Issuing Cryptocurrency (Token) and Conducting ICO

What is ICO in simple words.

ICO – Initial Coin Offering – the initial placement of Coins or Tokens among investors.

In simple terms, ICO is the issue of a certain amount of coins or tokens and an attempt to persuade future investors to exchange them for more liquid coins, for example Bitcoin or Ethereum at some rate. As a rule, for these purposes Tokens based on Ethereum are used, because for this it is enough just to issue a smart contract.

In the world of crypto-currency, you can often hear the words of Coin and Token, and it may seem that they are different names of the same, but this is not entirely true.

Issuing Cryptocurrency (Token) and Conducting ICO

Cryptocurrency with its own blockchain.

A crypto-currency with its own blockchain, which was created from scratch, or developed based on the fork of an already existing crypto currency, is called Coin, for example Bitcoin or Ethereum. This implies having your own nodes to maintain your own protocol, user community and technical team. Also you can find the term Altcoin (alternative coin), so is called any coin except Bitcoin, which until some time was the only crypto currency that uses blockchain technology.

Cryptocoin examples:

  • Bitcoin (BTC)
  • Ethereum (ETH)
  • EOS (EOS)
  • Waves

Currently, Polygant is developing several coins of varying complexity.

To develop a coin, we take the actual source code, make the necessary changes to it and compile. Usually, the development consists of the following stages:

  • Compilation of the coin + wallet core for Windows and Linux
  • Deploying 2 primary nodes
  • Creating a block explorer and a mining pool
  • Compiling mobile wallets (iOS and Android)

If you do not need significant changes in the core, the coin creation takes approximately one month and costs from $25,000. Separately, integration with web services and a web wallet can be worked out.

Token

coin and tokenThe main difference of the Tokens is that they do not have their own blockchain and supporting nodes, but use a blockchain of existing coins. Most often for this, the Ethereum blockchain is used, although such functionality is also provided in some other coins, for example, Omni. Despite this, Tokens can also be listed on the exchange, they can be used inside projects as an internal currency or a certifier. In order to release your token, it is necessary to form a Smart contract and “cement” it in the blockchain.

Token examples:

  • Golem
  • Tether
  • Augur

You should, however, bear in mind the important feature of tokens on Ethereum. The fact is that for any transactions, including the transfer of tokens between wallets, the GAS is spent – the network commission, which costs a certain amount of ETH. Thus, to carry out the transfer from the sender there must be not only Tokens in the wallet, but also some amount of Ether, and this is not always convenient.

The development of a smart contract takes from 1 week and costs from $3,500. Separately, integration with web services and a web wallet can be worked out.

Top 10 tokens by capitalization as of December 2017

As you can see, the capitalization of some tokens is not inferior to coins.

Adding cryptocurrency to the exchange.

After the release of the token or coin, a reasonable question arises – how to provide an opportunity to trade – buy, sell, change? To be able to perform operations it is necessary to add the issued coin to the listing on the exchange. Usually this requires three things:

  1. The coin must have a community, communication channels, such as Telegram, Facebook, Twitter, etc.
  2. Listing on the exchange costs money, and the amount varies greatly depending on the fame of the exchange, starting from $1000 for unknown exchanges and ending with hundreds of thousands of dollars for popular ones. Moreover, the popular exchanges add a coin to the listing only when it has proved its worth, and has large community.
  3. A technical team that will solve all the technical aspects of integration.

Our developers have significant experience in developing both smart contracts for token issue, and in creating coins with own blockchain. Will help you with pleasure!

What the typical ICO consists of.

  • White Paper. The White Paper contains a sufficiently detailed description of your idea to convince investors to believe that the demand for Coins or Tokens will grow. This is the most complex document: it is prepared longest and must be carefully read. Lawyers should also participate in the preparation of this document.
  • Smart contract. If you do not make a Coin with your own Blockchain, then the most popular way is to release a token through a smart contract based on Ethereum.
  • MVP (minimum viable product). It’s better, if you have a prototype of your service at the time of going to ICO, it will remove the vigilance of investors and allow you to raise more funds, because they understand that the future growth of the value of the token will depend on how much it will be demanded.
  • Team. The stronger the team looks, the more money you can collect. Typically, indicate 4-6 key team members.
  • Well-known advisors. Strong and well-known advisors, whom you will involve in your project, will significantly increase the possibilities of raising funds. As a rule, consultants want some kind of reward immediately, as well as a share of the collected funds (bounty).
  • ICO site. You will certainly need a beautiful site, which in a laconic form will inform investors about the project. Nowadays the single-page structure is mainly used, it is very convenient for acquaintance. The main language of the site and White Paper is English, but usually translates into 4-5 most common languages.
  • Advertising and PR. Here, traditional PR-work: compiling a list of sites, preparation of materials, contact with editors. You will also need to register for ICO trackers, such as: Icoalert.com, Icorating.com, Icocountdown.com, The-blockchain.com and more than a dozen.
  • Work with the community. You also need to configure social channels, at least: a blog on the site, Reddit, Medium, Telegram, Twitter, Facebook. A lot depends on the skillful management of these channels.
  • Integration with stock exchanges. After the ICO, investors should be able to sell and exchange a token. To do this, you need to agree on the listing on the exchanges. Large exchanges will request money for listing.

How much does the ICO cost?

The cost of an ICO is usually $ 100,000 – $ 500,000 and very much depends on factors such as:

  • Is the product ready, or is it necessary to develop MVP.
  • How much is White Paper worked out.
  • The number and composition of the advisers’ board is how much they are known.
  • PR coverage, the number of publications, the number of social channels.

Nevertheless, we can distinguish some works:

  • Developing a Smart Contract from $ 3,500.
  • Development of a prototype (MVP) from $ 30,000.
  • Development of the ICO site with the investor’s office from $ 10,000.

How long does the preparation for the ICO take?

As a rule, preparations for the ICO take 3-6 months, many people from lawyers and advisers to programmers and designers take part in this process. The fundraising itself is usually divided into stages and is held for 2 months.

Questions and answers on ICO (FAQ).

  • Should Token be directly used in my project?
    • Undoubtedly, investors hope that the demand for a token will grow and they will be able to sell it expensive. Use in the project – a pledge of value growth.
  • Is it possible to use the token as a share in the business and with the help of the ICO simply to draw money into the project in exchange for dividends?
    • The technology allows this, but such tokens will be of the Security Token type and will be equated to securities. The use of Security Token is prohibited in many countries.

Still have questions? Contact us, we’ll tell you in detail and together we will work out a strategy for entering the ICO!

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