Initial Coin Offerings have become an all-important feature in the blockchain industry. Most Fintech investors and those from other sectors or developers are constantly involved with one ICO or the other, hence all the rage. The need to come up with new projects who depend on the blockchain technology to gain economic importance in the cryptocurrency community and drive for mainstream adoption is crucial and takes a lot too.
Every ICO require some kind of expenditure, if an impact must be made to achieve the goals and objectives, the developers must ensure that they cover every base, and to this point, a comprehensible expenditure structure is drawn to achieve success.
Budgeting and the roles they play in any startup are essential in the planning process, and therefore should never be undermined. However, we can look at it from many angles; we would consider three elemental views: Is budgeting before launching a Coin Offering necessary? Do financial or accessorial budget count in the ICO planning process? Is budgeting required during the token sale proper once the token sale is launched?
There are different phases an Initial Coin Offering must go through before the objectives are achieved, depending on what route is taken. Whether you choose to do an ICO all by yourself, or with family and friends, or even within a community of crypto enthusiasts as supporters and carrier of the project, along the timeline of the project, the ICO would go through some modification and evolve along its roadmap. This is so because there are no constants, eventually, developers simply run scenarios to account for variables and possible adjustments that could be made.
Firstly, before we talk about whether or not ICOs require finance to be successful, it’s a given that before the explosive stardom of blockchain-token offering, and tokenization of real-world asset, it would have been a fair fight to put up an Ad on the internet and attract people to your website, almost at no cost. Remember it must cost you something no matter how little, except you have all it takes, which will include a web server to host your site, unlimited power supply, a bunch of mining equipment, etc.
You get the picture; even with the aforementioned materials, they all require funds somehow and that technically involves budgeting. But let’s take it you want to start an ICO and you have no funds, or have just a website. The challenge is meeting your objective using blockchain technology, which is why you started the token sale event in the first place. After all, no blockchain no initial coin offering.
Nowadays, blockchain enthusiasts come in three different categories; the ‘developer’, the ‘investor’ and the critic. So whichever one you belong to, whether or not funds are required to run a token sale event is a function of perspective. But looking from those interstices, it could be agreed upon that one may have an advantage over the other with regards to expertise, public influence, and experience.
A tech developer who understands and can program the blockchain system proficiently, will be at an advantage and can simply start off his project at no cost at all; wait, did I just say at no cost at all? Well given that blockchain technology is quite an impressive and robust system, it takes a lot to code and account for individual variables of the platform, even if it were a simple peer to peer transactional system log to be designed, – remember the blockchain is a decentralized record book that is distributed among multiple nodes (computing devices) across the internet.
So, having a spreadsheet that contains records of transactions between two individuals, say for example from Mr. A to Mr. B; the system (digitized), records the activity between the two parties, that Mr. A sent a particular amount of data to Mr. B on a particular date and time (timestamp).
However, the system has to be secure enough to prevent tampering by any member of the transaction and more so, there need to be witnesses to ascertain the transaction took place and this witness can be called upon at any time to verify the data, even if it were a neutral party.
Well, you must have understood all that by now, on this side of the equation we are dealing with a developer who wants to start an ICO to raise funds for a simple peer to peer transaction. It would be easy for the developer to develop an MVP (minimum viable product) to showcase his proficiency.
This alone with a website and a few Ads on social media platform can be sufficient for initial funding (pre-sale of tokens) or what is mostly referred to as pre-ICO. At this stage, the project developer provides hypothetical reasons why investors should be interested in the startup.
However, no matter how skillful the developer is, the blockchain and its community are constantly evolving, so except the developer is coming up with a novel undertaking, with an entirely new blockchain and all that, having zero $ account balance for the project would be quite the challenge.
So that’s even for the blockchain developer who understands the nitty-gritty of the system, how much more tough would it be for an ordinary enthusiast or a traditional venture capitalist who is willing to sponsor the development of a decentralized ledger technology or develop one.
Well, every piece of material whether physical, abstract or intangible, are considered inputs and are usually classified under budget estimates. But to be clear, budget not only refers to finance, it also revolves around the expenditures the ICO considers as important, necessary or crucial to the development of their project.
Looking through all the ICOs that have been conducted to date, one would observe that they all have a specific amount in mind that would be capped, usually estimated and falls within a range. And often time, when the token sale doesn’t meet the minimum criteria, no matter how much potential the project has or their visionary approach to the blockchain industry the idea may be, they would have to shut down the project.
Moreover, a financial budget helps take care of labor and service costs, equipment and maintenance costs. On the other hand, an accessorial budget full under the category of items that aren’t essential and without which the idea can still succeed.
Finance is important, especially when a startup wants to get ahead and quick, eliminating the drag most contemporary enterprises experience in their early stage of development. Finance happens to be the one of the most important factors, especially taking a 65% – 75% value in developing any project. However, needing finance to kick off a project might not be so all-important after all, if the project on its own can attract supporters due to its importance and veritability.
Well, if budgeting was somehow skipped before launching the token sale, and funds are now coming in, what happens next? You will need to upgrade your publicity, and activity at least, more social media advertisement and hiring of more experts to handle very important aspects of the enterprise to ensure its success.
Usually, that’s what the pre-sale funds are meant for, to either begin the MVP or facilitate the development of an alpha version, to bolster up community confidence.
To answer the question, it would be a Nay when an ICO wants to succeed and there are already established products by other competing enterprises, especially in line with the proposed objectives. It could also be a Yes if the project is offering what the blockchain predecessors haven’t offered, as it would require minimum publicity, and if it is cost-effective, there are enough venture capitalist who would want to stake their investment in the tokenized asset.
On one hand is the developer trying to start up a Decentralised Ledger Technology (DLT) venture and on the other are a team of experts, critics, and regulatory headhunters. Given the history of ICO and some scam experiences, the changes within the system are rather rapid. So it would require a level of advantage to execute an ICO without a sophisticated budget, and simply leveraging on other aspects of strength only.