Cryptocurrencies and blockchain are all over the news these days thanks to the market performance of bitcoin.
With over 200 initial coin offerings (ICOs) that have raised over $3.25 billion in 2017 alone, it’s obvious that many people are jumping on this bandwagon. Here’s a brief overview of what it takes to garner a share of this market.
Having an idea is the most important step. The critical beginning of a successful cryptocurrency is to solve a problem. A “neat” or “cool” idea may have garnered attention at the end of 2016, but the market has advanced to the point where a solid business idea that either addresses an unmet need and/or creates a significant cost savings is required to stand out from the crowd.
The larger the market covered by the idea or the greater the cost savings that the coin offers means a better chance for success. Cryptocurrencies that target specific industries are increasingly common, so be sure that your coin is either the first in that area or has something very unique in its approach that differentiates it from other coins.
The high level of fragmentation in this industry also makes it an ideal use case for the blockchain technology to be applied.
Launching a cryptocurrency involves a large number of tasks in some very different fields. It simply is not possible for one person to be skilled in all the areas that need attention for a successful digital coin. This means the person with the idea has to find a variety of talented and dedicated people to get the coin off the ground.
The first person, or group of people, necessary is the developer. Cryptocurrencies live on distributed data that is connected through the internet, so someone with knowledge in this area is critical. The team will need to include experts in the industry, expert communicators and expert lawyers. It is absolutely critical that all of these people believe in the value of the project. Simple “hired guns” will not get the job done.
t's important to make good decisions. This is where things start getting tricky. A misstep at this stage of the game can bring about the failure of the cryptocurrency in the end. Critical decisions need to be made regarding the number of coins that will be issued and when this will take place. The overall approach to achieving a long-term value has to be put in place at this stage.
One of the most critical decisions is where to host the blockchain that will support the coin and any transactions where the coin will be used. The most flexible approach is to start from scratch, but this is also the most complicated and time-consuming one. Choosing an existing blockchain with a proven high level of security is more efficient if it meets the key needs of the project.
An ICO is a major step in the life of a cryptocurrency. It may be considered the public introduction of the coin. There are certainly plenty of steps and growth that have to take place after a successful ICO, but if the ICO fails it will be necessary to go all the way back to the initial idea and re-evaluate.
If the ICO meets its targets, the work can get started. Ideas that were outlined prior to the sale now have to be developed and taken out into the marketplace. There may be some adjustment involved. It is also very important that news about these developments is shared with the market.