ICO Guideline by Shared Finance List 6 Elements in Whitepaper
4th June Shanghai– As defined by PBOC official, cyrpotcurrency is not qualified to be a “currency” due to the lack of certain features, like value stability etc. But what if the adopters choose to ignore them and willing to take their chances in exchange of its low cost in raising funds through ICO? ICO is becoming a trendy keyword in the Chinese community, which took the regulatory authority by surprise. Gongxiang Caijing and Shulian offers a 25-page Guideline for ICO projects.
What is ICO? If you are in the coffee business, ICO probably means “International Coffee Organization” . But if you are in the cryptocurrency community, ICO stands for Initial Coin Offering.
It’s said that the ico.com domain was sold in millions of USD recently. The history of the domain could be dated back in November 1997, almost 20 years ago. My most recent visit to the domain confirms that the site is being reconstructed into a fund-raising platform.
ICO (Initial Coin Offering) is a means of crowdfunding the release of a new cryptocurrency. Generally, tokens for the new cryptocurrency are sold to raise money for technical development before the cryptocurrency is released. ICOs are similar to IPOs and crowdfunding. Like IPOs, a stake of the startup or company is sold to raise money for the entity’s operations during an ICO operation.
As newbies are not familiar with “pump and dump” trick that has been around in the cryptocurrency market for years, the insane ROI of ICO tokens fanned out mainstream media has attracted many that wants to get rich instantly. Bitcoin is the most frequently quoted example.
Bitcoin price up by 3 million times in 8 years, revealing the world of Deep Web behind Bitcoin Weibo by Netease Finance
The guidelines indicate that the whitepaper published by ICO projects should include the following elements:
1. Introduction to the business and nature of the project,
2. Introduction of management team.
3. The creation and distribution of assets.
4. Business model.
5. Roadmap of technology implementation
6. Disclosure of risk and other warning
At the same time, ICO project should prioritize investor education with the establishment of a sound investor education mechanism.
The guideline also points out that many ICO projects were actually abandoned after the launch of network. Few ICO project could offer sustainable paybacks to the investors. Once the team vanished or key person resigned from the project, the development of the projects may slowly come to a halt and eventually died. Recently, BTC38 listed a new coin called MGC or MergeCoin, which is the collection the remnants of 5 dead coins and more maybe on its way, according to a latest notice.
Hopefully the initiative could shed more lights on the limbo area of ICO.
Learn cryptocurrency and digital assets since 2013 and co-founder of 8btc in 2014. Co-author of 2014-2015 Digital Currency Development Report(2015) and first author of Investment Guidelines To Blockchain Digital Currency (Published in June 2017 ISBN:9787300239286).
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