Change is everywhere, and regardless of what industry you’re in, it's inevitable. Leading the pack for change is technology -- and it can be overwhelming to try to keep up with its breakneck speed.
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Right now, the technology topic I'm trying to become expert in is blockchain technology, and the cryptocurrencies it underlies. I'm also studying the rise of Initial coin offerings (ICOs) -- the newest way for startups to raise capital, and an attractive option for individual investors, as well.
An ICO usually takes one to four weeks, during which people can buy tokens in exchange for cryptocurrencies or fiat currencies. The token provides buyers with access to future services from the ICO company and its community. And at the heart of that ICO? Blockchain technology, which manages and tracks digital transactions via smart contracts.
ICOs as a fund-raising vehicle
While it is still new to many, blockchain is a topic people like me are eager to learn about because something big is about to happen -- at least I believe so: I'm making the bold prediction that 2018 will be the year that blockchain, cryptocurrencies and other companies will be evaluating an ICO as a fund-raising vehicle.
Of course, things are just getting started: According to a survey by LendEDU, as much as 79 percent of Americans have heard about the best-known cryptocurrency, Bitcoin. But of these, only 14 percent actually own bitcoins.
But that's where entrepreneurs come in: Most of us at some time have had to raise capital and look for investors to infuse money into our ventures. As our businesses grew, we continued to search for venture capitalists, angel investors and other types of funders.
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VCs, until recently, were he main source of funding. But now, we can add ICOs to the mix. In 2017, ICOs raised over $3.6 billion in digital tokens, reflecting a faster pace than that of any other early-stage venture capital funding source.
While I think it essential for every entrepreneur to be as knowledgeable as possible about cryptocurrencies and ICOs, here are four specific things to do you before you jump into the fray.
Test the (ICO) waters.
As with any other business decision, jumping in without testing the waters first can prove disastrous. ICOs are cool right now, and they get your name into the annals of the cryptocurrencies world. But, ask yourself, "Will my product jive with the decentralization that blockchain technology provides?"
If your product is not ready to deal with the market's volatility, it might be best to sit this one out, for now. ICOs are easy to enter, so you’ll get another shot at this, unlike what happens with VC investment.
What's more, ICO success stories, while plentiful, are still not the common outcome. But there are some: An example is cloud storage provider Storj, which had one of the most successful token sales of all time -- raising $20 million in six hours.