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| comment | | "parent_author":"",<br>"parent_permlink":"bitcoin",<br>"author":"dorming",<br>"permlink":"what-do-we-know-about-the-past-ico-and-how-to-regulate-future-ico",<br>"title":"What do we know about the past ICO and how to regulate future ICO",<br>"body":"![bauGzLwPUmW56QHS8VOT0Uwmw8zRivebSqz92OgV.jpeg (https:\/\/steemitimages.com\/DQmdGftiBLAmrpfQytmvaDkKLGUraLwjSHHGikr6T19aghf\/bauGzLwPUmW56QHS8VOT0Uwmw8zRivebSqz92OgV.jpeg)\nThe British audit and consulting company EY (formerly Ernst & Young) published an ICO study,<br> having considered a total of 372 projects.\n\nAnalysis of investments from the 1st quarter of 2015 to November 2017 leads to the total amount of raised funds in the amount of $3.78 billion,<br> twice the volume of venture investments in blockchain projects. In addition,<br> another $400,<br>000 million were collected by companies registered in China,<br> which were obliged to return funds to investors after the September ban on ICO. And if for two years (from July 2015 to March 2017) investments increased by $ 190,<br>000,<br> then in April last year there was a sharp jump,<br> ICO investments increased from $290,<br>000 to $1.05 billion in 3 months,<br> and by November 2017 increased by 4 times. However,<br> since the end of last year ,<br> the volume of the ICO market has been falling,<br> and fewer projects are achieving the stated goals: in June 2017 \u2014 93%,<br> in November \u2014 23%.\n\n\nAt the same time,<br> the majority of ICOS were held in the US ($1.031 billion),<br> China ($452 million,<br> including Hong Kong) and Russia ($310 million). As for the regulation and support of the blockchain industry,<br> other countries are in the lead. The study shows that from 2008 to 2015,<br> regulators did not pay attention to the crypto industry. The very first to support ICO in 2016,<br> Singapore,<br> Switzerland and the Isle of man. In the first half of 2017,<br> Russia also had the status of a cryptocurrency-friendly country. Of these States,<br> the Isle of man has not changed its position and continues to actively support the industry.\n\n\nThe regulators of China,<br> Japan,<br> Malaysia and Russia were the first to discuss the crypto-industry and warn about risks in 2016. At the same time,<br> in January 2017,<br> Japan first began to regulate the crypto-region in accordance with existing laws,<br> since June,<br> the United States and Canada joined this scheme,<br> and since September,<br> Singapore,<br> Hong Kong,<br> Australia,<br> Estonia,<br> New Zealand and Lithuania have begun to regulate according to the laws of the country and in accordance with the nature of crypto-projects.\n\nThe most successful blockchain projects are implemented in the field of blockchain infrastructure development,<br> second place-Finance,<br> third \u2014 social networks,<br> content and advertising,<br> and the fourth leader was the industry of games and virtual reality.\n\n\nMost ICO projects use the existing blockchain platforms,<br> and according to ICO Watch List for December 2017,<br> the most popular was the Ethereum blockchain,<br> which launched 77% of the ICO reviewed. 13% of the projects created their own platforms,<br> another 4% used Waves.\n\n\nThe risks identified in connection with the ICO relate to smart contracts,<br> which prescribe the functionality and terms of use of the token and may contain hidden conditions or errors in the program code; unreliable token evaluation,<br> which is based on the \"loss of profit syndrome\" (fear of missing out,<br> FOMO),<br> and not on the forecasts of the development of the project and the nature of the token; and increasingly common hacker attacks.\n\nAs for the latter,<br> the study revealed that more than 10% of the funds collected during the ICO are lost due to fraud. The founders of the project focus on attracting investors,<br> not on security,<br> because the attacks are often subjected to the loudest ICO: hackers are attracted by the volume,<br> rush,<br> lack of centralized management,<br> irreversibility of transactions and information chaos. The most popular type of attack by 2017 was phishing,<br> followed by a frequency of DDoS attacks,<br> hacking of the site or application,<br> cyber attacks through employees of the company,<br> IT infrastructure or investors,<br> as well as hacking of exchanges and purses.\n\nRisks for investors may be associated with the nature of the project,<br> even if it is not a Scam. Most projects have no reason to use blockchain and cryptocurrencies,<br> so many do not move from the idea stage to implementation,<br> or implementation fails. Projects that still present a planned product often start accepting Fiat currency,<br> reducing the value of their token.\n\nWhite paper of most projects are full of clich\u00e9s that attract inexperienced investors,<br> but do not say anything about the essence of the project. The most common of them are \"a new generation platform\",<br> \"the first project releasing a multibillion \u2014 dollar market\",<br> \"a decentralized market that transfers control into the hands of users\",<br> \"we create a community\/ecosystem\/economy\",<br> \"no corrupt Central government\",<br> \"the most underrated token\".\n\nICO PlexCorps,<br> whose assets were frozen by order of the SEC in connection with the violation of the securities law,<br> used the following wording: \"the world decentralized cryptocurrency of the next generation,<br> which will expand the possibilities of application and increase the number of users,<br> simplifying use as much as possible.\"\n\nReturning to the problem of token valuation,<br> researchers believe that today it resembles the value of gold or fashion collections when a limited supply generates high demand. In most cases the popularity of a new cryptocurrency is associated with the hype,<br> as the White paper and the technique of licensee \u2014 fixed-price token and issue or not fixed,<br> when the price of the token and issue set after ICO. At the same time,<br> the second type discourages investors due to uncertainty in the total amount of financing.\n\nThe traditional token valuation system specified in the study is based on parameters that are difficult to determine at the stage of development: the number of tokens (T) and their turnover in a certain period (V) in relation to the price (P) and the volume of services (Q) on the platform for the same period: TV = PQ. In addition,<br> the very nature of the token is dual and makes it difficult to assess: investors expect growth in the price of cryptocurrency and the number of buyers while reducing the cost of services that it pays.\n\nAt the end of the work,<br> the authors propose a set of rules for each of the parties involved,<br> which,<br> with coordinated \"allied\" actions,<br> will turn the blockchain into an effective tool for raising funds for quality projects.\n\nSo,<br> the founders must provide a clear rationale for the use of the blockchain and its own token,<br> to make the process similar to IPO ICO to balance the price of the token to verify that the tools and personal information of investors is kept safe during and after the ICO,<br> to use a transparent legal structure,<br> thus make sure compliance with legal standards not only in the country where the project was,<br> but in all areas where the planned activities and the use of the token.\n\nInvestors must first ensure the transparency of the public blockchain,<br> analyze the code of the smart contract and the platform,<br> which should be in the public domain,<br> and invest \"smart money\" without succumbing to the \"fear of losing profit\".\n\nFrom the regulators want to associate crypto terminology with existing notions,<br> and only in extreme cases to introduce new terms,<br> standardizing minimal reporting requirements,<br> protect the rights of the holders of the tokens until they are used to pay for the platform,<br> to regulate the circulation of tokens,<br> including changes in emissions and functionality and interact with regulators of other jurisdictions,<br> at least with the jurisdictions,<br> to the sphere of influence which is the largest part of the ICO and to which belong the majority of investors and kryptomere.",<br>"json_metadata":" \"tags\":[\"bitcoin\",<br>\"steem\",<br>\"crypto\",<br>\"money\",<br>\"blockchain\" ,<br>\"image\":[\"https:\/\/steemitimages.com\/DQmdGftiBLAmrpfQytmvaDkKLGUraLwjSHHGikr6T19aghf\/bauGzLwPUmW56QHS8VOT0Uwmw8zRivebSqz92OgV.jpeg\" ,<br>\"app\":\"steemit\/0.1\",<br>\"format\":\"markdown\" " | | vote | "voter":"dorming",
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