You already know how an ICO works. For people who don’t know, here is a quick overview of how it works- An ICO founder comes up with an interesting project and they tokenize completely or they tokenize a part of the project and make the tokens available for purchase to the public. Investors who are attracted by the benefits of the ICO tokens from the token sale event. With the funds raised, the founder builds up the project according to the business plan. Over time, investors will profit from the investments made by them.
You also know how this simple process can go wrong when the ICO founders easily take off with the raised funds. Investors have no other option than to face the bitter side of investment that is losing all the money. With almost no legal regulations, the ICO founders enjoy the benefit of being a millionaire in a short time. ICOs are attracting more and more fraudster every day who wish to get rich with minimal effort by looting the hard earned money of the investors. With the increase in the number of frauds in the ICOs, people are beginning to lose faith in it.
Who’s bearing the brunt?
As the prospective investors are starting to lose faith in ICOs, genuine ICO founders are affected adversely. They have a promising idea and the capability to execute the idea, but due to these unfortunate situations, investors are now skeptical about making an investment. Investors reposition to evaluate a team based on the advisors they have on board. If a prominent influencer in the domain or a celebrity is backing the team, then its almost sure that it will be a success. If that’s not the case, softcap would remain a dream for the ICO founders no matter how good their idea or team is.
Is there a solution?
Yes, there is a proper solution built by Accubits Technologies named as Coinfactory-a battle-tested ICO platform which is scalable, self-hosted, compliant, secure and customizable. This platform helps a person to launch their ICO up and get it running in two days. It is built with every feature one would need to successfully conduct token sales and distribution. The features provided by the Coinfactory are incredible and reliable, but what I have to talk about is how Coinfactory can stop frauds that have affected the ICOs.
How to increase investor’s trust in your ICO?
We have come up with a really good idea to solve this issue and it is built into Coinfactory. The feature is called ‘milestone contract’, analyze the diagram below to quickly grasp an idea of how milestone contract works,
This is how milestone contracts work- An ICO founder, Mr John has a brilliant idea and want to tokenize a part of the project so that he can raise funds to build up the project. He then realizes that it is going to be a difficult process as investors are not willing to make an investment because they don't trust ICOs anymore. He then decides to host his ICO with Coinfactory. He defined his project as easy as a pie, he created milestones for his project in the Coinfactory dashboard. Every milestone he created was made into a smartcontract. If John’s ICO raised any funds, it will be split across different milestone contracts and the raised funds will be held in the contract until there is a consensus between John and the investor community champions about the completion of the milestone. Once the champions of the investor community approve the completion of a milestone, the funds as defined by the contract for the next milestone will be transferred to John’s wallet.
Milestone contract is an optional feature in the platform but it gives a sense of security for the investors that their funds will not be stolen. The ICO owner actually has to execute the milestones of the project idea to receive funds to execute the next milestone. Investors are happy as they are assured of the security. ICO owners are happy because they get sufficient funds to execute the different milestones in a timely manner. They just have to define the milestones and fund releases which would attract the investor’s attention.
We believe that the milestone contract will add a new dimension to the ICO market. ICOs can be made trustworthy again, thus creating a win-win situation for both the ICO founders and the investors. Most importantly, this will be a huge blow for the fraudsters. ICOs open gates to a bright future with more decentralized ecosystems. It's our responsibility to protect the revolution. I hope ICOs will once again rise up to help bring amazing project ideas to fruition and give confidence to investors about their investments and slowly change the world.
