Factors to consider before doing an ICO

How do you know whether it actually makes sense to do an ICO. Before planning to raise money through an ICO, one should think about, whether or not it has any validity in the business from any technological or financing aspect. Because it’s fun to raise millions of dollars through an ICO but if that token doesn’t have utility in your business, you are pretty much running a fraud.

ICO are a remarkable innovation. They are revolutionary methods to raise money, but it only applies to a specific set of circumstances. There are many hurdles of doing an ICO.

Firstly, If you want to raise money from an ICO, the first question you are going to ask yourself is does the actual token that you want to create for your company has a utility in your ecosystem. Many people are raising money through ICOs and their token has no utility and validity in their ecosystem. A good example of a token that have validity in ecosystem is civic and ethereum.

You have to ask yourself if the token that you create in your company is a necessity. Without that token if the company can still exist than the token is not a necessity.

Secondly, it takes a very mature tech team to launch a token and to make sure the token is secure. Security is a big issue. Even big good people can get hacked. Millions of dollars have been stolen in the past. To find a really good team is a challenge. If users are going to use your platform, are they safe enough? Do you have safe enough protocol to protect them as a consumer or a client of your business? As a business you are holding millions of dollars and private keys. You need a proper tech team with security protocols to protect that. Also, If you are a tech company and raising money Through ICOs, you are a red target for hackers.

Last but not the least, if your token is just there to raise money and there is no intrinsic value that your business can do to actually increase the value of the token, It’s not going to fly. You should be very clear about the business model behind your token. The path to success is a real business model behind your startup in the block chain space.

These are the things that should be considered when doing an ICO. ICOs have a huge room to grow. They are revolutionary. They are going to help many entrepreneurs around the world. If you are ready to face the above mentioned challenges than only you should conduct an ICO.