be a simpler or easier or better way to raise money. It's not. Start by reading the SEC bulletin on Coin Initial Offerings:
https://www.sec.gov/oiea/investor-alerts-and-bulletins/ib_co...
Not all coin offerings are necessarily securities, but if you're viewing it as a way to raise money, then it almost certainly will be. To determine whether an offering is likely to be a security, consider the Howey Test, which is a test created by the US Supreme Court for whether a transaction represents an investment (and thus may be regulated by the SEC). The test is whether:
(1) It is an investment of money (2) There is an expectation of profits from the investment (3) The investment of money is in a common enterprise (4) Any profit comes from the efforts of a promoter or third party
If you are selling coins in an ICO with the promise of profit for the coin holders; if the money will be invested in your enterprise; if the coin holders are expecting to profit based on your efforts or those of others, then the ICO is likely to be a security.
Here is one example of an investigation by the SEC into one coin offering (the DAO), where it was determined to be a security: https://www.sec.gov/litigation/investreport/34-81207.pdf
1) Talk to a lawyer, there is a chance your ICO could be considered selling securities and doing so without being licensed could get you into legal trouble[1].
[1]: https://www.sec.gov/oiea/investor-alerts-and-bulletins/ib_co...
[1]: https://www.sec.gov/oiea/investor-alerts-and-bulletins/ib_co...
The first question you shouldn’t be asking is how to have an ICO, but why do you NEED an ICO? What’s the role of tokens in your idea? Otherwise you’re just buying into the hype that is blockchain.
One item on the roadmap could be considering using https://ico.indiegogo.com/ who have lawyers reviewing compliance and it acts as marketing channel. Like with other crowdfunding the platform helps you concentrate more on the startup itself.
Try to research the list of ICO. Idea, Whitepaper, Team, Milestones, etc
There are more than 1200+ ICOs https://icomarks.com/
step 1: accumulate a lot of bitcoin
step 2: use the accumulated bitcoin to prove your new ICO has a value rooted in an already established coin
step 3: offer an initial price for the first however-many units of your coin
step 4: get your coin popular enough to be on the exchanges eventually
Bonus points / better chances if your coin does something in a new way, or using the cryptographic puzzle solving step to do something useful like Fold Proteins.
Many ICOs are not at all rooted in BTC. Something like IOTA is backed by just under 1337 BTC.
Imagine BTC as the gold in fort knox and any new coin you want to make as a currency that needs to be backed in gold, this is my advice.
Bonus points / better chances if your coin does something in a new way, or using the cryptographic puzzle solving step to do something useful like Fold Proteins.
Many ICOs are not at all rooted in BTC. Something like IOTA is backed by just under 1337 BTC.
Imagine BTC as the gold in fort knox and any new coin you want to make as a currency that needs to be backed in gold, this is my advice.
Look up the Truffle Ethereum Development Framework. Take a look into the Coin creation sample and work it out from there.
Don't.
If the idea is soldi enough, I would suggest a RegA+ offering
Also make sure that tokens have nothing to do with the performance of your company to get around regulations