Is the crypto community just smoke and mirros?

You’ve probably noticed that ‘community’ is a buzzword in the crypto sphere. There isn’t an ICO that doesn’t refer to building its ‘community’, which is really another way of talking about their investors, because that is what they are. But ‘community’ sounds warm, fuzzy and friendly when compared with the ‘investor’, which instead suggests neutrality, detachment and anonymity.

Why crypto geeks chose ‘community’

In the traditional world of business it is very important to build loyalty among clients and customers; that’s one of the functions of great branding, but the crypto startups focused on the concept of ‘community’ at the start, in my opinion because they were operating on the fringes and therefore wanted to use a word that suggested a coming together of like-minded people, as well as a sense of equality between those who developed the crypto projects and those who basically crowdfunded them.

In the early days of crypto, this rather ‘liberty, equality and fraternity’ approach served a good purpose; it strengthened belief in a new technology by making everyone feel they had skin in the game, even if an individual’s financial commitment to a new project was $100, let’s say. However, as the ICO took off and every project wanted to build followers who would buy into it, what had been a collection of believers turned into, as Michael K. Spencer writes in his article for Medium, “communities more prone to pump and dump” who were never really loyal followers.

Now crypto projects need to get real

Spencer’s argument is, and I agree with him, is that the so-called ‘communities’ built up by ICOs on Telegram and elsewhere are not as useful to projects as they were once thought to be. The reason for this is that the crypto world has moved on significantly since the launch of bitcoin. Crypto projects now need real clients and products with a real world use.

Communities show no loyalty

In short, a project’s community that has come together just for the Airdrop, or whatever freebies a project wants to hand out, is rarely loyal. These marketing tools may build numbers of followers on social media quite rapidly and make a project look as if it has broad support, but most of those people are just there for the giveaways and once they have them, they’ll be off.

Spencer says, “Crypto saying that its community is its best resource, is like Facebook saying it’s valuable because it has over 2 billion users.” Building community is not where crypto projects should be focusing; they should focus more on real world applications, demonstrate utility and by doing so attract loyal clients and investors.

How to hold an ICO in 2019

Once upon a time, people holding ICOs didn’t give too much thought to regulations, because there weren’t really any to follow, but in 2018 and beyond, they need to keep rules and regulations at the front of their minds.

ICOs started in 2013 with Mastercoin, swiftly followed by the Ethereum ICO promising smart contracts and the ERC20 token standard, both of which encouraged investors. Things were fine it seemed until 2016 and the DAO ICO, which raised $50 million, but then had its funds hacked. The US Securities and Exchange Commission (SEC) announced that DAO should have been considered a security and it wasn’t long after that that China banned ICOs, calling them illegal. However, what happened in China wasn’t followed elsewhere and ICOs continued to flourish, reaching their zenith in January 2018.

However, as 2018 passed by, we saw ICOs decrease, and a more regulated environment is one of the most likely reasons for that. We also saw a shift to a different type of ICO investor. Whereas in previous years, ICOs appealed to the man or woman in the street who would take a punt on a new project, this group dropped away and the institutional investors started to take their place. Old venture capital also made way for new crypto and blockchain-related VC firms that were focused on projects using the emerging technology. One report by

Autonomous Next indicates that VC funds invested $1.6 billion in blockchain projects in August 2018 alone. Meanwhile, funds raised by ICOs has been falling throughout 2018 and in Q3 the number of ICOs raising over $1 million had halved compared with the end of Q2.

Where is the best place to hold an ICO?

Places where there are clear guidelines for ICOs and favourable regulations are obviously the ones to choose if you’re planning a new coin offering. The two most important things to consider first are:

1. How can we safely conduct an ICO?

2. Can the project operate legally after the ICO and will licences etc be needed?

Europe is one of the regions most favourable to ICOs as it isn’t rushing to impose regulations. As long as projects follow KYC and AML rules –until some other rules come along –these are the most important regulations in Europe. Switzerland is one of the more friendly environments in Europe and in February 2018, the Swiss Financial Market Supervisory Authority, FINMA,issued a set of guidelines for ICO projects, which stated, “Each case should be decided on its individual merits.” Gibraltar is also high on the list and the UK has not really made a decision about firm ICO regulations yet, and looks at ICOs on a case by case basis.

To put it in a nutshell: if you’re planning an ICO, look for a favourable jurisdiction, make sure you comply with its regulations plus KYC and AML, and if you need a special licence because you’re in the fintech space, make sure you put yourself in a good position to get one.

Have ICOs reached the end of the road?

In 2017, Initial Coin Offering (ICO) was probably one of the biggest buzzwords in the fintech and other blockchain-based sectors. There were ICO calendars, journalists tracked how various ICOs were doing and reported on the final amount raised, looking for the ICO that would break all ICO records. However, the negative reaction of media giants like Facebook and Google to the ICO sphere had the effect of making it more difficult for those fledgling businesses holding ICOs to market their offering, and ultimately could be said to be responsible for dampening enthusiasm for this new form of crowdfunding.

Then 2018 brought with it a change in wind direction: the cryptocurrency market started to behave in a way that disappointed the small investor. Institutional investors were still apparently wary of the entire ecosystem, regulatory bodies debated how to handle it, and on top of that, the word ‘ICO’ became almost toxic thanks to the social media rulings on promoting them. Instead, people started to look for ways around it, calling them ‘token sales’ and talking about ‘digital assets’ rather than cryptocurrency. And, lets be honest, the glamour and excitement associated with ICOs in 2017 was beginning to wear a bit thin.

This is not something I made up: data from Crunchbase published this summer and in the Q3 of 2018 shows that there has been a massive decline in ICO fundraising. A report from ICORATING reveals, “a total of just over $1.8 billion was raised by a total of 597 ICO projects in Q3 2018, down significantly from the over $8.3 billion that was raised in Q2 2018.”

America’s SEC is also responsible for some of the problems faced by ICOs; its scrutiny has made the country a cold place for the blockchain-based startups. And America isn’t the only jurisdiction presenting barriers for the sector.

ICOs aren’t dead; they’re being reborn

The fact that ICOs seem to be declining in terms of the funds raised this year doesn’t mean that funding is not coming in for new blockchain businesses. Instead, what is happening is that the environment is simply changing: ICOs may no longer be the fashion, but there is an increase in crypto funds coming from venture capital sources. What we are going to see are better funding solutions in a different format.

The point I really want to make is this: just because there is a decline in ICO activity, don’t take this as a sign that cryptocurrencies, tokens and blockchain technology have also had their day. This is a new market where various roles and functions are constantly evolving, and there’s nothing surprising about that as history shows us.

Is Trilliant offering a new form of ICO?

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In a move to serve the growing consumer demand for cryptocurrency tokens, tech business Trilliant is launching 500 ‘next generation’ ATMs in Europe, which should be fully operational by the beginning of 2019. Trilliant is a Swiss-based company that started out as Crypto Capital AG, but now focuses on ATM operations, having moved away from being an investment platform.

Currently ATMs don’t have the facility to purchase cryptocurrencies using fiat currencies, but the new ATMs rectify that situation. Surely, this represents a leap forward for cryptocurrency, especially with regard to mainstream adoption.

What Trilliant is offering is a way to promote stability in the marketplace. Its goal is to have at least 500 ATMs operational by 2019 — a goal that doesn’t seem overly ambitious considering that the next generation ATMs offer more value to cryptocurrency investors than the 2,700 cryptocurrency ATMs currently in-place across the globe.

Founder and CEO, Sebastian Korbach said: “In the long run, we want our machines visible on every corner, creating greater awareness for cryptocurrencies in general.”

It is also offering investors the opportunity to purchase Fractional Ownership Units. These units cost upwards of $100 and will be sold on the Trilliant website. Essentially it means that investors will be able to purchase partial ownership of Trilliant’s operating cryptocurrency ATMs.

Is this a new type of ICO?

This is different to an ICO, the fundraising platform that is more typical for blockchain and crypto projects. A Fractional Ownership Unit is similar to a profit sharing agreement, which means investors stand to benefit from Trilliant’s profits. However, it is still holding a token sale and has a whitepaper — so isn’t it an ICO in another disguise?

This raises some interesting questions about the ICO landscape in the future. Is the basic model that emerged in 2017 simply that — a basic model? Will we see the ICO develop different formats, such as this Fractional Ownership concept. Fractional Ownership is by no means a new thing and it isn’t just connected to the cryptocurrency ecosystem — you can have fractional ownership of vineyards, racehorses and supercars. What other formats are likely to emerge and how will this test the strength of the regulatory frameworks for crypto ecosystems and token sales?

We have only seen the tip of the iceberg with ICOs — there is undoubtedly much more to come in terms of this fundraising tool.