The statistics could no longer be ignored. Most ICOs are canceled, and remain loaded, once the tokens hit the crypto exchanges, after the frenzy and ‘FOMO’ of attending the sale is over.
Most observers of the ICO phenomenon universally agree that the trend over the past few months has been for ICOs to lose value after the sell-off, with many buyers waiting in vain for the promised ‘month’ after the cryptocurrency hits the exchange portal.
What is not discussed, however, is the main reason why we are witnessing this phenomenon and that crowdsale participants, including the rating companies that most of us rely on to make our choices, must be wrong in choosing which ICO has the most value, or has the greatest likelihood of increasing in value after the sale is over.
While there are many reasons that can legitimately be cited for this phenomenon, there is one fact that I think is probably more responsible for this than most of the other competing reasons: ICO token valuation and the misplaced emphasis on ‘blockchain experts’, ‘ICO advisors’ or ‘ technical whizkids’ for erc20 tokens.
I’ve always thought that the need for blockchain technical experts or ICO technical advisors is exaggerated, or even completely misplaced, when judging a project by those criteria, unless the project is actually trying to create an entirely new coin concept. For most ERC20 tokens and copy coins, the really important consideration should be the business plan behind the token and the management backgrounds and executive profiles of the team leaders.
As everyone involved in the industry should know, creating ERC20 tokens from Ethereum or similar tokens from other cryptocurrencies does not require any great technical skill nor does it require any overpriced blockchain advisor (in fact, with the new software that exists, an ERC20 Token can make a complete technical novice in less than 10 minutes.
So technicality shouldn’t even be a big deal for tokens anymore). The key should be the business plan; level of business experience; competencies of the project manager and the business marketing strategy of the main fundraising company.
Frankly, as a lawyer and business consultant with more than 30 years of several companies around the world, I cannot understand why people keep looking for some Russian, Korean or Chinese ‘Crypto Whiz’ or ‘Crypto Advisor’ to determine the strength of an ICO for what is basically a crowdfunding campaign for BUSINESS CONCEPT…
I strongly 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, a disproportionate focus on the blockchain experience or technical ability of promoters is largely misplaced. It’s like trying to judge the likely success of a company based on the ability of its staff to create a good website or app. That train left the station long ago with the proliferation of tech workers on freelance sites like Guru; Upwork, Freelancer, and even Fiverr.
People seemed to get too caught up in the hype and technical qualifications of people promoting ICOs, especially ERC20 Ethereum based tokens, and then wonder why a technically superior Russian, Chinese or Korean guy can’t deliver the business end of a company after a fundraising campaign.
Even many of our ICO rating companies seem to have assigned a disproportionate number of points to a team member’s crypto experience, how many crypto advisors they have, and the ICO success experience they have on their team, instead of focusing on the core business model to be created by the collected means
Once it is understood that more than 90% of cryptocurrencies and ICOs are simply tokens created to raise funds for an idea and not just a token for token’s sake, then people’s emphasis will shift from technical angles to more relevant evaluation work. the business idea itself and the corporate business plan.
When we move into this era of evaluation before deciding whether to buy or invest in a cryptocurrency, we will then begin to evaluate the future prospects or value of our tokens based on sound business considerations such as:
– Swot analysis of the company and its promoters
– Management competence and experience of team leaders
– Validity of the business idea beyond token creation
– The company’s marketing plan and strategy for selling those ideas
– Ability to deliver basic products to the market
– Customer base for products and services to be created by the company
– and the basis for projecting market adoption
What most people fail to realize is that the potential for their tokens to increase in value after an ICO does not depend so much on anything technical, but on the good things happening in the fundraising company and the perceived increase in the company’s valuation as it develops its business plan and delivers their business products.
Of course, buying cryptocurrency is not buying shares, and it is not buying securities in any company. We understand that, but tokens react the same way stocks react to good or bad news about a company. The only difference is that in the case of cryptocurrencies, the effect is multiplied 100 times.
So when a company reaches some financial or business milestone, the price of its token on the stock market will rise… and fall quickly when nothing good happens. So what the company will do and how it will do it after the ICO should be of utmost importance to anyone who doesn’t want to see the value of their tokens go down and stay down forever.
Of course, most of the tokens would fall when the tokens come to the crypto exchange after the ICO, because of those who want to make an immediate profit, but whether it will ever come back and give you the expected multi-digit profit will always depend on the criteria I already stated above . After you have bought a token, the value of ‘crypto advisor’ and ‘technical moves’ goes to zero against the potential of your tokens for the month.
Following this reality, I think a smart crypto buyer or investor should focus less on how many crypto advisors a project has or how technically sound the team is (unless the company’s main business is technical in nature) and focus more on managerial, marketing and potential customer base of the company by raising funds through ICO.
In other words, award more points to the business and management side of the ICO instead of the technical jargon that won’t help your token in the market once the money is raised!