Crypto mining do I need to add this into my ICO white paper?

Disclaimer, this article is intended  for the layman who is interested in creating a token.

When you read about issuing new tokens a naive newcomer would think that your token will be mined.

In reality this is not the case for most token issuances that are based on Ethereum (ETH) coins. The underlying ETH will take care of the mining and infrastructure of your newly issued tokens.

Your token will have its own smart contract that will sit on top of the ETH infrastructure. The smart contract that you are issuing on the ETH platform is in essence a new token and how it is used and what the benefits around this are the token.

This is obviously different from what you read about with Bitcoin mining millionaires and the common perception in the traditional news media that new tokens will have some sort of mining attached to them.

In some cases if you decide to issue your own new crypto currency that is outside of this framework then mining is something that is required and will be need to be addressed in the white paper.

crypto mining

 

How ICO’s raise money

We read about ICO’s raising huge amount of money and wonder where the money comes from.

Lets have a look at some of the prominent big ICO raises:

Money Raised Number of Token Holders Average Investment
FILECOIN $257,000,000 2100 $122,381
EOS $185,000,000 89,306 $2,072
BANCOR $153,000,000 12,832 $11,923
STATUS $90,000,000 41,264 $2,181
TENX $80,000,000 36,242 $2,207

The Filecoin ICO seems like a bit of an anomaly with the average investment being much higher than other ICO’s. Much of this was due to the fact that it had backing from large venture capital investors like, Sequoia Capital, Union Square, Andreessen Horowitz and Winklevoss Capital.

However most ICO’s don’t get support from traditional venture capital and therefore rely on smaller buyers for their funding.

Even though this could lead us to believe that ICO’s could be funded by small buyers, the reality is that ICO’s need to build momentum in their ETH wallets when they open their ICO sales. This is why Pre-ICO sales are so important as a way to build momentum for the ¬†token sales.

The next thing to look at is what an average buyer would actually purchase. In our experience the average buyer is around $200 therefore the $2000 average is really pulled up by “whales” (large buyers) that buy much larger amounts of tokens.

So if you wish to do a successful ICO you need to not overlook Pre-ICO sales and make sure you build momentum going into the public sale.

Why we started Blocks Ventures

Having been serial entrepreneurs we realised that the advent of initial token offerings otherwise known as “initial coin offerings” (ICO) have the ability to shift the way startups raise capital.

There are huge benefits for investors and entrepreneurs in this new funding option.

Investors Benefits:

  • Access to liquidity with tokens vs traditional equity investments
  • Smart token contracts that make tracking business performance transparent
  • Initial token valuations are not as important due to the fact that these are tokens and not equity

Entrepreneurs Benefits:

  • Not having to give away control in order to get capital
  • Raising money without having to worry about valuations

We want to help entrepreneurs with funding, information, networks and our experience in this new and every growing field. In our opinion there is not enough information, experience or guidance in the crypto currency world. We believe that many people are naive about the legal implications around this as well and don’t spend enough time looking at the legal structures, token offerings and legal documentation that is required to do an ICO properly.

Apart from this help we believe that there is significant cost to doing an ICO properly and many businesses have not adequately funded themselves for the costs involved. This is why we would like to provide financing for this and help entrepreneurs get the best results for their ICO’s.

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