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Can ICO be created by offline business?

Posted Jan 11, 2018

Two words, decentralized-platform, and cryptocurrency describe the nature of an initial coin offering campaign.

The idea of an ICO is a fascinating phenomenon and has captured the attention of many Internet-based economies. Back in the days when companies that operated the dot-com ventures were enthusiastic in their approach towards internet development and its involvement in the exfoliating of the next generation financial boom, all sorts and kinds of ideas streamed the venture capital with innovations that revolutionize the global economy.

The idea of a commercial enterprise being networked and connected throughout the globe was at one time speculative and now, we have moved from the era of internet-based ventures to cloud-based systems. In just a span of 4 years (plus or minus), the strategy on how to raise funds for startups or expand an enterprise’s operational protocols has radically changed. Many believe that this new phenomenon may as well be a reincarnation of the bubble-like outbreak of the dot-com enterprises.

Lessons learned from those bubble-effect technological synclines would suggest that the continuous strive for corporations to sustain dominance in the capital market is unflinching. With every new opportunity in Fintech innovations, comes the drive from the R&D department of big enterprise to exploit these technologies with an aim to improve business activities.

ICOs have experienced a meteoric rise due to its unconventional ways of crowdfunding events for startup enterprises or already existing enterprises looking to expand their scope of operations. Since the first ICO event in 2013 by the then Mastercoin (now Omni Layer), lots of corporations have decided to implement the blockchain solutions in their business operations. By blockchain, I mean a ‘decentralized model’ to improve both efficiency in service delivery and expand profit margins by several multiple factors.

How does this meteorite affect Offline Small and Medium Scale Businesses (SMBs)?

Up until now, most ICOs are exploits of internet-based financial establishments who sort to expand the horizon of their businesses through decentralized venture capitalism. However, offline organizations have begun to embrace the possibility of exploiting the perks of blockchain technology in their everyday affairs.

With Projects like the DAO ICO in 2016, a wider spectrum of fundraising opportunities was opened despite being clamped due to security flaws (both policy-wise and technically). Its ability to raise the sum of $150 million USD in a few days provided a beam of hope for new innovative enterprises to clear for take-off without the constraints of legal due processes.

Today, most organizations have wrapped their ideologies to cater for customers in different sectors. Starting up your own startup with a clear understanding of the operational structures of market fluidity will always serve as an advantage. Brick and Mortar (as offline businesses are often referred to), E-commerce (online business facade) and Brick and Click (a hybrid of both offline and online operations) are the three major classes of corporate operations.

Looking at all three models intuitively, we would understand that the operational manuals of the individual elements, possesses certain advantages and disadvantages.

While Brick and Mortar mode of operation includes physical presentation of their ideology, trade, and commerce, the E-commerce model presents an ideal scenario for global market structure – a shortcoming observed in the traditional ways of doing business. On the plus side, traditional commercial models, create a physical entity for clients to interact with on a personal note. While e-commerce operations, only include a virtual presence.

On one hand, the major disadvantage posed by these two models is the cost incurred on infrastructural and human resources. On the other hand, brick and click have visibility on a global scale as the acute advantage to its model of operation.

All but the Kitchen sink

Various enterprises from all categories of the economic sector have embraced the blockchain technology, such that almost anything you can think of in the service and goods industry, has a blockchain / decentralized practical use case equivalent. Soon, individual freelancers may decide to operate the smart contract service to give technical advantages in the competing world.

ICOs and offline businesses

ICOs are usually conducted over an internet enabled platform, as it requires very little cost compared to its counterpart, IPOs. This unregulated method of crowdfunding might just be what many would-be entrepreneurs need to hack the funding required to kick-start their projects.

Investors nowadays are concentrating their resources on the more proliferating and reward centered cryptocurrencies. Entrepreneurs would stand at an advantage to exploit the jaws-dropping billions being raised in ICOs market throughout the globe.

Blockchain technology or decentralized networks have spanned the various sectors of the economy, viz;

  • Information and communication
  • Finance and insurance
  • Professional, scientific and technical activities
  • Electricity, gas, steam, and air conditioning supply
  • Arts, entertainment, and recreation
  • Education
  • Wholesale and retail trade
  • Human health and social work activities
  • Agriculture, forestry, and fishery
  • Accommodations and food services
  • Transportation and storage
  • Manufacturing
  • Real estate activities

It is reportedly revealed that the blockchain startup enterprises have spanned over 37 product and service categories to include: Infrastructure, Content management, Financial services, Data analytics, Exchange and trading, Investment and portfolio management, Consultancy, etc., to mention but a few.

As well known, blockchain ICOs have modeled after traditional IPO structures which have been an essential aspect of modern capitalism. Speculations are the driving force in the ICO convention where profit-making consolidations are in favor of both investors and entrepreneurs.

For offline businesses to stay without an online presence would be a shock in this era of technological disposition and places them at a disadvantage. SMBs willing to conduct unregulated crowdfunding to improve service and product delivery do so with an inclination to blur the barriers of their inherent scope of operations. However, those enterprises hoping to stay relevant in the market structure in the coming age would need to upgrade their modal façade to include internet-based layouts for their operations.

Lately, having an online presence is almost mandatory, as trade volumes have shifted from traditional business model to brick and click operational models. These days, being tech savvy is no longer a crucial requisite to operate an internet-based venture, all you need do is subscribe to any DIY tutorial or dummy tutorials to get started.

But for blockchain based platforms, it gets a little techier. The bottom-line is; for offline businesses looking to subscribe to ICO method of crowdfunding their projects, a little research is in place to get around the technical details involved which include;

  • Website development,
  • A concise whitepaper detailing project technicalities,
  • A proactive ICO campaign team,
  • A blockchain host network (if anchoring to an already existing blockchain service provider to generate tokens),
  • A blockchain development team (if building a blockchain platform from scratch)
  • A social media presence to mass educate the internet populace on their products and services.

In conclusion, while it may seem appropriate or beneficial for an offline business to pursue a decentralized platform for organizational expansion and impact, it may come with unexpected challenges that may ultimately affect its productivity.