The statistics could no longer be ignored. Most ICOs book and stay booked once the tokens hit the crypto exchanges, once the frenzy and “FOMO” attending the crowdsale has ended.
Most observers following the ICO phenomenon agree that the trend over the past few months has been for ICOs to lose value after the crowdsale, with many buyers waiting in vain for their promised “moon” 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 that most of us rely on to make our choices, must be wrong in choosing which ICO has the most value, or is most likely to increase in value after the crowdsale is over.
While there are many reasons one could legitimately propose for the phenomenon, there is one fact that I believe is probably more responsible for it than most other debatable reasons: the ICO token valuation and the undue emphasis on “blockchain experts,” “ICO advisors’ or ‘tech assistants’ for erc20 tokens.
I’ve always felt that the need for blockchain technical experts or ICO technical advisors is overstated or even completely irrelevant when a project is judged by these criteria, unless the project is actually trying to create a brand new coin concept. For most ERC20 tokens and clone coins, the really important consideration should be the business plan behind the token and the management background 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 does not require great technical skills or some overpriced blockchain wizard (in fact, with the new software, an ERC20 Token can be made for -less than 10 minutes from a complete technical novice.
So the technical features should not be a big deal for the tokens anymore). The key should be the business plan; level of business experience; the competence of the project managers and the business marketing strategy of the main fundraising company.
Frankly, as a lawyer and business consultant for over 30 years to several companies worldwide, I cannot understand why people continue to look for some Russian, Korean or Chinese “Crypto Whiz” or “Crypto Advisor” to determine the strength of an ICO for what is essentially a crowdfunding campaign for a BUSINESS CONCEPT…
I’m of the firm opinion that this is one of the main reasons why most ICOs never live up to their pre-launch hype. In an age where token creation software, platforms, and freelancers abound, a disproportionate focus on the blockchain experience or technical ability of organizers is mostly misplaced. It’s like trying to gauge 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 too engrossed in the hype and technical qualifications of people promoting ICOs, especially ERC20 based Ethereum tokens, and then wondered why a technically superior Russian, Chinese or Korean could not fulfill the company’s business objective after the fundraising campaign.
Even many of our ICO rating companies seem to give a disproportionate number of points to the 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 with the funds collected
Once one realizes that over 90% of cryptocurrencies and ICOs out there are simply tokens created to crowdfund an idea and not just a token for the token’s sake, then people’s emphasis will shift from technical angles to more relevant work by assessment the business idea itself and a corporate business plan.
Once we move into this era of valuation, 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
– Managerial competence and experience of team leaders
– Strength of business idea beyond token creation
– The company’s marketing plan and strategy for selling these ideas
– The ability to supply the basic products to the market
– The customer base for the products and services that the company will create
– and a basis for projecting market acceptance
What most people fail to realize is that the potential for their tokens to increase in value post-ICO is not so much dependent on anything technical as it is on good things happening in the company raising funds and the perceived increase in valuation of the company as it unfolds its business plan and delivers its business products.
Of course, buying cryptocurrency is not buying stock and it is not buying securities of any company. We understand this, but tokens react in much the same way that stocks react to good or bad news about a company. The only difference is that in the case of crypto, the effect is magnified 100 times.
So when a company reaches some kind of financial or business milestone, the price of its token on the exchange will rise… and fall rapidly 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 plummet and stay down forever.
Of course, the tokens most tokens will drop sharply after the tokens reach the crypto exchange after the ICO due to those who want to take immediate profits, but whether it will ever come back to give you the expected multi-digit profits will always depend on the criteria Now I outlined above. Once you have purchased a token, the value of “crypto advisors” and “tech assistants” goes to zero in terms of the potential of your moon tokens.
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 highlighted business of the company is technical in nature) and focus more on management, marketing and potential customer base of the company raising funds through ICO.
In other words, allocate more points to the business and management side of the ICO rather than the technical jargons that won’t help your token in the market when the money is raised!