The statistics were impossible to imagine. Most ICOs tank and stay tanked, once the tokens hit the crypto exchanges, after the frenzy and ‘FOMO’ attending the crowdsale is over.
Most viewers watching the ICO phenomenon generally agree that the trend in recent months has been for ICOs to lose value after the crowdsale, with many buyers waiting in vain for the “moon” they were promised. , once the cryptocurrency reaches an exchange portal.
What is not discussed, however, is the main reason why we are witnessing this phenomenon, and what crowdsale participants, including the rating companies most of us rely on to make a choice, must be doing wrong when choosing which one. ICO has the most value, or has the greatest chance of increasing in value once the crowdsale is over.
While there are many reasons one could legitimately put forward for the phenomenon, there is one fact that I think is probably more responsible for this than most of the other contending reasons: ICO token valuation and the misplaced emphasis on ‘blockchain experts’. , ‘ICO advisors’ ‘ or ‘tech whiz kids’ for erc20 tokens.
I’ve always thought that the need for blockchain technical experts or ICO technical advisors is exaggerated or even outright misguided when a project is judged against those criteria unless the project is actually trying to create an entirely new coin concept. For most ERC20 tokens and copycat coins, the real important consideration should be the business plan behind the token and the managerial antecedents and executive profiles of the team leaders.
As anyone involved in the industry should know, creating an ERC20 token from Ethereum, or similar tokens from other cryptocurrencies, doesn’t require great technical skill or an overrated blockchain advisor (in fact, with new software out there). , an ERC20 Token can be done in less than 10 minutes by a complete technical novice.
So technically should no longer be a big problem for tokens). The key should be the business plan; level of business experience; competence of the project leaders and the business marketing strategy of the main company raising the funds.
Honestly, as a lawyer and business advisor for over 30 years for various companies worldwide, I can’t understand why people keep looking for a Russian or Korean or Chinese ‘Crypto Whiz’ or ‘Crypto Advisor’ to determine the strength of an ICO for which is basically a crowdfunding campaign for a BUSINESS CONCEPT…
I firmly believe that this is one of the main reasons why most ICOs never live up to their prelaunch hype. In an era where there is an abundance of token creation software, platforms and freelancers, the disproportionate focus on the blockchain experience or technical prowess of the promoters is usually misplaced. It’s like trying to rate a company’s likely success based on its staff’s ability to create a good website or app. That train left the station long ago with the proliferation of tech hands on freelance sites like Guru; Upwork, freelancer and even Fiverr.
People seemed too caught up in the hype and the technical qualifications of people promoting an ICO, especially ERC20 Ethereum based tokens, and then wonder why a technically superior Russian, Chinese or Korean man wouldn’t do the business end of the company can deliver after the fundraising campaign.
Even many of our ICO Rating companies seemed to award a disproportionate number of points to team member crypto experience, how many crypto advisors they have and the ICO success experience they have on their team, rather than focusing on the underlying business model to be made with the money raised
Once you understand that over 90% of the cryptos and ICOs out there are just tokens created to raise crowdfunds for an idea, and just not a token for the token, people’s focus will shift from technical angles to the more relevant work of evaluating the business idea itself and the business plan.
Once we enter this evaluation era before deciding whether to buy or invest in a cryptocurrency, we will begin to value future prospects or value of our tokens based on sound business considerations, such as:
– SWOT analysis of the company and its promoters
– Leadership competence and experience of the team leaders
– The solidity of a business idea that goes beyond creating a token
– The company’s marketing plan and strategy for selling those ideas
– The ability to market the underlying products
– The customer base for the products and services to be created by the company
– and basis for projecting adoption in the market
What most people didn’t realize is that the potential for their tokens to increase in value after ICO depends not so much on anything technical as on the good things happening in the company collecting the funds and the perceived increase in the appreciation of the company as it rolls out its business plan and delivers its business products.
Of course, buying cryptocurrency is not buying stock, nor is it buying the security in a company. We get that, but tokens react much like stocks react to good news or bad news about a company. The only difference is that with cryptos, the effect is magnified 100 times.
So when a company hits a financial or business milestone, the price of its token on the exchange will rise… and fall quickly if nothing good happens. So, what the company will do and how it will do after the ICO should be paramount to anyone who doesn’t want the value of their tokens to plummet and stay low forever.
Sure, tokens, most tokens would plummet once the tokens reach a crypto exchange after the ICO, due to those who want to take immediate profits, but whether it would ever come back to give you the expected multi-digit profits always depends of the criteria I already outlined above. After you buy a token, the value of the ‘crypto advisor’s and ‘technical whizkids’ goes to zero in relation to the potential of your tokens to moon.
Following on from this reality, I think a savvy crypto buyer or investor should focus less on how many crypto advisors a project has or how technically sound the team is (unless the firm’s underlining activities are technical in nature) and more focus on the management, marketing and potential customer base of the company raising money through an ICO.
In other words, allocate more points to the business and management side of the ICO instead of the technical jargons that won’t help your token in the market when the money is raised!