ICOs, STOs: getting started guide
New to the blockchain space? Overwhelmed? that’s normal. 😖
Here are few resources to help you catch up. You know the 80/20 rule I’m sure. Well, it applies here too: you don’t need to become an expert. Just spend a couple of hours & you’ll probably know enough to attend meetups or follow debates on the topic (heads up: massive egos usually involved).
1. ICOs in a nutshell
A couple of articles explaining ICOs:
- A Super Beginners Guide to ICO (Initial Coin Offering), by CryptoVest.com
- ICOs explained, by a journalist of the Wall Street Journal
TL;DR: ICO is the process of creating & selling tokens 👶 💵
2. Tokens / Coins / Crypto
Much ink has been spilled to explain this. I’ll spare you “complex” articles that try to explain what a token is. 😄
TL;DR: it can be stored in a crypto wallet & gives you the right to use a digital product (i.e. an app) — think of it as a voucher system. 😉
Now that thousands of projects have created their own token, many people are screaming that the tokens are useless. IMO it’s a never ending & boring debate. 🙂
TL;DR: there are 1000’s of tokens/projects, the current general belief is that most will die/disappear & that only a few will survive (much like what happened after the internet bubble). 💀
3. 2017 created new crypto millionaires
After the incredible bull-run of 2017 🚀 many funds were created by “regular dudes” who became multi millionaires after investing in the right coin(s). 🍀
FYI “Bull Run” refers to a period of time when prices rise on a financial market 📈
Many of these new millionaires lost a massive part of their fortune though, as they didn’t convert their crypto investments into fiat (regular currencies such as USD, EUR, JPY). 😶
4. Traditional VCs jump into crypto
Even traditional VCs have been buying “worthless tokens” 🙄 This shows that even very experimented investors “believed/believe” in the possibility of a new paradigm with those tokens. 💫
Some of traditional VCs who have invested in the blockchain space:
- sequoiacap.com, Sequoia Capital, has invested in over 250 companies since 1972, including Apple, Google, Oracle, PayPal, Stripe, YouTube, Instagram, Yahoo! and WhatsApp. 🤩 🤩 🤩
- a16z.com, Andreessen Horowitz, founded in 2009, in less than two years it was managing a total of $1.2 billion under the two funds. 💰💰💰
- draperdragon.com, DraperDragon Innovation Fund is a core member of Draper Venture Network, and historically focuses on investing in US — China cross border startups.
Read more about that shift (VCs & funds jumping into crypto):
- Why are big VCs opening up crypto funds?
- 230+ Venture Funds that are already investing in crypto startups
5. How VCs invest in blockchain
In 2019, following the downtrend of the crypto market in 2018:
- Many funds totally stopped investing because they held their funds in BTC or ETH 🙄 (BTC lost 75% in 8 months & ETH 90%)
- Some funds now only invest for equity (not for tokens anymore), playing safe, old school style 🧓🏼
- Some do, but only very few projects manage to raise for tokens (via an ICO) 💪
6. Impact of VCs on the ICO space
With so many professionals entering the ICO space, the whole ICO world has changed very fast. ⚡
ICOs were very simple back in 2016 (everyone usually getting the same deal) and now you need a lot more knowledge to understand whether the deal you get is decent/fair (structure of the deals is now very complex). 🤨
As with many other things in the crypto space, what was invented with the intention to superpower change (fundraising in this case) has quickly disappointed. 😔
The story is only beginning though. ✨
7. Coming next: STOs?
And now the next phase is “supposed to be” STOs. 🧐
STO stands for Security Tokens Offering
In that context ‘Security’ roughly means “any regulated & traditional financial instrument”. 🤓
For instance, a Security Token could be representing:
- A company equity 🏢
- A commodity (gold, silver, …) 🌾
- Partial ownership of a property 🏠
- …
Some STO issuing & trading platforms
- bitbondsto.com — based in Germany, STO platform
- tzero.com — based in the USA, STO platform
- polymath.network — based in the USA, STO platform
- openfinance.io — based in the USA, Secondary Market for Security Tokens
8. 2019… and the winter goes on
The term “crypto winter” is a slang used to talk about that downward phase of the crypto market… or horizontal phase at best. 😭
Projects are still building the backbone of what will be the next internet (using blockchain tech of course) but the market is still boring. And many investors are still bitter. The moral is low on the crypto finance front. 😰
9. The crowd is usually wrong… and your ego will f*ck you over
Be careful to what people predict. Hearing most people getting excited about STOs make me think “it’s very unlikely to be the next big thing”. 🤣
Your ego might make you think “I know so much better than all these morons”, that type of reasoning is why so many people lost money in 2017–2018. Mind your ego and invest carefully. 🧘🏽♂️
My recommendation: invest in project you love but never put too many eggs in the same basket otherwise it will be emotionally unmanageable and you will make huge mistakes. ❤️
Thank you for reading! 🙏🏽
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