Blockchain software languages and blockchain developers

blockchain software

Building a blockchain project may seem like you only need blockchain developers. While it is true that you need blockchain developers for your project it will also need other infrastructure such as a website, design, mobile applications, email, hosting, backup, databases, api’s, security etc.

Currently the market conditions around finding blockchain developers are such that there are not enough blockchain developers to support the demand and this is making hiring full time blockchain developers unaffordable for many projects.

One option could be to build all the infrastructure for the project and have the blockchain specific components outsourced and accessed through an API or have the team work with your developers to help put the code together.

What most ICO projects need is DAPPS

DAPPS is an acronym for: Dated, Achievable, Personal, Positive and Specific. The idea around a Dapps network is that there is no central server and rather a program that lives on top of the network.

An ICO smart tokens is a Dapp and most ICO’s are built on top of Ethereum (ETH). Ethereum has its own programming language which is called Solidity which allows developers to write smart contracts. Inside this language is compiler which is built in javascript.

Core Blockchain Developer Languages

Each blockchain core has been built in different languages for example:

  • BitCoin Core: C++ and Java
  • Ethereum: Go (Multiple ports that support other languages but GO is the most advanced)

Cryptography BlockChain development

The core of blockchain technology is cryptography which is the link between the list of records called ‘blocks’ hence the name blockchain. Much of the contentious forking of coins comes from the way that the cryptography is being changed and whether or not the ‘coins’ owners are happy to move to the new system or not.

For more info check out the info on blockchain info on wikipedia.

Evolving ICO Ecosystem and funding

The world of ICO’s and Series A is converging as more deals happen in the ICO space.  This is shown has by the fact that the median ICO size is becoming closer to that of a traditional Series A raise amount.

series_a_vs_ico

Source: http://tomtunguz.com/ico-trends/

Series A Funding rounds

By definition Series A is typically the first round of capital from Venture Capitalists.

Traditionally startups have to achieve significant traction (usually revenue) before institutional investors will invest and therefore it is a significant mile stone for startups that want to achieve high growth rates and put them on a path to more institutional funding rounds.

Series A funding often also comes with a new share class that gives Venture Capitalists more rights vs ordinary shares.

ICO Funding

In ICO funding there is no equity sale and therefore it is not directly correlated to Series A funding but it has become closely related based on the fact that the funding amounts are close and the businesses are early stage.

The ICO world is changing so quickly though it would be a mistake to put ICO funding as for only early stage startups, as more businesses are turning to token sales and even listed companies have started to get into ICO’s. An example of this would be Naga a listed Frankfurt business.

We believe the  ICO space will evolve and more and more later stage businesses will turn to token sales to raise capital.

A growing ICO market

Number of ICO vs Series A

Source: http://tomtunguz.com/ico-trends/

It is still early and you can see that the number of successful ICO’s is growing rapidly. There will be a maturing of this market as professionals and mature businesses become more involved in the ICO space.

How much can you raise for your ICO?

As of the end of 2017 the raising of capital has become more difficult due mainly to legislation in China and Korea. Due to this the huge funding rounds that happened in the mid 2017 market have largely disappeared.

Currently $30m raise is considered to be on the large size. When comparing this to a Series A round this would be a large funding round, however a Series B funding round is probably more in line.

 

 

 

 

How to plan a timeline for your ICO

Screen Shot 2017-11-23 at 11.52.17 AM

Disclaimer: Building a community will need to continue to be done post the ICO to support the token and achieving the projects objectives.

Private token sale

Selling your tokens all in a private sale is also possible and good examples of this would be OMG Token that happened without a public sale. There is nothing wrong with this approach however often project owners networks are not large enough to sell enough tokens to meet their goals.

Public ICO

If you want to  do a public ICO you need to do build a community around your token and vision. This takes time and you need to build trust with your community by showing regular communication and traction that show that you are going to achieve the vision you outline.

We suggest that your build up to your ICO should take around 4-6 months. This does not include the learning and investigation you may have done before to convince yourself that you want to launch a Token offering.

Most successful ICO’s need to do a preico funding round and a public funding round.

Preico funding round

The preico funding round can be done publicly or privately. Doing a public preico round can leave a bad taste in the market as the public token buyers can see the discounts being offered to larger buyers and this can cause resentment.

Private preico sales need investor networks and often comes with a high commission cost.

Conclusion

Doing an ICO properly takes time and money. The cost of doing an ICO has risen overtime with more and more competition from competing ICO’s in the world. Be prepared to raise money before the preico and build your networks consistently.

 

ICO Communities around the world

ico_by_country

Source: http://tomtunguz.com/ico-trends/

There are a number of active ICO communities around the world that support and establish ICO projects. We will highlight some of the top communities in this article.

Singapore ICO

Regulatory Framework

Singapore MAS has said it would not regulate utility token ICO’s. This means that currently there is no reason you won’t be able to launch an ICO from Singapore.

Community

One of the most interesting ICO communities in the world. Vitalik Buterin the founder of Ethereum is based in Singapore and actively supports the community through events etc. The Singapore startup ecosystem is also strong and has many events and organisations that support starting new business which makes it attractive for ICO’s.

Switzerland ICO

Regulatory Framework

The Swiss don’t have ICO regulations but if your token is a utility token are considered to be acceptable. Most of the ICO’s are run as foundations out of Zug which is also called “Crypto Valley”.

Community

There are a number of experienced ICO practitioners in Switzerland due to the fact that a number of successful ICO’s have already happened in Switzerland. Switzerland is considered to be safe and stable environment that attracts capital. Ethereum foundation is also based in Zug and this means that there is a huge precedent for the Swiss ICO market.

Traditionally Switzerland is an offshore banking haven and this means that their are many wealth managers and high net worth individuals in the market.

Korea ICO

Regulatory Framework

Currently Korea government has banned a ICO’s.

Community

There is a strong cryptocurrency community in Korea and they are large buyers of Bitcoin. This could be due to some of the regional security issues with North Korea. This community is still interested in the ICO listings and environment which will surely come back again once regulations are brought in by the government.

China ICO

Regulatory Framework

Chinese government has banned ICO’s and crypto currencies. This is expected to change in the near to medium term.

Community

China was the hottest ICO market up until the ICO ban in September 2017. The market is expected to open up again in the short to medium term and a number of Chinese companies are actively working in the background to prepare for these changes. As an example one of the biggest ICO Venture Capitalists Fenbushi is based in China.

Japan ICO

Regulatory Framework

The Japanese government has issued licenses to 11 Japanese exchanges for crypto currencies.  This does not necessarily govern ICO’s but the future of crypto looks bright in Japan.

Community

The community is a bit insular and this is partly due to language barriers that Japanese insular culture. However due to regulations that have made crypto currencies legal there are a large number of crypto currencies holders.

USA ICO

Regulatory Framework

The US have not banned ICO’s but have warned against tokens that could be considered to be securities. Since the Howey Test could be quite wide the  risk is considered to be fairly high due to the fine line many ICO’s run.

Community

Some of the biggest ICO’s in the world have come from the US. The US market is the historical incumbent in the tech market and one of the great capital markets in the world. Silicon Valley has started to react to ICO’s with some leading investors in ICO’s coming from traditional venture capital.

Gibraltar ICO

Regulatory Framework

Gibraltar has a licensed token market at https://gbx.gi/ that will be one of the first licensed and regulated token markets.

Community

The Gibraltar community is small, however due to the regulatory environment is expected to grow dramatically.

Australia ICO

Regulatory Framework

Australia government has said that ICO’s are regulated by existing financial regulations. To find out more see: http://asic.gov.au/regulatory-resources/digital-transformation/initial-coin-offerings/

Community

The Australian market has a strong investor appetite for smaller equity offerings based on the superannuation funds that are part of the Australian regulations. This makes raising money for ICO’s from Australia attractive.

Building your ERC20 token

erc20 tokens

ERC20 tokens are open source and can be created fairly quickly using the public source code that can be found here: https://www.ethereum.org/token

You still need to do basic variables and create the rules around your token but in essence the framework is there and you then need to address what you want your token to do, how many you want to issue etc.

What’s great about the ERC20 token is that it is recognised by the community and can be easily integrated onto public exchanges and traded.

It is possible to issue your own unique tokens but this will mean you will need to address many issues such as how the token will be mined, stored, security and more complex problems that come with developing a core token platform.

 

Tokens ICO Source code

One of the best practice in ICO’s is to publish your source code for your token to allow the community to check the code and make sure that it is acceptable and does not have bugs. This is also a good way to work with the community to ensure that your supporters have transparency and can feel that the project is open and part of the community.

Hire a blockchain developer

The last point here is that if you are not a block chain developer or super geek better find someone to help you fast before doing this on your own. The token is core to the offering and you don’t want to mess up the very thing you are selling at your ICO.

 

How Blocks Ventures Venture Debt works

venture debtBlocks Ventures does venture debt for ICO’s.

The terms of the venture debt:

  1. Has interest
  2. Requires a small piece of equity
  3. Requires tokens at the ICO

Investment decision making process

We go through the following process around our investment decisions:

  1. Screening deals (prefer companies with substantial traction and clear utility token)
  2. Do due diligence (team, financials, vision, culture etc.)
  3. Check with our investors for preico investment appetite
  4. Check with our listing partners for their interest in listing the token
  5. Make offer
  6. Negotiate terms and close
  7. Send cash and introduce advisors etc.

The whole process can take a couple of weeks however as we are small in size and can only do 3-4 deals a year our filters have to be high due to the opportunity costs.

Investment size

Our ticket size is $500k to $1m for the venture debt. We believe that it should take around 4-6 months to launch a successful ICO and the barriers to entry are becoming higher with the number of ICO’s exploding which means that good ICO’s need time and money to develop themselves.

PreICO investments

We don’t invest in preico investments as this is not our thesis and prefer to help businesses with doing their ICO’s and coming in earlier than traditional investors.

ico investment

If you would like to have your business considered for investment please send us a message through our contact form.

 

Digital Marketing for your ICO

ico communityHaving come from a digital marketing background it would be easy to assume that ICO marketing would be similar to that of other digital marketing campaigns.

However as ICO buyers are not consumers and are not traditional investors the idea that you can run search pay per click ads or banner ads and be successful with your ICO is inherently misguided.

First you need to understand where token buyers go and seek opportunities and how they evaluate the token offerings. Once you understand this you can then formulate your ICO marketing strategies.

Many ICO token buyers will have their favourite forums and news websites that they get information from for their ICO’s

  1. ICO Forums
  2. Reddit
  3. ICO listing sites
  4. ICO news sites
  5. Youtube ICO channels
  6. Social media influencers
  7. Email newsletters
  8. Friends
  9. Events
  10. Traditional PR
  11. Social media advertising
  12. Video advertising

ICO Bounty Program

An often overlooked way to create interest in your ICO is through a bounty program. This involves giving tokens in your ICO for your community to help, translate your white paper, promote the offering in their social media and invite friends into the offering through token discounts.

Community Development

The primary objective of your marketing should be to develop community support around your project. This takes time and therefore the earlier you start the better off your ICO will do. Community development will take time and expect to give a lot before any significant momentum is developed. This will take time and is not easy to do therefore being resourced well and having expertise and good people around you will be vital to the success of the project.

The future of token exchanges and ICO’s

ICO futureThis is an opinion piece about token exchanges.

When meet ICO industry people there is often chat about a big fall out around ICO’s and the market for them.

The quick answer is that yes there will be a fall out around ICO’s but this will be around hyped up offerings with little or nothing behind them. There will be a new generation of ICO’s coming that have real existing businesses behind them that have users, revenues and profits.

This change is coming due to the massive success that businesses have had in raising money from token offerings which is now attracting more mature businesses.

The reason for the influx of capital is simply because investors prefer the liquidity of tokens over conventional equity that can have very long time to return the capital.

Token Exchanges

There are many exchanges out there as an example here are a couple:

https://tokenmarket.net
https://coss.io/ico
https://www.iconomi.net
https://bittrex.com/home/markets
https://poloniex.com
https://www.livecoin.net/en/coin-listing
https://www.bithumb.com
https://coinone.co.kr

However more traditional exchanges are coming like the new token exchange in Gibraltar.

Screen Shot 2017-11-15 at 2.13.27 PM

This is the new breed of exchange that have licenses and much harder to become listed as a token.

Next generation tokens

The next generation of tokens will be utility tokens, supported by real businesses in and have their tokens listed on regulated exchanges. This will bring more capital to the token markets and more sophisticated investors.

This will mean that many of the existing token offerings with less substance will become less attractive and mean that different tiers of token offerings will open up.

Around these changes more professional organisations will develop to support the ICO industry and move it away from the current “Wild West” that is the current ICO market.

 

 

 

Japan securities law

Japan ico lawThe securities laws in Japan are governed by Financial Service Authority (FSA) of Japan. The securities law was passed in 1948 and would affect the token issuance.

From the below definition a utility token would be not be a problem and therefore a number of Japanese ICO’s offerings should not be a problem if they are not recognised as a security according to the Financial Instruments and Exchange Act (Act No. 25 of 1948).

The definition of securities are:

(1) The term “Securities” as used in this Act means the following:

(i) national government bonds;

(ii) municipal bonds;

(iii) debentures issued by a juridical person under a special act (excluding those listed in the following item and item (xi));

(iv) specified bonds prescribed in the Act on the Securitization of Assets (Act – 6 – No. 105 of 1998);

(v) bonds (including those issued by a mutual company; the same shall apply hereinafter);

(vi) investment securities issued by a juridical person under a special act (excluding those listed in the following item, item

(viii) and item (xi));

(vii) preferred equity investment certificates prescribed in the Act on Preferred Equity Investment by Cooperative Structured Financial Institutions (Act No. 44 of 1993; (hereinafter referred to as the “Act on Preferred Equity Investment”);

(viii) preferred equity investment certificates and securities indicating preemptive rights for new preferred equity investment prescribed in the Act on the Securitization of Assets;

(ix) share certificates and share option certificates;

(x) beneficiary securities of investment trusts or foreign investment trusts prescribed in the Act on Investment Trust and Investment Corporation (Act No. 198 of 1951);

(xi) investment securities or investment corporation debentures, or foreign investment securities prescribed in the Act on Investment Trusts and Investment Corporations;

(xii) beneficiary securities of loan trusts;

(xiii) beneficiary securities of specific purpose trusts prescribed in the Act on the Securitization of Assets;

(xiv) beneficiary securities of beneficiary securities issuing trusts prescribed in the Trust Act (Act No. 108 of 2006);

(xv) promissory notes which have been issued by a juridical person in order to raise funds necessary to operate its business and are specified by a Cabinet Office Ordinance;

(xvi) mortgage securities prescribed in the Mortgage Securities Act (Act No. 15 of 1931);

(xvii) securities or certificates which have been issued by a foreign state or foreign person and have the nature of securities or certificates listed in items (i) to (ix) or item (xii) up to the preceding item (excluding those specified in the following item);

(xviii) securities or certificates which have been issued by a foreign person, indicate a beneficial interest of a trust in which loan claims held by persons engaging in banking business or persons otherwise conducting money loan in the course of trade are entrusted, or indicate any other similar rights, and are specified by a Cabinet Office Ordinance;

In addition all of these items are listed as securities:

1 Beneficiary interests in foreign trusts.

2 Partnership interests in general or limited partnership companies

3 Partnership interests in foreign corporations with the attributes of interests defined in any of the as designated by government ordinance, or interests in limited liabilities companies.  

4 Interests in collective investment schemes as comprehensively defined

5 Interests in foreign collective investment schemes

6 Other ordinance government by designated as interests

When you launching a your whitepaper

ICO whitepaperThere are two schools of thought around when should you launch your white paper, which is either to launch early or launch late with your white paper.

Launch white paper early approach

Traditionally ICO projects would launch their white papers months in advance. The idea is to give the community time to scrutinise the paper and provide feedback. The white paper often will be changed over the course of time and has versioning. Often white papers are very technical and can take time perfect hence the more time that the community has to review the better.

In addition to the white paper the token code can be made open for review.

Launch white paper late approach

A new school of thought is to launch a few weeks before the ICO and to try to get attention and funding while token buyers have given the white paper a look over.

It is often said that only a small number of buyers in fact read the white paper. This makes sense as most buyers only buy small number of tokens and often will buy less than $200 of token value. With this in mind the incentive to spend to much time on reading a typical white paper that is over 20 pages makes sense.

Under this approach the ICO marketing will be very aggressive and be dominated by paid marketing and fear of missing out (FOMO) tactics.

Conclusion

Based on the marketing approach the timing of the release of the white paper can be figured out. The preico demand can also play a big part of the timing as if you have a high percentage of the ICO already filled out +50% then the white paper release becomes less important.