What about ICO? Initial Coin Offering opinions to be provided by experts
Experts debate whether ICOs are the future of venture funding or a risky bubble. Proponents point to massive fundraising totals and strong returns; skeptics warn of consumer risk, securities violations, and the need for regulation. The panel covers token design, team credibility, and how different countries might crack down.
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The ICO phenomenon is a real phenomenon. So happy to be alive, and no government is ever going to take it down, period.
It's like the Wild west right now, really. I think we've raised $2.3 billion this year, and I think we're probably closed north of $3 billion this year, which is insane. But the truth is, I think in 2018, like Brock Pierce says, I think we'll probably do $10 billion next year. There' a lot of people waiting on the sidelines, sort of looking at the technology, wanting to make sure that it wasn't a fad and it was something that actually had longevity to it. And I think that we've proved that. And so a lot of institutional money and a lot of people are really looking to get funds into the cryptocurrency space. And the ICOs are the most predominant vehicle for bringing that capital into the area.
So the initial coin offering are amazing. It's very hard for good companies with good technology to get funded. So that's the beauty of the ICO. I think now we will go to ICOs there for real companies, scale ups that have revenue, that have a go and concern and that can use ICO as a true instrument. We need the regulators to come in, we need legislation to come in, and that's all going to happen. We will have people that get hurt, and we have people that think we have a very big balloon being pumped up. That's all true, probably.
And what we see today with ICOs is essentially a better solution for venture funding than the existing one. Not only it's better, it's actually not a fair competition. It's like trying to compare printing press to the Internet. You cannot compare between the two. One is so much more technologically advanced than the other. So what we're seeing today is that the large majority of of entrepreneurs and investors are discovering that there is a technological solution, just like journalists were discovering the Internet back in the day. And I believe that more and more venture funding activity will move toward ICOs. And we're going to see a lot of bumps, a lot of creativity, a lot of volatility, but definitely this is where the world is going. And I personally believe where it should go.
About a month ago, we put together the Blockchain Investor Consortium and one article in Cointelegraphy produced 100 crypto hedge funds, between 3 and $50 million in digital assets in each one of them. And when we did a dinner together with all of us, we realized we're sitting on $2 billion of digital assets. And everybody wants to get a piece of this, but everybody's trying to skip the due diligence checklist. By the end of this year, we'll be at $4 billion in crypto asset investments, which is phenomenal. Our fund at 61% ROI in the first quarter because, yeah, the market went up and it was with us, but also because we have very sophisticated people and we've developed and invested in amazing algorithm and trading tools to allow up to 85% accuracy on forecasting a specific trade.
Well, there's a lot of enemies of ICOs and they're enemies for good reasons. It's because ICOs are extremely dangerous. Imagine you're a mom pop. You hear about this opportunity to be the next Bitcoin, which has made your long removed nephew a millionaire. And so you go in on that. That project proceeds to go bust because most projects will go bust and you lose all your money. Who's responsible? In the current climate, Nobody. That's not acceptable. We have regulation on this stuff for a reason. And the enemies of ICOs are the people who are generally looking out for the public good, not bankers trying to crush any potential new innovation.
The main advice is to understand that doing an ICO is very close to doing an ipo. I'm not talking about the legal side because that could be controversial here. And there are of course, rules to. I'm talking more in terms of communication, the way you communicate to the market, the fact that you get a lot of questions. Also. The other advice is be well surrounded, of course, focus on the team. People are helping you. Don't underestimate the help that a good team and good advisors can bring. But it's very exciting. And of course, don't get only focused on token price amounts you need to raise. These are the usual criteria, but I think there is an overall quality of the project that needs to be maintained and not necessarily rush it.
I guess the first advice I give in an ICO project is make sure that your token is something that the world actually needs. Ethereum, over time, which we were lucky enough to work with in the early days, has evolved to something that is needed by a lot of folks for a lot of reasons. It's created a really great infrastructure for smart contracts that's continuing to evolve and it's then evolved its own ecosystem with asset creation layers which has allowed other people to create their own entities. And it's taken on a life of itself. So think five years out. What is your token be doing in five years? Can you Envision its growth into something that half the world needs.
Be very careful with promoting a token. Especially look very carefully at the rules in the US Why the US because it is basically the only jurisdiction which carries out extraterritorial enforcement. So outside of the territory of the US will come and enforce their laws. No other country really does this. And so therefore it's important that you look at the US Even if you are not selling your token in the US you should bear in mind the rules in the US and it is unfortunately the case that most tokens that are not functioning are probably securities. And therefore you should probably try and organize your token as a security token or as close to being a security token as possible.
So the ico, the diligence checklist that we put together, was really meant for all the great projects out there to understand that there's a lot of things they need to prepare, okay, they need to prepare a white paper, which they know. They need to prepare a pitch deck. They need to go around the world and speak at conferences, but that's not enough. They really have to produce a lot of documents when it comes to legal and about the team, and real biographies and many, many documents that investors like to see in any traditional financing. And ICOs now have become the coolest, hippest thing. But it's really a financial instrument that really needs to be further tuned. And the more people that think that it's just easy money and I have my business and I can't get more venture capital money or private equity money, oh, let me just decentralize. Put the word decentralized in front of it and blockchain at the end of it, it doesn't work. So they can't fool us anymore. So we've invested $3.5 million from our fund in 15 different ICOs after looking at probably 400 ICOs. Okay, that's a lot of work. We spend five to 50 hours on each ICO to do proper due diligence. Why? Because after 15 ICOs, we go back and we look at some of them. We say, ah, we should have done more due diligence because there was much more there that we should have looked at.
When I advise ICOs, I usually focus on what are the differences in this solution compared to more traditional solutions is that you don't really have to create a for profit company. In fact, the most successful ICO in history, Ethereum, did not create a for profit company. What they create is an online economy which is defined by its own currency. And that is the economy where the ICOs are happening. So this is really important thing to understand that we could not create online economies before. It's only now that people can actually issue secure digital currency that anyone can work with. Only now that you can create an economy which the economy itself is non profit, but creating the economy can be a for profit venture because as you know, people that were involved in creating Ethereum and participated in the ICO has made a fortune from their investment, even though the economy itself is non profit.
The interesting thing about bubbles is that you never know they're a bubble until they pop. So we do know that we're in a boom. There's unquestionably a boom going on when you go from 10 billion to 150 billion in a year. So if all of a sudden it drops back down to 20 billion, we know it was a bubble. I personally think that it's going to get much bigger before there's a substantial pullback. And it also depends what is the reason for the pullback? Is the reason something artificial like Jamie Dimon says bitcoin's dead. And people get panicked over that, even though he went out and bought Bitcoin afterwards, or at least a tracking stock? Or is it something that is more serious like, you know, ICOs being made illegal in China, which was kind of expected because Facebook's illegal there and it hasn't stopped Facebook from being one of the biggest companies in the world. Korea was a little bit of a surprise. So if all of a sudden you saw India and Canada and Italy and the EU, say no more ICOs. First of all, I think that they would have to justify that and say what law is actually being broken? I think what probably is going to happen in the next year if the boom keeps happening and say this time next year we're sitting at $500 million of assets, would be that maybe there's a pause where they say, okay, we don't want to have, we want to have a moratorium on all US based or Canada based ICOs. But that means that the really good projects will just move their feet. And if Mauritius lets people go and set up, people are going to go to Mauritius. I really don't think. I think Pandora's box has been opened and I think that some great companies and foundations have been created. And so I really don't think it's realistic that every country in the world is going to simultaneously say we have to get rid of crypto.
I think the main role is very similar to the role we always had with startups it's mainly connecting and trying to avoid issues that we know, hurdles that we know. So go directly maybe to the right lawyer, hopefully that will help them or avoid service providers that may not be useful for certain projects. And then of course, the connection to the network of people that could buy tokens or could advise them. So that's mainly the role, really. The other role is everything around token economics. So an ICO can be successful because you have a good project and a good team and sometimes a good product that's already there. But if the token economics are not good, then it won't work. You know, people have to feel that when they buy the token, the secondary market can be maintained. You're going to be on some exchanges you don't need, of course, you cannot guarantee it. But if you have a good grasp of what you need to be on the exchange, what is a strategy post ico? You know, ICO in many ways is like any funding. It's a beginning of a company, an adventure of a development. Right. So in that sense, the post ICO work is quite important as well.
So all the PR hype out there was really created by cointelegraph. It's really your fault. You allowed certain articles to appear by really well educated people with really good projects. So the more people that read about you, the more people wanted to invest in them. So the hype is there's two kinds of hype. There's real hype and there's the mainstream media, and then the mainstream crypto media, which includes cointelegraph. And that's the credibility that you bring to the world, which is great. And then there's the BS hype, which is really created by fake news on less known blogs. And investors will eventually learn what is real and what is not. No government needs to interfere to tell us what is real and what's not, because people will learn through their own experiences. And if they're stupid enough to invest in certain deals where they read inaccurate information, then they will learn because they lost their money. And there's nothing wrong with that. There's no learning without pain. And therefore people sometimes have to lose 10, 20, $100, $10,000. And then they will learn much faster than if any government tried to regulate it and educate us what to do and what not to do. Because it's a very old saying that libertarians believe in, which is government has no place in my wallet to tell me what to do with my time and my money and has no place in my bedroom to tell me what to do and what positions I should be allowed to sit on my bed? Yes.
