Born in 1999, and now born again in 2017, Overstock.com is launching the biggest ICO in history. Sure, Initial Coin Offerings — otherwise known as an ‘Initial Public Coin Offering’ (IPCO) — are sometimes considered to a be a bit shady, but with this breakthrough claim to have created a federally regulated platform according to Securities and Exchange Commision (SEC) standards, what does it take to make a credible ICO?
In its most basic form, ICOs are a new way to fund tech projects through the use of cryptocurrencies or tokens. By offering a faster, more transparent solution to crowdfunding a project and eliminating the search for an initial Venture Capitalist (VC), there is some serious cash to be made.
The need for an ICO rating
As no official ICO rating exists in the marketplace, another important aspect for carrying out a successful ICO is to establish a rating system for potential investors to constitute more credibility in the marketplace.A rating system would not only limit the amount of fraudulent activity and corruption risk, but would again promote a higher level of security and transparency to all parties involved.
A lucrative rating system would first include a few different company-based scoring methods, such as an investor interest level and a risk assessment. Having an investor interest level is beneficial for promoting healthy competition and a sense of scarcity among potential investors, thus creating more awareness and attracting people to a new ICO project. A risk score would be extremely beneficial as well for assessing the amount of potential fraudulent activity happening behind the scenes, along with gauging the overall quality of the project too.
Similarly, investors’ main concern lies in their ROI — or return on investment. Having an official ICO rating system with an investment potential score, as well as an in-depth overview of a beta ICO, would heighten buyer potential and promote more transactions based on a higher sense of security and trust. Then again, some investors like a little more risk — but an ICO rating system would still be beneficial for them to view and purchase ones that are more volatile.
Moreover, having a scoring system would ensure that integrity is being upheld within the team under the ICO. As previously mentioned, people will not feel confident investing in ICOs if they do not know what’s going on behind the scenes. With that being said, there’s a greater probability for corruption right now as there are no official regulations or ways to make sure companies are being honest with their ICO-related activity. As the U.S. Securities and Exchange Commission has let the ICO market largely develop with no guidance, they’ve recently warned startups that they could be violating security laws with token sales. Private companies are also required to file a disclosure whenever they raise private cash. An ICO rating system would not only ensure these standards are being met, but would endorse a higher sense of virtue for all new ICO teams.
To sum up, in order to carry out a successful ICO, it is important to have a solid team that operates by specific guidelines created by the SEC. From here, you can develop a strong ICO brand based on responsibility, integrity, and create an ICO rating scale to systematise the whole process. As ICOs gain traction in the marketplace, having both the startups and the investors operate according to these standards will ensure a higher level of success on both ends. This new form of fundraising is a great solution for the bootstrap dilemma many startups face, and with new developments, can be an extremely profitable and efficient way of giving companies a more democratic way to launch using digital currency.
A solution in the mist
So, amidst all these ICO rises and tumbles, bubbles and pops, where is an investor to turn? Finally, there is a trustworthy source — also built using blockchain technology — that aims to guide uneasy investors in the right direction. Revain has recently raised funds through a crowdsale to secure funds for R&D for its revolutionary technology, which allows users to review ICOs side-by-side, see other users’ experiences, and evaluate investment risk. In partnership with ICOrating.com, Revain will allow users to review the most important elements of an ICO, including its business model, market segment, team, competition, technical background, and community reviews. Following the development and public unveiling of this groundbreaking technology, Revain’s developers have plans to further disrupt the market by taking the blockchain mechanics that form the core of these online reviews to other markets, from e-commerce to gaming.
