Free money is something that comes to mind when you think about high-risk, high-yielding investments such as ICOs but in fact free money do exist. And for a good purpose. There are several benefits for crypto startups to distribute a portion of their coins in an airdrop for free before the beginning of the official token sale or even a pre-sale. There are two main benefits of doing a cryptocurrency airdrop:
1. Tokens are distributed across many wallets which increases their value in the market, so the more people own them, even for free, the wider is the adoption and the more useful the coins become. Tokens can be used in the newly launched platform or traded in the cryptocurrency exchange. Offering free tokens that end up in as many wallets as possible creates a strong army of early adopters, the ones that can become potential users of the platform or a solution. Such early adoption dramatically improves its value and attractiveness to ICO investors.
2. Free token distributions lead to increased awareness of the startup and their solution. The solution is becoming popular even before the coin sale event. People usually receive coins for their activities in social media as they help spread the word and create hype and buzz about the new cryptocurrency and the upcoming token sale event.
Unlike “buy one get one free” promotional activities in the traditional commerce, airdrop doesn’t come with numerous stipulations where and how the tokens may be used. The terms and conditions are usually easy to understand. In order to qualify for a free coin via airdrop the user must already be a holder of several tokens in this cryptocurrency.
Joining the event is also easy: once you learn about the airdrop, you fill in a simple questionnaire, provide details of your Ethereum or Bitcoin Cash address and you receive new shiny coins a few days later. Some events are done via posts in forums or social media. Other blockchains can also be used, but Ethereum remains the most popular with airdrop organizers because the majority of ICOs are launched on this platform.
This way the company creates a viral effect on their new offering and the rumor of the cryptocurrency event is carried out by the army of early supporters. Among other reasons for carrying the airdrop sale is rewarding loyal customers who now have even larger portion of tokens to spend on the platform or trade in the cryptocurrency market.
Compared to the traditional investment when the public, private or other forms of the sale of company shares is limited only to the institutional or professional investors, the airdrop even democratizes the whole investment process so that everyone has a chance to own a token that can become a new Ether one day. Airdrop can lead to massive adoption of the solution even before it has been built. By offering free coins the project brings more people than a traditional media campaign could, and the costs comparison is in favor of the airdrop.
While it’s tempting to offer as many tokens as possible via an airdrop, the company allocates only a small portion of coins before the big event. This is done to maintain their value and attractiveness to investors. While during an actual ICO event tokens are sold to a relatively small group of investors, not more than 50 thousand of them in a case of a successful event, the airdrop widens the user base massively. When done right, tokens can land in wallets of millions of users. They will be interested in learning more about the project and spread the word around. Even if only 2 percent begin using these tokens on your platform, the conversion rate would be very encouraging. By offering free coins (remember, tokens are not costing the company anything before the ICO and even before the solution has been built) the clever startup reaches a large audience without investing a fortune in marketing. That’s why some companies choose to distribute as much as 80 percent and more tokens via the airdrop, leaving a small portion “in-house” to finance the future development needs.
Increasing the follower base, creating a community and building brand awareness are strong benefits of a successful airdrop that can lead to a fruitful ICO event. Those who receive tokens that are perceived as a share in the company will become much more dedicated users and evangelists. Some airdrops allow their loyal users to suggest solution features and participate in its design.
Another attractive attribute of airdrops is that they are not raising any red flags in eyes of finance authorities. Technically speaking, the startup is rewarding its early followers with freebies, as there is no movement of cash involved. So until the project reaches the phase where it generates profit, airdrops can be done at the company’s will.
As with all cryptocurrency investments, participating in activities such as airdrops should be done with caution. Make sure to choose the most technologically viable solution and investigate the team behind it with the same scrutiny as you would do when paying cash for these tokens. After the ICO, successful or not, many crypto investors tend to continue buying the currency that they have obtained for free. This strategy diminishes the risk. Others like to diversify their portfolios with new coins and balance the risk. Startup are aware of these tendencies, and the area of growth for airdrop could awarding free tokens to those early supporters who hold tokens in similar projects, and that can be combined for a synergistic effect. Some projects can even join forces and co-promote their token events by offering free coins at the same time, which effectively doubles the already large follower base for each project.
When your investment portfolio grows, you will gain experience and will confidently pick new coins to receive profit in the future. Remain vigilant when collecting free money because as this method of marketing gains popularity so does the number of con artists trying to steal your private keys or steal your coins through scam websites.
If you are asking a question where to save your digital capital and sleep peacefully, the answer is here. Find the top mobile wallets for bitcoin suitable for iOS and Android.
The Best Opportunities to Store Digital Capital in Mobile Wallets
The fiat currency has a serious competitor in the form of virtual coins. In this connection, the question arises – how to choose a purse for your cryptocurrencies? If paper bills can be stored in a wallet or just in your pocket, then the mathematical code as a digital capital cannot be touched or seen.
What is a bitcoin wallet? Actually, if the electronic money itself has the appearance of an alphanumeric series, then the savings cell should be equal to it.
Those who are engaged in mining, necessarily face the question. what electronic purse for cryptocurrency to choose? There are a lot of mobile wallets suitable for apple ios and android, some of them can be used on android and desktop. The list of popular versions changes over time and it is best to give preference to what the crypto-currency websites offer. They are tested directly by the dev company of these very virtual currencies. We will consider not only recommended, but also the most popular amid users, mentioning their attractive sides, and not forgetting about the shortcomings.
This is a multi-currency purse for the cryptocurrency, in which you can store 12 types of the most common digital coins, as well as euros and dollars. It has a user-friendly and easy to use interface, which is especially important for beginners.
The system of HD for the compilation of SEED-codes is absent, and the ciphers from the accounts are on the servers but there is a two-phase authentication, and you can create your private complex passwords.
This is one of the popular online storages, despite the problems with transactions. It also works on android and ios mobile devices and is multicurrency, supporting up to 16-and crypto-currency and 4 official ones.
This is equipped with two-phase authentication, you need a password and confirmation of the operation by phone or e-mail. As for problems with remittances, there are many complaints that money does not reach a mobile wallet of the recipient, although the transaction was confirmed.
This is another multicurrency purse for the cryptocurrency. In fact, this is a desktop-purse integrated into the web environment of the Swiss exchange ShapeShift with a well thought out simple interface. Beginners quickly get help from technical support, and this is one of the advantages about the app. Here you can create complex passwords, use SEED-phrases and make copies of the wallet by a special utility developed by resource programmers.
This is multilingual, multi-currency mobile wallet for Android smartphone. There is an HD wallet, but there is no two-phase confirmation. But if you consider that a virus that gets into the phone is able to get your private keys to savings, it knows how to get authentication ciphers, and in this respect, the absence of this function does not matter.
In the cryptocurrency market, it has been working for a long time, having gained confidence. It can be put on smartphones and on different OSes as a thin mobile wallet. It works on the principle of open source code, and those who value anonymity refer to it because it works perfectly on the Tor network.
Unlike other programs, each user has several bit-addresses available, which are safe to be given to other people and even shown in social networks. There is an opportunity to come up with complex passwords and SEED-phrases, and individual keys are stored at their owners. If there are questions or difficulties in the work, the tech support quickly responds to the requests.
This is the perfect online wallet for bitcoins; it has two-step authentication, you can create SEED-codes and complex passwords. This wallet is completely reliable.
But if you synchronize it with your mobile phone using QR-code, the internet security level immediately drops. The drawbacks include slowness during transactions. Although technical support tries to quickly resolve the problems that arise.
This is an old but tested purse for storing bitcoins, created by the Bitcoin Foundation. If you are willing to get the cryptocurrency space to store electronic capital, which will be really secure, choose this thick desktop wallet.
Bitcoin Core is supported by Windows, Mac, and Linux. As a drawback, one can say about too much information that confuses newcomers, as well as slow synchronization of the blockchain, which makes operations not as fast as we would like.
It supports several cryptocurrencies, it is presented as a mobile and a desktop purse with an internal currency exchange due to the introduction of the ShapeShift service into the network. Amid the advantages is the ability to come up with SEED-codes and a nice interface. Now about the minuses. The service takes a commission; there is a very weak password of 4 numbers, a constant loss of some amounts from accounts.
This is a claimed purse. The address for it, along with the QR code, is generated by randomly moving the mouse across the screen on the resource page. There is a suspicion that the information may be available to site owners. Although there are few negative responses about BitAddress.
This is a famous manufacturer of hardware wallets, for which several models have already been released, but with a single operating principle. If to talk about possible risks, then the list can include: the loss of SEED-code, the falsification of addresses during the transfer and banal theft.
None of these options can be a serious problem. In order not to lose the wallet and SEED-code, it is enough to be careful and attentive, keeping them away from prying eyes and “sticky” hands. And in order to prevent intervention in the transaction, only trusted, invulnerable crypto wallets should be used to process them.
Feel free to choose the best one and keep your cryptocurrency safe!
Very often we don’t know how to store and waste our money in the right way. Innovative technologies including blockchain are developing very fast; thereby more and more people are interested in them. This facilitates the development of the decentralized society. And I’ve decided to tell you about the most popular ways to store, control transactions, withdraw, purchase and sell your digital money.
Day by day, new cryptocurrencies appear on the market. It causes the appearance of a great number of different ways to store your digital assets. Somebody wastes money on expensive devices and others use online or desktop applications for free. How to choose the way for storage or transferring your digital assets? We want to present you a list of the best crypto wallets in this review.
To protect your assets from the scam and frauds, you should find out more about different ways of storing digital assets, their advantages and disadvantages, abilities and main differences.
But before the review of the best cryptocurrency wallets, we will tell you about the types of the crypto wallets.
There are five types of cryptocurrency wallets on the market
This type is used by customers online, so that they are very convenient, available to use wherever you are and have affordable prices. You can launch it on the computer, laptop, tablet, mobile phone or any other gadget at any place of the world. For this, it’s necessary only to be connected to the Internet. This type has a huge amount of pros, including availability to use wherever you are, to store a lot of virtual assets at the same time, any problems with the launch, affordable prices, etc.
This type is similar to online apps but developed especially for mobile phones. They are very convenient to apply and carry with you wherever you go, thereby they are very popular among crypto holders and traders. Mobile phones have special QR code scanning option.
They have a higher level of protection against hacks and frauds than online apps. As it doesn’t require a permanent connection to the Internet, it has fewer chances to get hacked as you don’t save your registration passwords on the third-party websites. A huge amount of these applications are free as compared to online wallets. In spite of a huge amount of pros, this type has also one important problem. If you delete it from your laptop or your machine will get hacked, you will lose the access to the app forever.
They are a real catch for customers who want to carry their digital assets with themselves. This is a great addition to your laptop or computer allowing you to store all your digital assets on a special hard drive designed as a device or USB flash drive. They have a high level of protection against hacks and frauds. They can be equipped with a touchscreen for control of all transactions withdrawn. Also, they are very convenient in the appliance, but they have one disadvantage that is a high price compared to other cryptocurrency wallets.
If compared to the apps, this option is more reliable, because they are not connected to the Internet all the time, thereby they are less vulnerable to hacks and frauds.
This is the strangest option of storage of your private keys, but they are the safest ones. Any hacks or frauds don’t threaten your digital assets, because you don’t store your private keys on third-party servers.
Which difference is there between hot and cold wallets?
All the wallets are divided into two main groups such as cold and hot ones. The first type doesn’t require a permanent connection to the Internet and is suitable for storage and control of the balance, but not for everyday usage. The last one is a type connected to the Internet all the time. This type is less protected against hacks and frauds, but more convenient for purchasing, selling, withdrawing digital assets.
Now, we will present the list of the best wallets for cryptocurrency.
This is the most popular platform for trading and storing Bitcoin and Ethereum. People from more than 30 countries use the best crypto wallet. Compared to other similar platforms, the registration is free, but the platform charges fees from the transactions. It can boast of an easy-to-use interface and other useful features helping confirm transactions, withdraw, store and trade money. To use this service, you must pass the registration and buy BTC, which takes till several days for the first time. For a higher level of protection, you can put your digital assets on your “vault”.
This is one of the most popular online wallets making it possible to store more than 300 cryptocurrencies without charging fees for registration and use. You pay fees only for withdrawing transactions between different places using this wallet. The main advantage of this wallet is multifunctionality allowing to utilize it at more than one hundred online stores. It’s very convenient for purchasing goods at different stores as well as for trading goals.
There are a lot of pros of this web-based digital wallet:
It ensures purchasing stuff at a great number of online stores which makes it useful for everyday life;
It has a mobile option for the majority of OS;
This is multi-cryptocurrency app enabling not to create a lot of accounts on different websites to cover your customer needs;
It has integrated multi-signature technology to ensure a high level of security and safety for your money;
It has the vault feature for a high level of protection from hacks making you have a specific amount of assets to withdraw transactions.
Initially, it was developed as a mobile application, but it matches Windows and other OS and works on the desktop as well as on the mobile gadgets and tablets. It’s suitable for cryptocurrencies, but also for digital assets to store and transfer. It has been said that mobile apps are not so safe as desktop ones, but Jaxx has several special tools providing the customer a high level of protection in case of the theft or any other accident. If you lose your mobile phone, you can use your account on another gadget.
The best wallet for cryptocurrency has a lot of advantages, among them:
Easy-to-use. To use the wallet you don’t have to fill a lot of forms, give your personal information and do other unnecessary actions. Nada privacy model is used for the wallet privacy;
Stylish design – the team has worked an exclusive application design to cover all your meets;
Safety – private keys are saved only on your device without saving on the main server. This function increases a level of protection from hacks and frauds;
The last feature of the application is compatibility with different OS including Windows and Linux, but also mobile OS, for instance, Android and iOS.
If you are looking for easy-to-use cryptocurrency wallet with graphics features, a reporting system, exclusive design, then this is a real catch for you. It will cover all your customer needs, but also will lure with an exclusive design. This wallet has the same features as other similar ones, but it can boast of a stylish design. It’s suitable for customers, who pay attention to the technical characteristics, but also presentation style. The design is not the only advantage of this app, it has a lot of other pros, among them:
This application can be used for different cryptocurrencies without charging any additional fees;
A hot cryptocurrency wallet, but also an offline option is available. Using a website you can create a wallet, all your personal data will be stored on your computer, not on the website server providing a high level of protection against hacks and frauds;
Fast transactions ensuring very quick exchange your cryptocurrencies;
An availability to use the wallet without fees;
The wallet has a very stylish design allowing even non-technical customers to use it.
The main preference of this wallet is compatibility with different OS, including Windows, Mac, and Linux. This is a ‘full node’ Bitcoin client, downloading the current version of the blockchain. This wallet has one main benefit in protecting your identity because the service downloads information about all transactions in the Bitcoin network. It provides you with additional protection from frauds and thieves, who tries to waste the same assets twice. Also, thieves can’t make you believe that you receive money that you haven’t received.
This service uses a special network anonymizing your digital assets preventing the link of money with your home IP address, which ensures additional privacy. Bitcoin Core requires a permanent connection with the Internet to synchronize with the network. After creating an account, you receive private keys being in the free asset, but every user, who wants, can encrypt the account with the password.
In summary, it has one main advantage that is a high level of protection against fraud, and its main disadvantage is a requirement of a huge amount of space and bandwidth.
Electrum is compatible with different OS, including Windows, Linux, and Mac. It’s secured due to the connection to other servers for verification all the BTC transactions instead of downloading all the blockchain. You don’t need a lot of space on the computer. After the launch, the platform generates your private key from random 12 words used for verification of your BTC balance. In case of losing the access to this version of the app, it’s possible to reinstall it on another computer.
You have a possibility to encrypt your wallet during its setup if you want compared to Bitcoin Core. With this client, you can download a cold wallet only for storage of your digital assets. Every user can receive BTC on the bill and control the balance, but can’t waste money. This option matches those customers, who want to purchase cryptocurrency for long-term investments.
As it depends on other services, it’s less protected against hacks and frauds compared to Bitcoin Core.
In summary, the application is a good option for those, who want to store their digital assets as a long-term investment, but not very reliable because of dependence on other resources.
This is a hybrid wallet making it possible to store encrypted private keys online before digital assets reach their servers. After purchasing cryptocurrency, an amount reaches directly your account. Your assets are protected from thieves and frauds. You can create an account for free, but the company charges fees for confirming transactions depending on the number of digital assets.
This is the best multi cryptocurrency wallet for storing Bitcoin and Ethereum tested by thousands of customers. This service combines all benefits of the decentralized blockchain technology and best features of the bank system, including a high level of security. It integrates with different brands, including Glidera, Trezor, Ledger, Cashila, and Coinapult. This application is always upgraded by the developers of the company and becomes better and more convenient for users.
Ledge Nano S
In spite of its high price, this manufacturer offers its users a lot of useful features, including a high level of security of your cryptocurrency private keys. This feature is the main advantage of this device making it a real leader on the market.
For use of this device, you don’t have to use a computer. This is a full-fledged device solution for storage and exchange of your cryptocurrencies equipped with a small LCD screen allowing to make operations with your digital assets, including to withdraw transactions, transfer money from one account to another, store your cryptocurrencies, etc.
There are a lot of advantages of this device:
All the transactions are transmitted on its screen, so you can control all the manipulations with your digital assets;
It’s equipped with comfortable buttons making it very convenient in use for even for newbies;
To protect it against frauds, developers have equipped it with PIN code;
If you lose your Ledge Nano S, you will be able to restore your wallet with no problems;
You can store and exchange a lot of cryptocurrencies with it because this wallet is multi-cryptocurrency allowing you not to create a lot of cryptocurrency wallets.
The company, who has developed Ledge Nano S, is a creator of the best cryptocurrency wallet. This is a leading-edge solution in the world of the innovative technologies. It has a lot of pros compared to the previous one. This is a hardware cryptocurrency wallet, but also a full-fledged device with its own touchscreen, USD connectivity, and Bluetooth.
It resembles a tablet, but it has a lot of useful functions for customers. This is not a simple gadget for entertaining goals, it has several onboarding options providing you with comfortable control of the wallet and backup.
In summary, there are a lot of advantages:
It’s equipped with the dual chip architecture technology for the high level of the protection;
It is malware-proof and protected from the hacks and frauds;
This is a multi-cryptocurrency wallet – every customer can store more than 1 dozen cryptocurrencies simultaneously;
You can set from 4 to 8 PIN code on it.
This is one more multi-cryptocurrency hardware wallet for storage of digital assets suitable for different currencies, including Bitcoin, Litecoin, Ethereum, Dash, Dogecoin, and Namecoin. It resembles a usual USB flash drive. This is a very convenient way to store your digital assets due to a great digital display and the availability to carry your money always with you. One of the most important benefits of this device is a high level of protection against hacks and frauds. These gadgets are malware proof because they don’t have OS, but they are compatible with different OS, including Mac, Linux, PC, and Android. This device is manufactured from very durable materials protecting the case from mechanical defects.
This is a very popular way to store digital assets among cryptocurrency holders because this manufacturer is a leader in producing hardware cryptocurrency wallets. It matches a lot of currencies, and you don’t have to create a lot of accounts on different websites to store your digital assets. Customers prefer this device for its level of safety because it’s very easy in the appliance. This device has a Google Chrome extension making utilization the most convenient for customers. Trezor can boast of the combination of the easy setup and durable token allowing you to store digital assets.
As initial coin offerings (ICO) grew in popularity, the amount of money contributes by early investors to cryptocurrency projects exceeded that invested by traditional methods. Both investors and ICO startups should understand the fundamental difference between ICO and venture capital funding: with venture capital, you always build up your business first, make it worthwhile, then talk to venture capital funds. With ICO, you raise the capital first and build the business. But there are more differences than that.
Due to the nature of running digital businesses, ICOs are a lot more cost-effective way of raising capital than an application for venture funding.
Because VCs are the more experienced entrepreneurs, they want to ensure that they can get better Return on Investment (ROI) as well as a fair share of the company’s equity. In most cases, VCs get a percentage of equity ranging from 10% to 50%.
In case of an ICO, business owners keep possession of full equity of their new company.
Control over the business is another important aspect. When the company receives funding from venture capital firms, they also understand that such investment will result in stakeholders controlling the way the company is run.
ICO funding does not empower investors to exercise any control over the business, so the founders are free to operate as they see fit.
Due to the nature of the digital business, ICO founders expect significant liquidity. A good project with substantial followers’ trust and solid advising team can quickly get hold of tokens worth millions of dollars.
In case of venture capitalist funding businesses cannot enjoy the same level of liquidity without handing over securities in some way. The funding lifecycle usually takes 3 to 7 years and could involve 3 to 4 rounds of funding.
While the quick availability of funds clearly plays to the advantage of digital token sales, when the new cryptocurrency is listed on the exchange, and trading begins, the project team often becomes less focused on productivity. Teams are distracted by the media scrutiny and the competitors examining their every step.
TYPE OF INVESTORS
ICOs typically attract either beginner investors or speculators with a taste for a high-risk, high-yielding investment. They may not believe in the viability of the project or its ability to generate profit. With VC, a venture capitalist invests with long-term potential, keeping farther in the company until it goes public or is acquired by another company for a profit. This is not an attractive opportunity for speculative investors.
VC funding is often more than cash injection in return for equity: it is an excellent way to improve the business perspective for a new company. Many venture capital companies educate the new business, sharing strategic business advice, assisting in networking to offer new business opportunities, and even help with headhunting. ICOs are often left on their own relying on the expertise of their advisors.
It’s good to keep in mind that many venture capital funds have mandates – minimum investment would be $1 million or $10 million, so if you are just seeking a smaller amount of capital, they will not talk to you.
SIGN OF TRUST
Start-ups rarely get the attention of VC firms and should go for alternatives rather than venture capital funds. To win the trust of angel investors and pass the due diligence the company has to be on the market for some time and has a strong history of success. Similar to the filing of a bank loan or asking for a line of credit, you need to show proofs that your business has a high potential for growth, particularly during the first three years of operation. Any company seeking capital must ensure that their business is bankable.
No wonder that only one percent of hopeful applicants pass this strict test and receive the funding. In return, they not only enjoy the capital for growth but also a badge of honor for meeting high standards set in the industry.
ICOs are not regulated in any way. All that you have to examine and build the level of trust in the project is the website, personalities of the team and a white paper. This creates a sense of uncertainty and a feeling that anyone can do an ICO.
While it may seem that ICOs are a more progressive and beneficial method of raising funds for a startup, investors should not be fooled by the impression of simplicity. Even though launching a new token is relatively easy on a platform such as Ethereum, a successful fundraising campaign requires careful planning and initial investment, a solid team, and of course a great product idea. And even though tokens may be available in a matter of weeks, it takes a good preparation and specific steps to access funds and start using them.
There are certain benefits and disadvantages to both types of raising capital. We will still have to see if ICOs end up a reliable and popular method of seeking investment and whether the new regulation changes the cryptocurrency system. Initial token offerings are ideally suiting digital projects that thrive on agility and quick changes on the technological landscape.
Converting cryptocurrencies to fiat money or local currencies is not an easy task. It is always accompanied by extra fees, risks that the transaction doesn’t go through, or if the bank suddenly reconsiders its policy towards cryptocurrency.
Turning funds you managed to raise during the ICO campaign into fiat currency is a critical issue for many startups. Before you can use all Bitcoins, Ether or any other tokens you received from early investors, you must convert them to your local currency so that you could start growing your project. You need to pay rent, salaries and travel expenses, buy equipment and pay for marketing services. All this has to be done via your old-fashioned bank account. While some digital marketers can accept a portion of their fees in cryptocurrencies, especially if they are involved in the project as advisors, you will be paying for all business expenses with fiat currency, either in cash or via wire transfer.
And even if you impress your local adviser about the success of your fundraising campaign, most banks will make it extremely difficult for you to cash out large amounts of cryptocurrencies, even if you then are going to deposit them into your bank account.
Why Is It Difficult To Cash Out Cryptocurrency
While major financial corporations are playing with blockchain and even implementing it in their business processes, when it comes to handling large amounts of money banks are becoming very cautious. While some banks became early adopters of cryptocurrencies, the vast majority of banks worldwide will not open an account for the cryptocurrency-related company. But even if you are lucky to find a bank that thinks ahead of time or simply overlooks the nature of your business, the number of documents to be the file is staggering.
This is not because bankers are so old-fashioned or they are afraid of progress brought upon by cryptocurrencies. The problem is in the lack of legislation designed to deal with the decentralized nature of crypto cash. This means that banks are applying the same policies as they do when they deal with traditional investment. The bank needs to know if your ICO is not a cover-up for an international money laundering scheme, that the money invested didn’t come from drug or weapon trading, and that you have done your due diligence when accepting contributions, no matter how big or small they were.
Even if you assemble all the forms and evidence required, and successfully navigate around all those hidden obstacles, this is not a guarantee that you won. Your brand-new business account still can be closed any minute because of stringent security policies. Financial institutions of all sizes are very nervous when they hear words such as “Bitcoin” or “ICO,” so they will freeze your account the next minute they suspect some unusual activity. Banks would rather lose some profit now than face an audit or risking their banking license tomorrow. So forget about cashing out large amounts of cryptocurrencies using a financial organization – but there is a way for you to be able to open a bank account for your ICO.
The option is to open a bank account in countries that are friendly towards cryptocurrencies such as Switzerland, Malta, Cayman Islands or Gibraltar. The latter is a popular option thanks to its local bank called Turicum that specializes in ICO financing operations. To do that you have to get incorporated in this jurisdiction. For that, you would have to hire a local lawyer and an accountant. But it’s worth it if you aim big. But remember that if you want to convert $10 million worth of cryptocurrency into any local money would automatically raise red flags and get your project audited, especially if your ICO was completed in a jurisdiction that limits its citizen from participating in such activities.
How to Turn Bitcoin Into Cash Using OTC
An over-the-counter exchange is the least sustainable option for exchanging several Bitcoins for local currency. Both parties meet at a physical location where the buyer of coins pays the seller the agreed amount of money in cash and the seller (you) transfers the cryptocurrency to the buyer’s wallet. Such transaction can be completed in as little as 30 minutes. There are certain risks to it such as physical security of all parties involved. You can find the interested parties on online platforms or via brokers, and even if you managed to find a suitable deal to sell coins to a person, there are fees involved also. It’s convenient to cash out small amounts of cryptocurrency this way.
How To Cash Out ICO Profits Via Exchange
This is the most common way to cashing out crypto. There’s always an option to convert money from your digital wallets to fiat money using cryptocurrency exchanges. The benefit of exchanges is that you are guaranteed to receive the local currency into your bank account, which eliminates the risk that the other party will not honor its agreement or compromise your security. This way may appear the safest and less expensive option compared to moving your company to Switzerland or Gibraltar.
You will still need to have a regular bank account connected to your exchange wallet so you could transfer the fiat currency from the exchange wallet to your bank account. First, you have to open an account on an exchange and then link your bank account to it. It’s important to make sure that this particular exchange can pay fiat currency to debit cards. Having your account verified can take a long time, depending on the exchange. You will also have to provide your ID which cancels your anonymity, but this is a standard procedure that cannot be skipped.
Another challenge is to find a trustworthy exchange that will handle your transactions securely and legally in your jurisdictions. The security of exchanges, even the most popular ones, is often breached. One of the most popular exchanges, Mt. Gox, eventually declared itself broke because so many transactions were corrupted and users lost their coins.
It’s important to find an exchange that is regulated to some extent. For example, Bitstamp exchange was among the first ones to receive a banking license, and the benefit of Coinbase exchange is the instant verification of the bank account linked to your wallet. BTC-e exchange allows for automatic trading and exchange of cryptocurrencies into USD, but you will still have to wait up to three days to get the money to your account. You have to be prepared to lose a certain amount of money on fees.
A lot of exchanges double up as a wallet where you can securely store your coins while waiting for the transaction to go through but this is not recommended because of security concerns. Exchanges are prone to becoming targets of hackers and it’s not uncommon for a user to lose control of their wallets while a hacker is emptying them. Read the fine print to learn more about insurances provided by a particular exchange.
Bitcoin ATMs: Use with Caution
While it may sound like a super-easy way to withdraw the fiat money from your digital wallet, Bitcoin ATMs often work one way: to sell your bitcoins in exchange for your cash, not the other way around. If you happen to have a Bitcoin ATM nearby check if it allows withdrawing fiat money, and proceed accordingly.
The Best Way to Cash ICO Funds
Instead of risking the whole amount getting stuck because of investigation or faulty exchange services, you should withdraw only precisely how much you need to cover your projected monthly expenses. Combine the total of your rent, salaries, legal and marketing fees, travel to conferences or other events and start cashing out small portions of the tokens. You can consider exchanging BTC/USD and moving money immediately to your bank account. Local exchange of crypto to fiat currencies is good to cash out money for unforeseen expenses.
Depending on where your startup is incorporated you can find a payment provider that accepts the equivalent in cryptocurrencies for wire transfers of fees, for example, rent and legal advice. To pay salaries, you can issue prepaid debit cards for your employees and load them using cryptocurrencies. Bitwala and Mona.co cards are viable options. These cards can be used to pay in stores and to withdraw money in ATMs. This method doesn’t suit all jurisdictions. You cannot load prepaid cards with crypto in European Union, and Bitcoin ATMs are not issuing any fiat money there too.
To sum things up, your best approach to converting your ICO funds into your local currency is by combining several options: registering your business in a crypto-friendly country such as Gibraltar, which takes time and certain investment, and in the meantime using cryptocurrency exchanges to cover your monthly expenses to ensure that you have your basic expenses covered. This will ensure a sustainable cashing out of your ICO proceeds to fund your project.
Right now, as you are reading this, someone is launching a new initial token sales to raise funds for their startup. An initial coin offering or ICO is a simple way to attract investment while maintaining control over your project. Also known as token generating events, ICOs using Ethereum ERC20 tokens supported the launch of many disruptive businesses while also bringing attractive returns to early supporters of projects involved.
History of ICOs
The first ever ICO was held in 2013 by Mastercoin. The event took about a month to complete and it raised over half million dollars. Since then there was a massive growth of popularity of ICOs with a new event being launched every day. Not all ICOs were successful, with only 54 events in 2016 reaching their funding goals and 92 successful events in 2017 raising over $1.3 billion. Compared to traditional venture capital investing in fintech projects ICOs attracted three times more investment to the blockchain industry.
Considering the fact that there are 20-50 ICOs launched at any time, investment opportunities are ample. The average small ICO aims to raise tens millions of dollars, and the highest ICO took 500 million dollars. The market capitalisation — the market value of investments and any appreciation or depreciation of a cryptocurrency that bought into them — measures at half a trillion dollars in the first half of 2018. Come to think, ICOs are a very young industry, so this growth rate is fascinating.
Benefits of ICOs
One of the most significant benefits of initial coin offerings is that they offer a low-cost access to investment in new technologies for regular people. You get a certain amount of coins that you can sell at a later date with a fixed profit, or you can wait until the business matures and becomes profitable or close to profitable.
To invest in a traditional IPO and buy shares in a company you need a help of a professional or institutional investor who also claims a fee. IPOs are regulated by stringent securities laws, while ICOs are less strictly regulated.
Companies also benefit from the low risk: instead of a share of a company you sell tokens which provide no ownership rights or control. They use the money raised to quickly bring the product or a solution to the market. On many occasions, the company would completely overhaul its offering and make significant changes to the product initially marketed.
Risks of ICOs
The main risk is associated with tokens since they are not deemed as secure as shares by most jurisdictions. Tokens do not give you any legal rights of the company or its assets. In the best case scenario, you have a contract that allows you to recover your funds if the company is unsuccessful.
When considering a project for investment, there are three levels of project risks that are similar to those associated with regular startups.
1. Low level of risk
The legitimate idea of the ICO with a team of people behind it that can actually make it happen. This is the least risky route, although of course, сoperational and market risks are inevitable. All you have to do is to accept these risks.
2. Medium risk level
The company has no clue how the market works but they believe they have a great idea. The managers are not fully aware of the risks and challenges that the project will meet ahead. This offering has high risk of falling apart because in the addition to usual operational, market and business risks you add a risk of bad management. You need to perform your due diligence to fully understand the viability of the project’s idea, the strengths and weaknesses of the team behind the project as well as proposed business models.
3. High level of risk
The highest risk for your investment is an ICO where the project managers only want the free cash and plan to dissipate immediately after the ICO ends. There are no signs of the development of a project. Their promise sounds too good. This is the ICO you should run away from. This is more than a risk — this is a losing bet of your money from the beginning.
To begin learning how to tell the bad sheep start with looking at ten ICOs published on popular ICO marketing platforms. If you can tell three ICOs that will fail to raise the money they aim for at the first attempt, you are in a good shape.
Are ICOs Legal?
In most jurisdictions, token sales are legal although not all countries allow their citizens to join them. To avoid being associated with stock trading companies and fall under a different law category, token sales are marketed as “early access,” “contribution” and “donation” from early supporters.
As there are no laws regulating the relationship between investors and token buyers, the ICO economy attracts hundreds of fraudsters who are preying on beginners in investing who want to profit on the increasing price of the tokens. Without substantial legal framework, cryptocurrency industry may be less attractive for large capital and miss potential in development.
What Is A Good ICO Investment?
There are several ways you can examine an investment in an ICO. The first is the appreciation in value over time that you expect it to make. Most ICOs will give you a discount when you buy their tokens early, ideally on a pre-sale. In this case, you clearly know the upside to expectations. The second way is to examine the business and discount the value of their projections in a way that reflects where your investment would be in a specific time period. No one can really tell what kind of investment would be good for you. All investors have their own ambitions.
Did you know that nearly 60 percent of all ICOs in 2018 will fail to meet their funding goals? The cryptocurrency market is getting more saturated and competitive, with hundreds of projects fighting for attention of investors. In the highly competitive market having an amazing idea and a stellar team is not often enough for success. There could be great projects failing because they were too busy developing their product and are too shy to tell the world about it. And sometimes a project with unrealistic or simply faulty idea would raise millions because they hired the right agency. The difference between a hit and failed ICOs generally is powerful or ineffective marketing strategy.
Planning a strategy to market your ICO project from the start is simply crucial, probably even more important than developing the actual product itself. While you can improve and rework the initial product idea, you cannot make another first impression. When done right, marketing is a crucial element in the way we spread the word about the ICO and ensure successful crowdfunding for your project.
Most of the agencies assume that developing a trendy ICO campaign website, complete with all features, plus a well-written in-depth whitepaper, is sufficient to meet investment goals. Successful ICO marketing campaigns make use of specific communication channels, from conventional and recognized methods to very latest advanced techniques such as native advertising and AI-powered email campaigns.
There are not many ICO marketing firms – just about a hundred of them worldwide – simply because the cryptocurrency market is still too young. There is a competitive group of agencies that offer specialised services for ICOs and cryptocurrency projects in general. Goodfirms has conducted a research and offers a list of verified agencies (you will find them at the end of this article). Before you make your inquiries let’s first understand the rules that define a great marketer for your ICO.
Rule #1. This agency has to focus on ICOs and nothing else
The reason for that is that marketing for cryptocurrency startups is essentially different from that of a regular startup. Some of the strategies that are effective for the usual campaign are not applicable to ICOs simply because the timeframe is too short.
It’s recommended to start unfolding your strategy at least 90 days prior to the pre-sale. Activities such as SEO will not yield any results because they unveil over longer time. Instead, PR campaigns, community building and instant messaging channels are often used to spread the word more quickly and build a “tribe” of trusty followers. There are many other elements specific to digital crowdfunding that a traditional agency cannot deliver because they lack expertise or experience. Unless you have invented another Bitcoin, a marketing team consisting of professionals well-versed in digital startup marketing is your top priority.
Rule #2. Look for a full cycle digital agency
The best ICO marketing agency for your project has a team of experts who are proficient in the full range of services, starting with a website design, hosting, email campaigns and lead generation, community building, SEO services, content marketing, public relations, media relations, PPC services, graphic design, and social media management. Initial coin offerings events are held for very short time so all activities must be closely knit and well coordinated. They need to have experience using all available channels to spread news about the emerging crypto startup and do it in the most cost-efficient way. You don’t want one agency to do a digital PR and another one run your website because any glitch in communication can be very costly.
One aspect that is often overlooked is the branding of your company in addition to the above mentioned services. Make sure your branding is a digital world-friendly and developed by professionals and corresponds well with the blockchain product philosophy. To make changes to the campaign on the go rely on regular analytics and better yet keep your own eye on key metrics.
Rule #3. The record of success
When you browse the list of consultants and agencies online, make sure to analyse their former clients. They should have a clearly visible list of former blockchain and cryptocurrency-related clients on their website. Not many ICOs want to disclose their links to certain agencies for privacy reasons, but if you do find such clients, don’t hesitate to check the success of their ICO. You want to choose the agency that delivers a strong rate of success. The very best way to recognise a trustworthy professional is to understand the way they deal with token sales, to look out for user cases, project portfolios and of course for client testimonials. Don’t take the glowing testimonials for granted – check if real people have left them.
The first and essential indicator of quality is to see how much of a success the campaign has become, how much money these projects managed to raise. In addition to that, it’s very beneficial to find out what types of services the company has provided for companies seeking to launch an ICO and what the outcomes were. Try to predict which strategy they have been using and which practical insight you can put to use in your own project.
Rule #4. Let them demonstrate expertise
When communicating with the agency, ask them questions about the latest events in the ICO market, what makes them excited about your project, how generally know they are. Many ICO-focused agencies have expertise in such advanced tools as artificial intelligence and smart contracts which is a great way to ensure that their efforts bring the results that the ICO founder wants.
Ask them to create a draft campaign plan. A great team will make an effort to fully recognise the innovative value of your project, your team, your aspirations and what you have completed to date. They would be targeting the long term collaboration going well beyond the strategic coin offering event.
You want to find an agency this is constantly keeping up with the industry and has the know-how and capability to evolve the strategy to quickly meet unique challenges within the cryptocurrency and blockchain environment. A small group of professionals, and not a large international agency, frequently has what it takes to stay agile and make frequent changes in the tasks that they come across.
Rule #6. Budget requirements
It has been very clear at some point of our analysis of the market that the fees are not actually set in stone. The charges are very volatile in this marketplace and they also range a lot from company to company. There’s no clear understanding of what an appropriate fee is. While some agencies provide complete packages with very steep pricing models, others work with an hourly rate or even a weekly rate. More established agencies have working contacts in the media and with influencers and are likely to generate a lot of press exposure for free or at steep discount.
Marketing is such a crucial step for your ICO, it calls for a generous budget. Without spending both time and finances on marketing, your ICO isn’t going to attract the investors this is deserved. A typical token sale allocates for marketing up to 30 percent of its targeted funding to be raised.
Rule #7. Clarity from the start
A sign of a good ICO marketing agency is the lack of industry jargon. The team will give you a clear picture of what they aim to achieve, the approach they intend to implements that you will achieve your investment goals. They should take effort to explain all the information in plain English and get anyone on the same page. A responsible services provider would honestly tell you how robust your project looks from the market perspective, and whether your funding goal is actually attainable. And if it isn’t, it would rather say “no” to the customer instead of promising the sky and turning in the dust.
And here’s what to be cautious about. If the promised results appear too good to be true, they probable are. Avoid marketers that claim to follow the unique and first-class strategy, as each campaign needs customisation and improvisation. Don’t agree with in agencies that tend to guarantee outcomes. No agency can assure you will reach your investment goals; they could only improve your chances of getting there.
To make the ICO team’s life easier, GoodFirms website has researched and verified some of the most capable digital agencies that specialise in cryptocurrency and ICO. According to the website, these digital agencies have grown from the pioneers to game changers when it comes to creating an effective ICO marketing plan for digital coin sales. Here are their top recommendations:
Anchor Point Marketing
Blockchain App Factory
Of course, there are many other reputable agencies that specialise in digital marketing for ICOs. You may find them through recommendations and by reading reviews online. The world of marketing is evolving so quickly, you may easily find a top-class specialist outside of a beaten path.
Nathan Sebastien at GoodFirms says that the list is continually in progress as the company practices to maintain checks on the newly rising ICO marketing firms to make it easier for coin owners to benefit from maximum investment and improved reputation. If you believe that you know a cryptocurrency marketing company that deserves a spot in this listing, you could send GoodFirms a name of this agency, and they will consider it in their next update of the list.
We hope this article helped you better understand what type of unique challenges you are going to face when choosing a digital marketing agency for your ICO. These recommended resources, in-depth research and due diligence will help you choose the right digital team and avoid costly mistakes.
ICO vs IPO? Examine the Differences Between Initial Public Offerings and Initial Coin Offerings
Initial coin offering can be easily compared to the more familiar and ubiquitous IPO – initial public offering – but it’s advisable that you realise the difference between the two. The ICO and IPO could be compared only when it comes to their initial raising of investment in a venture and that this investment is raised in public. Other than that, nothing is the same.
ICO is the digital counterpart of the IPO to the extent that it results in the funding of the business through the issue of tokens. But unlike actual shares of the enterprise, these tokens do not represent any equity in the company. When a share indicates some form of the ownership of the company, a token only represents the ability to buy something that the company is selling (a service, an access to the solution) using that token, or sell that token to someone who wants to transact with that company. This is the major difference which should be realised before making a decision to invest in a ICO vs IPO.
Similar to the IPO, the startup that launches a token sale is looking to raise money for specific purposes. During an IPO such business entity would raise equity capital from investors to build new headquarters, expand a product line, or launching in the new marketplace, by offering them a share of the business in return.
During an ICO, as you will see from the next paragraph, the company is doing almost the same by offering tokens in return for Bitcoin or Ether coins. These tokens can be exchanged to other cryptocurrencies at a later date.
ICOs are not regulating at the time of writing, although various financial agencies are starting to enforce their jurisdictions on the market. There’s little legal control as well. All the ICO team has to present for the potential investors for inspection is the white paper where the new solution or an application is described and business models are outlined. It’s up to investors to investigate the team’s credentials, industry reputation, previous experience to gauge their ability to deliver the promises. There are no legal obligations to the investors except those outlined in smart contracts and the agreement made during the transfer of tokens in exchange for a certain amount of Bitcoin or Ether.
IPOs are strictly regulated. To hold an IPO is a major step for any mature, well-settled company with a good business record and solid financial background. In order to provide truthful information to investors, before the IPO can be started, the company must comply with a range of requirements including third-party audit, a breakdown of their revenue stream, a presentation of company documents for potential investors to inspect. A regulatory body also expects a well-written prospectus outlining the way the money will be spent and the financial forecast for the company resulting from this money injection.
With IPOs, you can invest in any domestic company and for investing in foreign companies you need to hire an investment broker who charges the fee.
An IPO allows buyers to purchase shares of the company, with all benefits that come along with it. ICO does not confer any sort of rights on the purchases. It simply allows to buy in when the new cryptocurrency is at its absolutely lowest rate. The hope then is for the price of the new cryptocurrency to rise which can lead to significant profits when the business takes off and generates revenue. A white paper should provide clear explanation about methods of profit generation, as well as details of the solution, the token structure, and the amount of tokens released.
When you purchase stocks during the IPO you automatically earn an ownership stake and claim part of the profit the company generates in the future. As a shareholder, you earn your dividends every year depending on the financial results of the company. You can also make the profit earlier if you trade the shares on the exchange when its value goes up.
With the ICO, tokens do not represent any tangible value, such as corporate assets or a share in revenues. Token holder does not own a single bit of the company. Even if the angel investor has purchased a massive amount of tokens, he has no capability to influence any business decision, unlike major shareholders of companies. Yet there are many ways investors can ensure their revenues, and you have to examine the token structure to make sure you see any return on your investment. Sometimes you earn a profit when you sell it at a fixed price after the ICO, at other times it’s the profit you make after the company starts operating and breaking even. Make sure to examine the white paper and do not skim over any fine print.
Does it make IPO a more reliable project to invest in? No matter how to touch the due diligence was and how many legal checks were completed, there are no guarantees that the business will remain profitable by the end of the year. Both types of investment offer certain advantages and disadvantages. Not a single investment is entirely risk-free.
Before participating in an ICO or IPO each investor must decide whether they are comfortable with high-risk type of investment such as ICO, or they prefer to make a medium-risk, traditional investment such as IPO. In both cases, it’s recommended to do a thorough investigation of the project in question, determine the viability of the idea in the first place, do checks on the founders and their experience and expertise, and only then to make an investment decision.
ICO is the excellent starting point for the new investor, a great chance to dip their toes in the water. In other words, get in as early as you can, never miss a promising ICO and choose the type of token with great attention. With such low prices as some ICOs are setting for their tokens, you can gain experience without risking too much money.
Experts consider that only 10 percent of ICOs happening at any time have a chance for successfully meeting their goals. This doesn’t stop investors because, according to the recent research, the average ROI of ICO investment is over 1200%. Yet on many occasions, new investors could avoid disappointment if they better researched the basics of the ICO, and most importantly, the token.
Currently, financial regulators treat tokens in the same way because there’s no clear understanding of what type of assets they belong to and how they relate to securities regulations.
The first group of tokens used in the ICO is security tokens. Sometimes called tokenized security, these tokens are most popular among investors. In traditional investment terminology, they are similar to bonds, derivatives or equities. Securities tokens resemble stocks that are traded on stock exchanges. Security tokens are subject to financial regulations which of course makes them more attractive for investors.
Utility token is the second, and most popular type, of ICO tokens. Their function is to help run the blockchain and circulate inside the platform to pay fees, goods and services. They can also buy discounts or premium access to some of the features of a new product. Utility tokens cannot be used for investment and buying them in hopes that their price would grow is a common mistake. It’s worth remembering that some projects can offer two types of tokens.
Cryptocurrencies, according to the US classification, or payment/currency tokens, as classified by Swiss FINMA, are the third type of tokens. Cryptocurrencies, or virtual currencies, enable financial transactions, can be sold or purchased, and they inherently are designed to store value.
Reward tokens are not used commonly for investment because it’s still unclear how they will be rising in value. It’s an interesting concept similar to loyalty programs that reward users for their activity in the platform and on social media. Reward tokens remain close to utility tokens and are not good for investing.
Asset tokens is a very promising type of tokens. They are derived from tokenisation, for example, a token can represent a share of a real-world asset. This is a very promising idea which is still being explored, so new investors are not keen on investing in this type of a token. But it’s worth keeping an eye on it.
Experts agree that any project that launches the ICO is destined to fail to attract the investment because of the problematic token. Sometimes the token minted by ICO is simply not necessary for the solution to work and as a result adds no value to the project. In other occasions, the token price is valued too high and the structure of the project simply doesn’t have any economic reason for the price to grow. We hope this article will help you to make informed decisions when choosing a project to invest in.
Many initial coin offerings are launching a smaller coin sale just before the big blockchain launch event. Pre-ICO, also called pre-sale, is another type of crowdfunding event where tokens are sold. The only difference is that early investors get bigger discounts compared to the actual ICO. Do not confuse these two events as they have different structure and outcomes.
Why did this practice appear? Pre-ICO events generate a lot smaller amounts of funding and tokens are often sold with a generous bonus, sometimes up to 80 percent off. Offering a bonus 50 percentage of the token price is becoming a norm. The pre-sale is usually held from several weeks to one month before the actual event.
How Pre-ICOs Are Different
Pre-ICO has a completely different structure than a cryptocurrency ICO. Its smart contract is designed in such way to ensure that funds raised during the pre-sale are not added to the funds raised during the main event. The company needs to be very vigilant with reporting the actual funds raised during the whole initial coin offering so that they would be able to report the crowdfunding results to the regulators. Transparency is key to maintain the trust of investors.
Pre-ICO has a lot of benefits for the project, one of them is building of trust and another is raising awareness. But the true reason why companies are risking their profits and launch pre-sales is that this is the perfect way to attract angel investors to support the project. Similar to the angel round when the company goes public, a successful pre-ICO often guarantees the success of the main event.
The raised capital during the pre-ICO is often used to fund the main ICO token sale as it provides much-needed operational expenses. Angel investors could form a very small portion of the fixed amount needed for the project launch, the so-called hard cap. The raised funds cover a lot of costs on building the infrastructure of the project, while the team is busy with prototype constructing, business development, marketing, white paper editing, or adjusting the project roadmap.
The disadvantage of pre-ICOs for startups is the situation when early investors often get rid of their tokens at ICO prices once the new coin can be traded at a cryptocurrency exchange. Since the early investors grab tokens at bargain prices, they cannot resist the urge to maximise their profits. As a result, investors earn a substantial profit but the overall token’s value diminishes. The company launching a pre-sale has to be very confident that the main event will generate even more sales and that the value of the token will stay attractive.
To enter the pre-ICO investors join the whitelist, a special membership list that grants them access to massive discounts if they buy tokens at pre-ICO stage, as well as access to bounty program and other rewards. This helps build an army of supporters that in turn develop trust and reputation of the project. Among the benefits that early supporters get are the lower token price, bonuses and rewards, as well as some tangible perks, for example, access to the alpha and beta versions of the software or application, the ability to suggest modifications, and more.
Moving On to ICO
After a successful pre-sale the project usually is ready to start the development of their product, while getting ready for the actual ICO. Usually, a successful pre-sale generates a good amount of free publicity and public awareness of the project. During the ICO tokens are sold at full price. The capital being raised becomes a working capital for the company used to fund the future growth of the business, including any additional infrastructure.
At the moment ICOs are considered a legitimate way of raising capital for digital startups. Residents of certain jurisdictions are banned from participation in token sales, so it’s worth checking the legislation in your country, just to be sure. As long as you stick to the terms and conditions of the sale and deposit a certain amount of Bitcoins or Ethers, you can consider yourself an investor.