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What is a pre-ICO? How does it differ from an ICO?

Posted on by Shipra

What is a pre-ICO How does it differ from an ICO

Pre-ICO, as the name implies, is a presale event held before the ICO. It’s a purchasing event at even lower pricing for a limited number of token launches. As a result, the development business may raise funds for its Initial Coin Offering platform or utilise it to finish its product. Some firms, such as Telegram, which raised $1.7 billion in 2018, and Datum, which raised $1.5 million in 2017, have had very successful presales. Pre-ICO fundraising goals are often smaller than the main ICOs, and tokens are typically offered at a lesser price.

Buyers benefit from incentive programs and potentially earn a significant ROI if they sell their crypto-tokens at a higher price. Pre-sales have prevailed since the advent of Bitcoin, the world’s original and oldest cryptocurrency. The bulk of them has become millionaires.

Presale

A pre-ICO presale, also known as an ICO presale, is a coin launch or sale event held before the general public may participate in an ICO. One disadvantage of ICO presales is that early investors or adopters dump tokens as soon as they become exchange-tradable. Because they obtained the tokens for less than the main ICO price, they often sell them at the ICO price, resulting in large gains while adversely impacting the price for ICO participants.

There are two kinds of pre-sales:

  • Investor-only Pre-sales 

It is only offered to wealthy investors willing to spend large quantities of money on the project. While the initial investment is substantial, investors will benefit from price increases once the tokens are available on the open market.

  • Open-for-all Pre-sales

These allow retail investors to purchase a project’s token before it becomes accessible to the general public. Nonetheless, the bulk of tokens remains unsold due to a lack of faith in ongoing activity.

How does Pre-ICO differ from ICO?

The primary distinctions between a Pre-ICO and an ICO (in most situations, but not all cases) are as follows:

  • Pre-ICO Tokens are typically distributed at the time of the ICO. Therefore pre-ICO customers may have to wait much longer to obtain the Tokens.
  • A Pre-ICO has a very modest quantity of real Tokens available for purchase. The final ICO will contain a much larger amount of tokens.
  • Pre-ICOs are often conducted when the underlying technology for the Tokens has not yet been implemented. ICOs are usually undertaken much later in the process when the product is ready for testing.
  • A Pre-ICO is often accessible to a considerably smaller number of individuals than an ICO.

How can you participate in a cryptocurrency pre-sale?

How can you participate in a cryptocurrency pre-sale

You may participate in a cryptocurrency pre-sale in three simple steps:

  • Find a pre-sale

Browse the pages of CoinMarketCap or CryptoTotem to see which projects are holding a pre-sale. We advocate completing due research and being completely informed of the project offered before making an investment decision.

  • Purchase

After you’ve made your account and wallet, all you are left to do is seek the pre-sale on your exchange’s website and buy your tokens.

  • Select an exchange

 Before opening an account with an exchange platform and depositing money, do your homework to guarantee that it is a reputable service provider. Choose well-known cryptocurrency exchanges to ensure that a reputable third party handles your funds.

Three pre-sales that grew into megaprojects:

  • Filecoin (FIL): 

FIL debuted with a pre-sale price of $5 and has since risen to $18.96. It debuted on the market in 2017 for $11.5 and has since increased by 279 per cent above its pre-sale price.

  • Calyx (CLX) – Coming Soon:

This project has created a reputation by developing a liquidity sourcing pool that enables it to deliver liquidity from many sources, making cryptocurrency swapping simpler. It is creating headlines because CLX holders will be entitled to a share of the fees transactors pay, enabling them to supplement their income.

  • Tezos (XTZ): 

One of the most well-known instances of a successful pre-sale is Tezos. It began with a pre-sale price of $0.47 and raised over $200 million during the ICO. XTZ sells at $3.05, representing a 549 per cent increase over its pre-sale price.

How does it work?

How does it work

The Pre-ICO sale often takes place a month or two before the ICO, although it might take up to a week or longer. Tokens are sold to investors once their prospective audience has been verified. There is often a minimum and maximum value per individual.

It may seem that obtaining a pre-ICO is simple, but it is not. They are typically provided to a small number of investors and may be completed in seconds. So, if you’re interested in the pre-sale, it’s always a good idea to keep up with the newest developments.

Pre-sales also assist developers in spreading the word about their products and gaining additional marketing attention. The event will be critical in attracting investors when the ICO platform goes live.

Pre-sales have prevailed since the beginning or advent of Bitcoin, the world’s original and oldest cryptocurrency, in 2009. It was a great opportunity for investors who enlisted at the time and maintained their money for more than a decade. The bulk of them has become millionaires now.

Disadvantages of Pre-ICO

Pre-sales are analogous to accessing the bottom level of a still-under-construction skyscraper. There is no way to tell if it will attract investors in the future until it is completely completed. While there are some advantages to purchasing crypto tokens during a pre-sale, such as a reduced entrance barrier and anticipated future gains, there are also some disadvantages:

  • Uncharted Territory

Pre-sales might be precursors to rug pulls and other frauds. Investing in anything that has not been tried or confirmed is dangerous. Not many currencies are as successful as Bitcoin and Ethereum.

  • High Volatility

 Although pre-sale prices are lower than ICO launch platform pricing, they may fall following the ICO, particularly if consumers do not perceive the underlying blockchain as creating value or addressing real-world issues. In this instance, you may lose your hard-earned money.

  • Cyber-Vulnerability 

Because most crypto wallets are custodial (kept by the exchange), nothing is protecting your funds from hackers other than the exchange’s security standards. Hackers steal hundreds of millions of dollars worth of cryptocurrency from internet marketplaces.

Conclusion

For starters, you will not hold stock in the future firm, and the ICO must be linked to a blockchain. Instead, crypto-tokens are sold in a ‘crowdsale,’ which enables anybody to purchase and support a company’s development of some new technology that is expected to shake the crypto world. 

Often, only a limited amount of tokens are available for sale in return for Bitcoins or fiat money. Companies like Ethereum and Waves have raised millions of dollars using pre-ICOs.

These tokens may then be traded or swapped for access to the finished product or service. And, since the amount of tokens launched is restricted, their value might skyrocket after the ICO, depending on the project’s performance.

The Real Potential of NFTs

Posted on by Shipra

Amidst the scams and bubbles, credible scarcity and authenticity will unlock real value in digital markets

Last week, Mark Zuckerberg announced NFTs are coming to Instagram. What does that … mean? The announcement was a word salad of platitudes, so we don’t know how the Zuck will bolt this latest thing onto his Frankenstein product structure. The good money is it won’t work — Meta is one of the best acquirers in history, and one of the least innovative. The broader, and more interesting, question is the half-life of NFTs.

As we ended 2021, NFTs were white-hot. Forty-one billion dollars hot, and everywhere. Twitter beat Zuckerberg to the NFT punch, letting tweeters use an NFT as their profile picture, Spotify is hiring for NFTs, and brands from Budweiser to Louis Vuitton are producing them. You can even buy a virtual NFT of the McDonald’s McRib. But there are signs the hype is fading. Trading is down, Google searches are down, scams and frauds are (still) up.

The sun may have passed midday on the hype cycle, but NFTs (or something similar) have real potential to be an unlock for a fundamental aspect of the digital economy.

So … WTF is an NFT? Technobabble aside, it’s similar to the deed to a house. A digital document that identifies one true owner of a digital product. Real estate deeds rely on an ecosystem of paper and electronic records, legal standards, and institutions staffed by experts. It’s worth the expense, as real estate is valuable. NFTs, or non-fungible tokens, are deeds rendered in the world of bits, not atoms. Digitally native, NFTS are (theoretically) lower cost than real estate deeds — thus they’re economically practical for digital items and lower-value property. Deeds … for anything. As private property and ownership are central to capitalism, and economic activity increasingly moves online, NFTs may become central to our economy.

You can also read : Understanding the Ethereum ICO Token Hype

Scarcity and Authenticity

NFTs offer digital commerce something the Internet lacks: scarcity and authenticity. A scarcity mentality is built into us at an instinctual level. Our cravings for sugar and fat (historically scarce) have resulted in an obesity crisis, because our instincts haven’t kept pace with industrial food production. Authenticity’s virtues are practical (we like to know where our food comes from and who we can sue if it makes us sick) and philosophical (if we buy music, is some of the money going to the artist who made it?).

Limited options for credible scarcity and authenticity have rendered digital commerce chaotic. Napster broke the barriers of scarcity that were inherent to physical distribution of music on plastic discs. The pirating of digital goods of all kinds reduces both tech profitability and long-term innovation. Google put the news media into intensive care by reproducing its content (ending scarcity), and Facebook drove another nail in the coffin by de-emphasizing the source (neutering authenticity).

Enter blockchain. Bitcoin became a trillion-dollar asset class because it cracked this code. A dollar bill is worth $1 because only the U.S. Treasury can make it (authenticity) and we trust Uncle Sam to mint a limited number (scarcity). Bitcoin’s “proof-of-work” system likewise ensures scarcity (there will only ever be 21 million bitcoins produced) and authenticity (all are tracked on an immutable public ledger).

NFTs offer the promise of scarcity and authenticity for digital goods. NFTs aren’t the only way to create scarcity and authenticity online — trusted, centralized entities such as banks (and platforms such as Twitter and Apple) do it within their verticals, and blockchain tech is evolving to address myriad environmental and security concerns. So the current implementation of NFTs may not be the best way, or even a good way (many reasons to be skeptical). But they’re … a way. A potentially widespread, inexpensive way to offer credible scarcity and authenticity online, opening up new vistas of digital commerce. Prospectors are rushing in.

Art

The world beyond crypto-obsessives started paying attention to NFTs a year ago, when digital artist Beeple sold an NFT mosaic of his daily digital images, Everydays, at Christie’s for $69 million. No asset class depends more on scarcity and authenticity than art. The Mona Lisa’s value relies on our belief that there’s only one (scarce); plus, we know it was created by da Vinci (authentic).

As deeds do for real estate, a whole industry of galleries, museums, and consultants, along with ancient documents and high-tech gadgets, props up the fine art market. We know this from the failures: A single successful forger, Pei-Shen Qian, formerly of Queens, brought down a 170-year-old art gallery and spawned 10+ lawsuits (and one Alec Baldwin podcast) with his oeuvre of fake Rothkos. NFTs offer a defense against digital forgery. Beeple’s Everydays is authenticated publicly, on the blockchain (and a less cryptic Opensea listing, with legibility brought to you by … centralization). The lower priced the art, the more it requires a scalable platform for establishing scarcity and authenticity.

You can also read : Initial Coin Offering (ICO): Everything You Need To Know!

Bored Ape

Bored Ape Yacht Club — a series of JPEGs of monkeys wearing different outfits — is no more or less risible than any other trend. There are 10,000 of them, each unique, and they’re collectively valued at $3 billion. The floor price for one is $311,000. The company behind les singes ennuyés, Yuga Labs, has consolidated its position as the dominant force in NFT-based collectible bubbles, buying up the NFT brands CryptoPunks (bored dudes) and Meebits (bored avatars) and raising $450 million at a $4 billion valuation.

Is this a JPEG ape bubble? Likely. Collectible bubbles are nothing new. Beanie Babies were individually unique, cartoonish figures produced at low cost and brilliantly marketed. In 1997, eBay sold $500 million worth in a month — 6% of the company’s annual sales. Garbage Pail Kids, Cabbage Patch Dolls, animation cells, POGS, tulips — the list goes on. Some endure, such as vintage baseball cards (outperforming the S&P 500 since 2008). There is a huge market for modestly priced art and un-bubbled collectibles that could benefit from digital scarcity and authenticity. NFTs also offer the potential for creators to collect royalties every time their art is sold in the secondary market, remedying some of the creative economy’s inequities.

How long will Bored Apes remain culturally relevant? Don’t know. They are trees, which live and die. Yet the forest is immortal.

Brands

For brands, scarcity and authenticity is everything. Chanel can sell sunglasses for $500 because they’re scarce and they’re Chanel. In exchange, the customer gets to say “I’m aspirational” without saying “I’m aspirational.” But branding goes beyond signaling wealth. Doc Marten boots say something, and Wrangler and Levi’s say something else. Oatly is not milk, but it is a statement about who you are.

People underestimate the power of brands; it’s a lie we tell ourselves. Branded beer tastes better than non-branded beer. Allergy medication is more effective after you watch branded advertisements. Labradoodle vs. Labrador, Star Wars vs. Dragon Ball, iOS vs. Android, NYU vs. Columbia — we are a tribal species, and we sort ourselves with logos. Logos that we insist are “authentic,” despite the availability of knock-offs. A robust ecosystem of intellectual property laws and institutions ensures a brand’s owners control scarcity, and NFTs augment that system in the digital economy.

Many companies are catching on to this in their own socially stunted, corporate, Zuckerbergian way. People want to show up to the Miller Lite metaverse tavern no more than they want to follow Miller Lite’s Instagram page. There’s no doubt that much of the fullness brands give to physical life is missing online.

Belongings

Every morning I put on a Panerai watch to signal my masculinity and success. I haven’t wound it in 10 years. Online I have something even more scarce: A Twitter blue check. The blue check is a digital Panerai (sort of): scarce and authentic, it signals that if you mate with me your kids are more likely to survive than if you couple with someone missing the blue check.

One of the keys to NFTs will be portability across mediums. A Twitter blue check can’t exist on Instagram, but the NFT equivalent of a Twitter blue check can — and deliver credible authenticity, thanks to that NFT deed. This is the metaverse vision of interoperability that could help make digital belongings feel similar to physical belongings.

Digital belongings exist on the internet, but there aren’t that many types of them. On Fortnite you can acquire guns and outfits. On Reddit you gain badges. Point is: There’s a lot of stuff on the internet, but there isn’t much stuff that’s yours.

Now ask yourself: How much physical stuff is yours? Think of every item in your house: books, paintings, photos, CDs, heirlooms, trophies, etc. What’s the market value of all that? As our lives move further online, so will our stuff, and we’ll need some sort of infrastructure that allows us to own it.

Money Changes Everything

I’m a capitalist and generally think that functioning markets improve lives. Bringing credible scarcity and authenticity to digital markets is a net positive — but the key word there is “net.” The flood of interest in NFTs has predictably resulted in scams and exploits. The market has cooled off recently, with the top corresponding pretty closely to former First Lady Melania Trump’s NFT scam. (She bought her own NFT through shell accounts to create false signals re the value.) When I interviewed Mark Cuban (owner of the Dallas Mavericks), he raised concerns about sports team NFTs injecting a money-making incentive between the fans and the team, replacing the emotional bond they feel with the team and players with the anxiety of a Robin Hood day trader sweating a position.

Scarcity and authenticity are powerful, and not always forces for good. Our instinctual craving for scarce sugar and fat has produced an obesity crisis, but we aren’t going to throw out the industrial food system and live off the land. Amidst the scams and bubbles, credible scarcity and authenticity will unlock real value in digital markets.

In sum, Madame First Lady Trump,

Learn the damn language: scarcity and authenticity.

Life is so rich,

Credit: Medium

Initial Coin Offering (ICO): Everything You Need To Know!

Posted on by Bhavya Dave

Initial Coin Offering

An Initial Coin Offering (ICO) is a novel fundraising mechanism employed by businesses in the cryptocurrency industry. It involves issuing a new cryptocurrency token and selling it to investors during a specified period. Similar to how Coinbase, a crypto-fiat based company, recently launched its Initial Public Offering (IPO) by offering shares of its company in exchange for funds that can be used for various projects and capital requirements. In the crypto world, a token or coin issued through an ICO is also referred to as an ICO. Token creators can sell a predetermined quantity of digital tokens at a fixed price to distribute the token in the market and raise capital for their project or personal needs.

Types of ICOs

There are two types of ICO:

1. Private ICOs:

  • Limited participation, only a select group of investors are allowed.
  • Participants tend to be large institutions and wealthy individuals due to high minimum investment amounts.
  • Companies choose this option when they need significant funding and target specific, high-value investors.

2. Public ICOs:

  • Open to everyone, targeting the general public.
  • Regulatory concerns have made private ICOs more attractive for companies.
  • Lower investment amounts to attract a wider range of participants.
  • Companies aim to raise funds from a large number of contributors.

Working of ICO

An ICO (Initial Coin Offering) is a process that demands a profound understanding of the underlying technology. The fundamental concept behind an ICO is to secure capital for the company from investors. To raise funds through an ICO, the project organizer must first define its structure. There are typically three common structures for an ICO:

1. Static Supply and Static Price: The number of tokens and their price remain constant in this model.

2. Static Supply and Dynamic Price: The price of the token is determined by the amount of funds raised during the ICO, while the supply of the token remains fixed.

3. Dynamic Supply and Static Price: The supply of the token is determined by the amount of funds raised during the ICO, while the price of the token remains fixed.

The Following Are The Steps Explaining The Working Of ICO:

1. Investment Targets:

  • Upon launching an ICO, a company establishes a value for its currency and seeks individuals interested in acquiring that value.
  • Identifying the target audience, the company creates relevant materials to attract potential investors.

2. Token Creation:

  • After identifying the target audience, the company initiates the creation of tokens.
  • These tokens are tradable and distinct from cryptocurrencies.
  • Tokens do not confer equity ownership in the company but rather provide holders with a stake in the company’s success.
  • Tokens are created on existing blockchain platforms, eliminating the need for the company to develop code from scratch.

3. Promotion Campaign:

  • The company launches promotional campaigns to raise awareness about its ICO among potential customers.
  • These promotions are primarily conducted online, as some platforms prohibit the promotion of ICOs on their platforms.
  • Despite these restrictions, there are numerous potential platforms willing to run promotional campaigns for ICOs.

4. Initial Offering:

  • Tokens are offered to investors through several funding rounds.
  • The company can utilize the proceeds from the ICO to launch new products or services, while investors can use the received tokens to access and benefit from those offerings.

The startup begins the Initial Coin Offering (ICO) process by setting up the blockchain and establishing protocols and rules. Then, the company specifies the purpose of the ICO launch. After that, the creators take the final step of checking to ensure the smooth operation of the ICOs at the time of launch. The creators will sign up with an exchange, where active or upcoming ICOs can be found. The process is similar to an Initial Public Offering (IPO) listing but with less paperwork for the company.

ICO vs IPO

When investing in an Initial Public Offering (IPO), one gains voting rights proportional to the number of shares owned. This allows shareholders to influence company decisions. However, investing in an IPO requires thorough research and due diligence, as the success of the project is uncertain. IPOs are regulated by government agencies and established companies can only raise IPOs with stable bank accounts, business records, and proper legal formats. Lawyers and banks are usually involved in IPOs.

In contrast, Initial Coin Offerings (ICOs) do not require a finished product, leading to increased risk. However, some ICOs do have working and testable products, which should be considered when investing. Unlike IPOs, ICOs are not regulated, making it easier for developers to take the money and run away, creating a “rug pool” scam. Any startup or new entity can launch an ICO, as it only requires a new idea and does not follow a specific legal format. Programmers and the internet are usually involved in ICOs.

IPO

  • Initial Public Offering (IPO) involves opening a bank account for security purposes.
  • IPOs are a conventional method for private companies to raise funds under government supervision.
  • IPOs are subject to strict regulations imposed by the regulatory bodies of the respective countries.
  • An IPO provides security in the form of shares, representing the ownership rights of the investor.
  • IPOs require a substantial amount of time to obtain funds from a company, as they involve extensive due diligence processes.

ICO

  • Initial Coin Offering (ICO), a new form of fundraising, requires an account with an exchange or a wallet to apply for offerings.
  • ICOs are characterized by low regulations and low to moderate transparency, with the exception of security tokens.
  • Cryptocurrency utility tokens are issued during ICOs, except in cases where security tokens are taken as equity.
  • Cryptocurrency tokens can be issued quickly, while security tokens typically take longer to issue due to regulatory requirements.

Related: ICO Vs IPO: What’s the Difference?

How to Create ICO?

How to Create ICO

The steps to create an ICO are:

1. Whitepaper:

  • A statistical explanation of the coin’s purpose and how it differs from others.
  • Includes information such as marketing plans, problem-solving capabilities, unique features, development fees, developer wallets, future plans, and long-term goals.

2. Marketing:

  • Challenging due to past influencer scams and rug pulls associated with ICOs.
  • Involves attracting investors to understand the coin’s purpose and secure funding.
  • Popular advertising methods include targeted advertising on crypto platforms, joining relevant groups, and promoting through influencers.

3. Selling on Platforms:

  • Platforms allow for the collection of pre-sale funds and subsequent distribution of coins to investors.
  • Investors trust third-party platforms rather than solely relying on the coin’s developers.
  • Simplifies the coin launch process.

Related: 15 Best ICO Platforms to Invest In 2024

ICO Regulations

To enhance the capitalization of the cryptocurrency market, the regulation of the ICO space is essential. The Russian Association of Crypto-Currency and Blockchain (RACB) has taken the initiative to establish uniform standards for companies participating in ICOs. Currently, the lack of uniform standards and the absence of new institutions to delineate the relationship between cryptocurrencies and their economic role and significance pose challenges. However, governments in the future are expected to create favorable conditions for ICOs, fostering innovative activity, diversified business development, and increased income generation.

Advantages of ICO

  • Liquidity: Lack of funds is a frequent obstacle for individuals seeking investment opportunities. ICOs provide significant liquidity to investors, eliminating many limitations imposed by traditional funding sources.
  • Decentralization: Most ICOs allow investors to transfer funds at the time of purchase, ensuring that many individuals can contribute at any time. Early investment is advantageous as it allows contributors to pay less and avoid premiums.
  • Ease of Funding: ICOs offer a straightforward method for fundraising. Anyone from anywhere in the world can participate in the investment process, simplifying fundraising and allowing projects to acquire the necessary funds.
  • Online Marketing: ICO tokens are marketed online, reaching a wide audience. Potential buyers can learn about ICOs through the organization’s website, forums, and other platforms.
  • Positive Impact: The ICO model promotes the development of decentralized applications, as these applications require numerous users. When an organization launches a public ICO for decentralized applications, it encourages adoption and growth.
  • Quick Fund Availability: Companies can raise funds without extensive paperwork. This process is rapid, enabling funds to be made available quickly, which is crucial for building a company’s infrastructure at an early stage.
  • Traceability: All ICO transactions are conducted online and can be easily traced, allowing potential investors to conduct thorough research. Plans for the coming months and year are transparently visible.
  • High Liquidity: ICO tokens have high liquidity, meaning they can be bought and sold easily. Their digital nature eliminates the need for physical exchange, and investors can monitor their investments closely.
  • High Returns: Some ICOs offer high returns, as they begin with a low initial value that increases over time. These potential returns make ICOs attractive to investors.

Disadvantages Of ICO

Concerns Surrounding Initial Coin Offerings (ICOs):

1. Due Diligence:

  • Lack of formal ICO audit processes.
  • Flaws in white papers may remain undetected until substantial investments have been made.
  • Some organizations include clauses requiring contributors to accept project abandonment risks.

2. Volatility:

  • Rapid fluctuations in token prices within seconds.
  • High price volatility poses risks for investors and may impact their portfolios.
  • The competitive nature of ICOs in the market can lead to unpredictable price changes, making them more volatile compared to other investment options.

3. Unlawful Activity:

  • Growing concerns about the potential use of ICOs to finance terrorist organizations or criminal activities.
  • Cryptography’s hash functions conceal the identities of parties involved, making it easier for unlawful activities to occur.

4. Conflict of Interest:

  • Founders’ lack of personal financial risk in ICO transactions creates a conflict of interest.
  • Allocating tokens to founders without lock-up periods misaligns incentives.

5. ICO Scams:

  • Investors often invest in ICOs with the expectation of quick and high returns.
  • While some successful ICOs have delivered high returns, investors often overlook ICO scams, leading to financial losses.
  • Scammers take advantage of the lack of paperwork and ease of fundraising in ICOs, targeting unsuspecting investors.

6. Lack of Clarity:

  • Unclear regulations regarding the treatment of profits from ICOs in various jurisdictions.
  • Ambiguity in tax accounting and tax treatment of ICOs.

Read Also: Build MiCA-Compliant Neo Banks in Europe

Examples

  • Ethereum: Launched in 2014, Ethereum raised $18 million in just 42 days with an initial token price of $0.31. It remains the most valuable cryptocurrency ecosystem, providing technology for building distributed applications through smart contracts.
  • Tezos: Despite raising $232 million in its ICO in July 2017, this project faced numerous delays in token distributions. As a result, it wasn’t able to achieve its desired outcome.
  • EOS: EOS launched in 2017 with an initial token price of $0.925. This blockchain raised $185 million in just five days. It positions itself as an alternative to the Ethereum network.
  • NEO: NEO initially came into existence between 2015 and 2016 with an initial token price of $0.032. This ICO yielded substantial returns in 2016, largely attributed to the support and confidence it garnered from high-profile entities.

What To Consider Before Investing In An ICO?

What to Consider Before Investing In An ICO

To protect your financial interests, exercising caution when assessing an Initial Coin Offering (ICO) is imperative. Here are some key factors to consider to avoid the risk of monetary loss:

1. Project Goals Assessment:

  • Scrutinize the project’s goals and objectives for realism and achievability.
  • Beware of unrealistic promises and timelines that might indicate over-ambition.
  • Legitimate projects will have well-defined and practical goals aligned with their resources and expertise.

2. Developers’ Reputation and Transparency:

  • Research the developers behind the ICO for a proven track record in the cryptocurrency industry.
  • Examine their reputation for transparency and openness.
  • Look for red flags such as past failures or questionable dealings.

3. Legal Terms and Conditions Review:

  • Thoroughly review the ICO’s legal terms and conditions for clarity, comprehensiveness, and legal compliance.
  • Pay close attention to clauses related to token distribution, refunds, and dispute resolution.
  • Consider seeking legal counsel to understand your rights and obligations as an investor.

4. Escrow Wallet with Multiple Keys Verification:

  • Confirm that the funds raised during the ICO are stored in an escrow wallet with multiple keys.
  • This setup ensures that no single entity has control over the funds, reducing the risk of misappropriation or fraud.
  • The escrow wallet should be managed by a reputable third-party custodian.

5. Professional Advice:

  • Enlist the help of cryptocurrency experts, such as financial advisors or analysts specializing in ICOs, to gain valuable insights and guidance.
  • These experts can evaluate the project’s potential, assess the risks involved, and assist you in making informed investment decisions.

To mitigate the risk of investing in deceptive or unsustainable Initial Coin Offerings (ICOs), investors should adhere to a strategic approach. While the cryptocurrency market’s volatility presents inherent risks, even for promising projects, prudent investors can minimize potential losses by conducting thorough research, exercising caution, and investing only disposable funds.

The Difference Between Coin And Token

In the cryptocurrency realm, coins and tokens, though often used interchangeably, possess distinct meanings. Coins, exemplified by Bitcoin, Ether, Ripple, and Litecoin, are cryptocurrencies built on their own decentralized blockchain networks. These coins serve specific purposes, such as a store of value or a medium of exchange. In contrast, tokens utilize existing blockchain networks as their foundation. Each project has its own interpretation of tokens, as exemplified by the ERC20 standard on the Ethereum blockchain. The fundamental difference between coins and tokens lies in their underlying structure: coins operate on their own dedicated blockchains, while tokens leverage pre-existing ones. Typically, coins and tokens are listed on separate cryptocurrency exchanges. Grasping this distinction is essential for navigating the world of cryptocurrency effectively.

ICO Development Company

Conclusion

In conclusion, understanding the intricacies of an Initial Coin Offering (ICO) is crucial for navigating the rapidly evolving world of cryptocurrency. Whether you’re asking “What is an Initial Coin Offering?” or looking at specific initial coin offering examples, the key aspects such as ICO vs IPO, how to create ICO, and the various types of ICOs are essential knowledge. With numerous ICO listings available, it’s important to discern which projects are worthwhile. ICO development plays a pivotal role in shaping the success of these ventures. Companies like SoluLab are at the forefront of this field, offering expert guidance and innovative solutions for your coin initial offering needs. Explore our comprehensive ICO initial coin offering list to stay informed and make educated decisions in this dynamic market.

FAQs

1. What is a Initial Coin Offering (ICO)?

An Initial Coin Offering (ICO) is a fundraising method used by startups to raise capital by issuing digital tokens in exchange for cryptocurrencies like Bitcoin or Ethereum.

2. How does an ICO work?

An ICO works by allowing investors to purchase newly issued tokens from a project in its early stages. These tokens can represent various utilities or assets within the project’s ecosystem and can often be traded on various crypto exchanges.

3. What are some initial coin offering examples?

Examples of successful initial coin offerings include Ethereum, which raised millions in its ICO, and Filecoin, which became one of the largest ICOs in history by raising over $250 million.

4. What is the difference between ICO vs IPO?

An ICO (Initial Coin Offering) is used to raise funds for cryptocurrency projects by issuing digital tokens, whereas an IPO (Initial Public Offering) is the process of offering shares of a private corporation to the public in the stock market.

5. How to create an ICO?

To create an ICO, you need a well-defined project, a whitepaper outlining the project’s goals, a legal framework, a strong development team, a marketing strategy, and a platform for issuing and managing tokens.

6. What are the types of ICOs?

The types of ICOs include Public ICOs, open to the general public, and Private ICOs, restricted to a select group of investors. Each type has its own benefits and regulatory considerations.

7. Where can I find an ICO initial coin offering list?

ICO listings can be found on various platforms and websites dedicated to tracking upcoming and ongoing ICOs. These lists provide information on project details, funding goals, and timelines.

8. What role does ICO development play?

ICO development involves creating the technological infrastructure, legal framework, and marketing strategy necessary to successfully launch and manage an ICO. Companies like SoluLab specialize in providing comprehensive ICO development services.

Understanding the Ethereum ICO Token Hype

Posted on by Shipra

Understanding the Ethereum ICO Token Hype

Tokens and the Future of Crypto

Since the advent of bitcoin, the overall excitement around decentralized technologies has grown exponentially. The imagined possibilities of what these new systems will do for humanity have only just begun being explored in-depth. With a market capitalization of currently about ~$40 billion at the time of this writing, bitcoin remains the most valuable, and widely adopted cryptocurrency to date.

However, the rise of cryptocurrencies has birthed a few new breadwinners for our growing crypto family of public blockchains — specifically Ethereum (ETH).

Ethereum, which broke onto the scene only within the last 2 years, thanks to a very successful crowd sale, has since experienced astronomical gains…With an immense uptick in adoption from developers, institutions, and some of the largest enterprise-level organizations in the world, such as BP, Toyota, Intel, Microsoft, and more.

The core draw of generalized public blockchains like Ethereum is not purely a technical attraction, but more specifically “socio-technical”. The most disruptive aspect, thus far, for Ethereum, has been the growth of “tokenized assets” being created on the Ethereum public chain to create incentivized platforms; wherein the owners of the token use that asset to interact with and utilize the platform itself.

Read also: 7 Most Successful ICOs of All Time

The incentives for these tokens have many layers. Though the initial draw to these tokens is technical: the real benefit of tokens is the societal impact they have on the creation of new businesses, and raising funds in a borderless, global manner…without having to ask permission. Let’s jump into the specifics…

Smart Contracts 101 — An Introduction to Irrational Exuberance

If you read our previous article on our introduction to Ethereum, you should know by now that the project has the potential to solve major efficiency problems across a plethora of pre-existing industries; as well as create wholly new owned industries.

At the center of Ethereum lies the EVM or “Ethereum Virtual Machine”, a decentralized computer that can execute “smart contracts” (think mini-applications) that are submitted to run on the Ethereum public chain.

These contracts are self-enforcing, meaning that they will run exactly as pre-programmed, without the ability of manipulation or censorship, retroactively (though some will argue that this aspect isn’t true due to past events, that’s a discussion outside the scope of this post). This poses a tremendous advantage, allowing programmers to automate many processes throughout e-commerce, finance, real estate, legal contracts, and more.

Imagine an escrow system where “John” sells a product to “Mary”; a smart contract will securely store Mary’s payment, and will release it to John after the confirmation of delivery is made by an outside oracle. This eliminates the need for third parties to oversee the transaction (which creates additional counterparty risk by adding another trusted agent to the transaction).

Read also: How Do Smart Contract Applications Actually Work

Similarly, one can imagine a smart contract that automatically settles countless transactions in the banking sector, eliminating the need for costly settlement systems like the SWIFT network; systems that not only expend a large number of monetary resources but also precious human capital and intellect as well; intellect that could be best utilized in other ways than simply moving value from Point A to Point B across the globe.

Enter ERC20 Tokens

One of the main capabilities of Ethereum is that it allows a user to create their own token. A token is a representation of value, a sort of digital asset (dasset). The Ethereum developers decided to standardize this process, and so the ERC20 ‘Token Standard’ was created. This templated-contract standardization contains a series of functions that enables the issuance, distribution, and control of the assets in a formalized, standardized manner.

A token standard allows for the ease of interoperability between DApps (decentralized applications built on the Ethereum public chain) and the tokens built by the programmers.

What is an Ethereum Token sale?

Many developers have chosen Ethereum as the main platform to kickstart new projects; at the center of this, we have ICOs, which stands for “Initial Coin Offering” (there are other names as well but this is the most prevalent), similar to IPOs (initial public offerings, minus all the securities stuff, but that’s an on-going point of contingency).

ICOs are essentially a fundraising mechanism that allows a person/investor to receive a token in exchange for another well-known digital currency like Ether or Bitcoin. Typically, ICOs on the Ethereum network issue ERC20-compatible tokens to its users via smart contracts (barring the organization/individual holding the ICO from creating more tokens than originally specified in the initial contract); this allows developers to take advantage of the security the Ethereum protocol provides, minus all the additional technical overhead and complexity. Without having to worry as much about security (the initial token contract being secure is still, of course, a top priority) developers can keenly focus on the application layer; creating a more refined user experience to aid in the adoption of their platform/project.

It is also the norm that each new team that hopes to raise funding via an ICO launch platform also presents a ‘whitepaper’: a document explaining in detail the pitch of the future company and platform, going as far as to describe in detail the technology behind the proposal itself.

The various formats in which an individual or organization can hold an ICO crowd sale are ever-evolving, however; but, we’ll find a fair methodology that ensures optimal token distribution, and doesn’t create a quick cash exit, burning crowd sale participants.

What’s Got People Excited?

The initial appeal of ICOs should be fairly easy to see. Due to the borderless and decentralized nature of public blockchains like Bitcoin and Ethereum — the ease of transferring and moving wealth globally becomes almost effortless.

Now, because those transfers are effortless and permissionless, the barrier to entry for investing in a good company/venture is now freely available to everyone — even your gardener.

The tokens themselves do not offer the holder any particular rights or actual equity in these projects; however, it does enable the ability for individuals to speculate on the adoption and eventual real-world usage of those systems, creating liquidity and the ability for developers to fund their project and bring it to fruition. It also allows those users/investors to access any platforms or features that the developers create in the future with the token (think of it like an API key, that you pay for, Balaji puts that ever so succinctly).

With tokens, entrepreneurs have the ability to open up their projects to a global audience, allowing them to attract and raise funds from savvy investors all over the world salivating for the next “big thing” in tech. Technical Expertise, Developer Evangelism, and Product Marketing play a key role in helping ICO holders to establish a base of early adopters and fuel the initial bout of speculation to get the project off the ground (and enough attention to begin trading on prominent exchanges).

Token Sales Thus Far

We’ve seen many high-profile ICOs thus far. With companies like Storj, raising $ 30 million for their decentralized cloud storage platform; Brave raised a stagging ~$34mill in roughly 30 seconds; Aragon raised ~$25 million in about 20 minutes; and Gnosis, the originator of the Reverse Dutch Auction, who raised $12million in about 12 minutes.

But, we also can’t forget most recently, Bancor, who raised an astounding $140million in just a few hours (insert gasp here).

If those figures are stagging and surprising to you, you’re not the only one. But, who’s to say if these are proper valuations or not? This is the first time in history we’ve been given this ability to raise from a global audience, almost instantly. Perhaps these numbers are only a drop in the bucket for what’s to come next. Time will tell, and history will play out from here.

Picking a Good ICO

Creating an ERC20 token is easy. Paying a team to create amazing design mockups and marketing pages is even easier. The difficult aspect of ICO investing is learning to filter out the noise, and determine if the team is in it for the technology and use case — or a quick buck.

Now, you’d probably argue that’s the job of modern-day VCs, and in a way you’re right — that’s what VCs are good at. Finding the diamonds in the rough from a Founder perspective. Investing in ICOs like Brave’s Basic Attention Token Sale, an offering by an already established entity with a working product and sound team, are likely a safer bet. But, the risk/reward there might not be satisfactory (especially after you’ve gotten a taste of 5–10x returns, it can be hard to go back). Picking a great project is a combination of art, and science — due diligence remains more important than ever, especially when investing your hard-earned savings into such an unregulated and “Wild West” like industry.

Read also: How to Find the Best ICO Service Provider?

There is no clear-cut formula for token investing; it’s a matter of making informed and educated decisions, at the right time. But, fortune favors the bold, no?

Legal Risks

No primer on ICOs would be complete without a section on legal risk. As mentioned above, this space is highly unregulated and filled with opportunistic money grabbers looking to make a quick buck on your poorly informed decisions.

That said, regardless of how high-profile the token offering is, there is nothing stopping a development team from running off with the funds raised via an ICO, except for maybe burning years of social capital. Which, will stop some, but not all (greed can do powerful things, remember this).

Lock-up mechanisms (think vesting schedules and cliffs) with token contracts are becoming a more common norm; but, to think that’s enough to give you peace of mind in this (somedays seemingly) lawless jungle of cutthroats, would be naive.

Since most of these ICOs run with a disclaimer of not guaranteeing returns to investors if its associated token price plummets to zero based on negligence or malicious actions by the development team — there is likely not much legal recourse will do if the developers are good at masking their trail…this is the Wild West remember — watch out for cowboys (and cowgirls, it’s 2017).

Closing

Hopefully, this was a concise quick introduction to this growing phenomenon. For now, VCs and traditional accredited investors will do all they can to gain influence and hold ground in this fledging industry; performing the appropriate due diligence to calculate risk; maybe even picking a few winners along the way.

But, once this powerful new paradigm evolves a bit more, we may have finally created the global answer to Silicon Valley — only this time on the internet, where all can be sovereign and free.

Blog Credits: Medium

Solidus Ai Tech Announces New Partnership With Metaverse Giants Galaxy Arena

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Solidus Ai Tech Announces New Partnership With Metaverse Giants Galaxy Arena

Solidus Ai Tech has just proclaimed a new strategic partnership or coalition with Galaxy Arena, and they have presented the foremost VR Earn game aggregator metaverse hub shortly. Galaxy Arena is giving rise to several discussions in the Meta sector and Play2Earn by uniting or bridging the void between reality and virtual by drawing tournaments, enterprises, events, and attractions inside the metaverse. Galaxy Arena and its partners will progress from operating Solidus Ai Tech’s gigantic computer capability. Whereas Solidus Ai Tech will have a substantial gateway for the consumers and players of its play to procure games from the metaverse.

There are three special, distinct categories of Galaxy Arena. An explorable digital atmosphere’s 30,000 square meters ‘Entertainment Venue’ is divided into six action-filled phases or levels. Every phase will possess diverse structures, interests, purposes, experiences, and ordeals. The stadium will include a virtual reality background for real-world star shows, warfare training, and numerous arrangements for entertainment and recreation. The world’s first state of art meta-structure that conveys a combination of interactive virtual reality health objectives and fitness campaign mini or small games is the ‘Galaxy Gym’. The gym furnishes a fully immersive fitness and health studio connecting stars, world-recognized athletes, and instructors to consumers while delivering classes and courses in VR.

The ‘Galaxy Tower’ is positioned opposite the arena and gym, and the tower is a masterwork on its own. The prime tier will comprise a Celestial Casino and a Sky Lounge Social club. The remnant of the building constitutes an anthology and collection of 20,000 NFT units segregated between offices, digital real estate, and luxury areas. The platform is remarkable, where users and customers may sing, study, play, dance, move and partake to obtain capital under one cover. It makes the Galaxy Arena the deluxe ‘X to earn’ hub. 

Paul Farhi, the technological founder of  Solidus Ai, spoke about the recent pact and said that they are and have been vigorously pursuing Web 3.0 corporations operating in gaming or the metaverse. Galaxy Arena fulfils a lot of benchmarks for them. Galaxy Arena is an extremely skilled and competent company with an amazing product. It is also certain that they have added 150 partners and collaborators to whom they procure gateways to their events, games, and metaverses. Furthermore, we have admission to these corporations who will also benefit from our unrivalled computer potential. Galaxy Arena ecosystem’s users and customers will be eligible to play their game, play-to-earn. So it’s pretty vastly a mutually advantageous partnership or cooperation.

The residing untapped capability of the metaverse, Farhi said that in its easiest phrases, the metaverse is practically a 3D interpretation of the internet. It is a category of digital dealings where networked virtual experiences may mimic our reality or re-imagine realms. He views the metaverse as an enormous force for good in that it is a device that can associate us as human beings via stories and experiences. However, it can also link us with our world. The metaverse and the technologies that are provoking us towards it can have an exceptionally strong and positive impact on the world, deducing that we put what is promising for the earth and its civilisation at the nucleus of its structure.

Solidus Ai Tech has had an unprecedented run of plaudits and victories accommodating successful alliances with business bigwigs since its founding. Recent accomplishments entail achieving the Top Initial Coin Offering (AI) at the 2022 World Blockchain Summit in Singapore for its AITECH coin. It is the earth’s first deflationary artificial intelligence utility token and numerous high-profile partnerships and coalitions, such as its current declaration of an alliance with Blockchain business leader Herbert Sim who is one of the less than 100 verified ‘blue tick’ social figures across all leading social media outlets in Blockchain industry, in the world. 

AI In Blockchain: Current Application And Trends

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AI In Blockchain

Two major contenders in this evolving digital environment are blockchain technology and artificial intelligence (AI). Each of them has had a big influence on different businesses and how people interact in society. But the possibilities they provide together usher in a completely new age. Among other industries, supply chain logistics, healthcare, and cybersecurity might all be revolutionized by the combination of AI and Blockchain. To put it plainly, the innovations supported by the combination of them are genuinely unmatched.

In this blog, we look at the current trends and applications of AI and Blockchain, as well as the areas of synergy between the two industry titans.

The Coming Together of Blockchain and AI

Deep learning models use complex neural networks that imitate the thinking processes of the human brain to analyze enormous volumes of data, find patterns, forecast outcomes, and facilitate decision-making. A blockchain network provides an Internet-native, transparent, decentralized, and censorship-resistant financial settlement layer that minimizes trust and allows for immutable data storage and permissionless digital transactions.

The combination of blockchain technology and artificial intelligence (AI) has the potential to open up completely new business opportunities, boost organizational productivity, help automate tedious tasks for individuals, facilitate safer and more effective data exchange, optimize decision-making processes through AI-powered smart contracts, and increase public confidence and transparency in important economic and infrastructure processes.

Beyond conventional commercial blockchain and AI applications, the combination of blockchain technology and artificial intelligence (AI) has the potential to yield several advantages. Data-driven decision-making and more effective resource management could be made possible by fusing the potent analytical powers of AI with the safe, decentralized structure of blockchains. These applications could be made in a variety of fields, including education, healthcare, energy, social impact, agriculture, and urban planning.

Blockchain and AI Use Cases

Blockchain and AI Use Cases

We’ll look at a number of possible use cases in this section to show the potential benefits of integrating blockchain technology and artificial intelligence.

  • Security

One of the best blockchain AI use cases is the implementation of security. Blockchain technology and decentralized infrastructure can serve as AI systems’ encryption-backed safety nets. According to this approach, AI systems may be implemented with built-in protections that lessen the possibility that they would be abused or exploited in hostile ways. AI developers may specify the precise constraints that AI must adhere to in order to access different key systems, and private keys, in conjunction with tamper-proof decentralized infrastructure like as blockchains, smart contracts, and oracles, can impose these constraints. 

Decentralized, blockchain-based systems offer robust security against manipulation by adversaries, a feature that extends to combating adversarial AI agents. Unlike centralized systems vulnerable to single points of failure, decentralized infrastructure disperses across multiple nodes and private keys, increasing resilience against compromise. This fusion of AI’s utility and blockchain’s security mitigates attack vectors, enabling organizations to harness AI’s potential while ensuring cryptographic security measures uphold stringent standards.

  • Supply Chain

Smart contracts, computer programs hosted and executed on blockchains, offer inherent advantages when combined with artificial intelligence (AI). AI models integrated into smart contracts can utilize predefined conditions to automate tasks, such as detecting inventory shortages and executing orders with suppliers. This seamless integration enhances efficiency and accuracy in executing predetermined actions, streamlining processes like inventory management.

Moreover, the synergy between blockchain and AI can revolutionize transparency and fraud prevention by digitizing paper-based processes and enabling real-time tracking of goods. By merging AI-driven predictive analytics with blockchain technology, companies gain insights into demand patterns, optimize inventory management, and make data-driven decisions to minimize costs. This combination extends beyond business applications, as seen in disaster relief scenarios. Through AI-driven analytics and blockchain-based supply chain tracking, humanitarian organizations can optimize resource allocation during natural disasters by providing real-time data on supply availability and locations, ensuring that essential supplies reach their intended destinations promptly and efficiently.

  • Authenticity Verification

The advent of deep learning models like DALL-E and Stable Diffusion has underscored AI’s capacity to generate rich media from textual prompts, yet the proliferation of synthetic content poses risks of misinformation and deep fakes. In response, blockchain technology emerges as a pivotal trend in blockchain app development, offering cryptographic validation and timestamping to authenticate media origin and integrity. This cryptographic watermarking not only bolsters trust in decentralized platforms for content curation and distribution but also ensures transparency and verifiability in an era where discerning between genuine and altered content is crucial for societal stability.

Moreover, the rise of blockchain tokens, notably non-fungible tokens (NFTs), signifies a transformative trend in verifying digital content’s authenticity and provenance. As a key blockchain app development trend, NFTs enable content creators to establish a unique digital fingerprint for their work, facilitating transparent tracking of ownership history and modifications. This standardization of technology not only promotes accountability among publishers but also empowers users to confidently distinguish between authentic and manipulated content, thereby fostering a more trustworthy digital technology.

  • Data Analytics

Blockchain technology offers unparalleled data provenance, ensuring data integrity by storing information in a secure and decentralized network. This feature makes blockchain networks ideal for large-scale data analytics, as they provide a reliable foundation for analyzing vast datasets. As blockchain increasingly shapes human economic and social activities, sophisticated machine learning models can leverage on-chain data to identify trends and offer predictive insights. This empowers businesses and individuals to make informed decisions, capitalizing on opportunities within the evolving on-chain economy.

Moreover, AI models play a crucial role in optimizing calculations for consensus algorithms in blockchain systems like Bitcoin mining. By employing AI, blockchain nodes can decrease latency and compute requirements, enhancing the efficiency of the consensus process. This synergy between blockchain technology and AI not only enables more efficient blockchain operations but also facilitates the extraction of valuable insights from on-chain data, further propelling innovation and growth within the blockchain ecosystem.

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  • Decentralized Data Storage

Blockchain-based storage solutions like Filecoin, IPFS, and Arweave offer decentralized storage options that can maintain the integrity of training data and ensure its accurate provenance. Furthermore, employing advanced encryption methods can enable the training of deep learning models on encrypted datasets, safeguarding privacy and confidentiality.

Incorporating blockchain-based storage solutions into the deep learning infrastructure can bolster the security and dependability of AI systems, while also fostering transparency and trust in their decision-making processes.

  • Smart Contract Development

The emergence of AI-assisted development tools like GitHub Copilot has revolutionized smart contract development, exponentially boosting developers’ productivity. Leveraging AI-powered APIs, smart contract applications can now integrate real-world sensor analytics, sentiment analysis, and generative models, ushering in a new era of Web3 applications. This fusion of blockchain and AI applications holds immense potential to enhance the functionality and versatility of smart contracts, paving the way for innovative decentralized solutions across various industries.

Moreover, AI will revolutionize Web3 gaming experiences by enabling game developers to effortlessly create entire game worlds, assets, non-player characters, and scripted events using natural language and generative AI models. By codifying game mechanics on-chain, developers can ensure transparency and immutability while fostering collaborative game development efforts driven by open-source code and AI-generated content. This integration of blockchain and AI not only redefines the gaming landscape but also exemplifies the boundless possibilities when these technologies converge in Web3 ecosystems.

Challenges and Considerations for AI in Blockchain

While the integration of AI into blockchain technology holds tremendous promise, it also presents several challenges and considerations that need to be addressed. Here are a few of the challenges that come with the integration of AI in blockchain.

  • Scalability: Integrating AI algorithms into blockchain networks may strain computational resources, exacerbating scalability challenges.
  • Data Privacy and Security: AI models trained on sensitive data stored on the blockchain raise concerns about privacy and confidentiality, necessitating robust security measures.
  • Interoperability: Establishing standards and protocols for interoperability between AI and blockchain systems is essential to facilitate seamless integration across different networks.
  • Ethical Considerations: Ensuring transparency, fairness, and accountability in AI decision-making processes is crucial to mitigate biases and address ethical concerns.
  • Regulatory Compliance: Developing legal frameworks and regulatory guidelines for the use of AI and blockchain technologies is necessary to navigate legal and ethical implications.
  • Adversarial Attacks: Protecting AI models from adversarial attacks within blockchain networks requires enhanced security measures and defenses against malicious actors.
  • Resource Management: Efficiently managing computational resources and optimizing AI algorithms for blockchain environments is vital for performance and sustainability.
  • Education and Awareness: Promoting education and awareness about the capabilities and limitations of AI in blockchain applications is essential for fostering responsible development and adoption.
  • Governance: Establishing governance mechanisms to oversee the deployment and operation of AI systems on blockchain platforms can ensure accountability and compliance with industry standards.
  • Collaboration: Encouraging collaboration between technologists, policymakers, and stakeholders is critical for addressing challenges and unlocking the full potential of AI in blockchain applications.

The Future of AI With Blockchain

Blockchain facilitates cooperation, value transfer, and trust minimization at scale, whereas AI allows intelligence at scale. When integrated, these technologies may improve security, transparency, and general efficiency, opening up new opportunities and benefiting many different businesses.

Combining AI with blockchains has enormous potential to impact many different areas. AI models are anticipated to continue spreading into many economic sectors as businesses work to automate processes, increase efficiency, and improve their business offers by incorporating AI into a significant percentage of software products.

At the same time, while institutional trust has been steadily declining for decades, people are becoming more and more drawn to apps that rely on cryptographic promises. These two seismic breakthroughs in technology are coming together to radically alter our economy and civilizations.

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The Bottom Line

In conclusion, the intersection of AI and blockchain represents a frontier of innovation with vast potential to reshape industries and drive transformative change. Current applications of AI in blockchain, such as enhancing data integrity, optimizing smart contracts, and revolutionizing Web3 gaming experiences, demonstrate the diverse ways in which these technologies can converge to create value. However, as with any emerging technology, challenges such as scalability, data privacy, and regulatory compliance must be carefully navigated to unlock the full potential of AI in blockchain applications. 

By addressing these challenges collaboratively and leveraging the expertise of companies like SoluLab, which specializes in AI development and blockchain solutions, businesses can capitalize on the opportunities presented by this exciting convergence. With SoluLab’s comprehensive AI development solutions and blockchain development services, organizations can harness the power of AI and blockchain to drive innovation, improve efficiency, and stay ahead in today’s rapidly evolving digital era. Contact us today to explore how SoluLab can help navigate the complexities of AI in blockchain and unlock new possibilities for your business.

FAQs

1. What are some current applications of AI in blockchain?

Current applications of AI in blockchain include enhancing data integrity through decentralized storage solutions, optimizing smart contracts with AI-assisted development tools, and revolutionizing Web3 gaming experiences by leveraging AI-generated content.

2. How does AI improve the functionality of blockchain technology?

AI enhances the functionality of blockchain technology by providing advanced analytics, predictive insights, and automation capabilities. AI-powered algorithms can analyze large datasets on the blockchain, identify patterns, and offer actionable intelligence for informed decision-making.

3. What challenges exist in integrating AI with blockchain?

Challenges in integrating AI with blockchain include scalability issues due to computational resource constraints, concerns about data privacy and security, interoperability between different AI and blockchain systems, and ethical considerations surrounding AI decision-making processes.

4. How can businesses leverage AI in blockchain applications?

Businesses can leverage AI in blockchain applications to enhance data integrity, automate processes, optimize smart contracts, improve decision-making with predictive analytics, and develop innovative decentralized solutions across various industries.

5. Why choose SoluLab for AI development and blockchain solutions?

SoluLab specializes in AI development and blockchain solutions, offering comprehensive services to help businesses harness the power of AI in blockchain applications. With expertise in AI algorithms, blockchain development, and a commitment to delivering innovative solutions, SoluLab provides tailored services to meet the unique needs of each client.

Crypto Launches Explained: ICO vs. IDO vs. IEO

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Crypto Launches Explained ICO vs. IDO vs. IEO

If you’re familiar with stocks, you’ll know that an IPO is an Initial Public Offering. That’s when professional investors, independent speculators, and supporters can buy shares in a company. Crypto launches are a little different from stock launches.

Crypto projects have ICOs, IEOs, and IDOs. Interestingly, these are all essentially different versions of an IPO, and a crypto project may engage in any of them, any combination of them, or even all of them. But what are they? What do they mean, and how are they different?

What Is an ICO?

An ICO is an Initial Coin Offering. After an ICO platform, anyone can buy crypto in support of a project directly from the organization hosting the project.

Prior to an ICO, there is typically no coin availability or circulation. Alternatively, availability and circulation may have been limited by the organization behind the project. For example, a coin may have already been minable but was then only available to miners. ICOs can also be public (open to anyone) or private (open to select investors, etc.).

Read also: What is the ICO and How Does it Work?

ICOs were the initial “crypto IPO” before exchanges became popular. For example, when Bitcoin had its “ICO,” it couldn’t have listed on an exchange because there were no cryptocurrency exchanges. Because ICOs involve buying tokens directly from the project, you have to really trust what you’re investing in because it may not have been verified in any meaningful way.

What Is an IEO?

An IEO is an Initial Exchange Offering. Crypto exchanges have a verification process, so crypto projects that make it onto exchanges are usually more reliable. Plus, when you buy from an exchange, you’re not giving up any payment information to the individual projects you invest in through the exchange.

Because being verified by an exchange takes time, some projects may have an ICO and then have an IEO later down the road. However, because crypto projects are more discoverable and are more likely to be successful on an exchange, a project might not have its own ICO and instead wait to “go public” on an exchange.

Read also: All You Need to Know About Initial Exchange Offering (IEO)

There’s another reason crypto projects are moving toward skipping the ICO: They’re afraid of regulators. For example, did you know that Coinbase reports to the IRS? So, selling through exchanges takes some of the pressure off the organizations that host the actual crypto projects.

What Is an IDO?

An IDO is an Initial DEX Offering, whereas a “DEX” is a Decentralized Exchange. A decentralized exchange is like a regular exchange, but no one is in charge. So, instead of the exchange buying coins from sellers and selling coins to buyers, the buyers and sellers just do business with one another.

If an ICO is buying from an artist, and the exchange is buying from an auction house, a decentralized exchange is buying from a flea market. It’s easy, fast, and fun, but it puts a lot of the responsibility and pressure back on the buyers—just like with ICOs. In fact, decentralized exchanges are older than the more popular centralized exchanges of today.

Just like a project can have an ICO and a subsequent IEO, a listing on a DEX may already have an IEO and ICO.

That’s All. Right?

That’s actually not all. There are still other ways for cryptocurrencies to get into people’s hands. But, most of it has to do with different kinds of cryptocurrencies—because they’re not all made equal.

For example, security tokens operate a lot like shares of a company. The only real difference between security tokens and stocks is that security tokens are on a blockchain instead of being registered. But, not being a cryptocurrency and not being a stock means that they can avoid answering to pretty much anyone.

These projects have Security Token Offerings. But, these offerings are usually limited to organizations like investment groups.

ICO vs. IDO vs. IEO

A lot of crypto projects that have an ICO can be successful. A lot of crypto projects that get listed on exchanges are not successful. Experiences with decentralized exchanges can be positive or negative. No matter how you buy crypto, just make sure that you do your research first.

Blog Credits: MakeUseOf

How Much Does it Cost to Build your own ICO?

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How Much Does it Cost to Build your own ICO

As we know, an ICO is a popular procedure in which crypto companies raise funds through the sale of coins or tokens for products and services (usually related to blockchain). It is extremely rare to find an entity that has a fixed cost. Unfortunately or fortunately, the cost of launching an ICO(initial coin offering) event is not one of them. . It might cost more than $ 100,000 to run an initial coin offering project. Or you can manage to launch a fully functional ICO(initial coin offering) event for just $7k to $14k. The cost to build an ICO has a huge range that involves a lot of factors that have to be taken into consideration. So to answer the question of How much it costs to launch an ICO, let’s dive into the process one by one, demarcation-wise.

How intricate is your project?

The more features merged, the higher the cost involved. Prices escalate with the attributes that are embedded in your ICO. The ICO cost will vary if it’s highly customisable or offers features like referral Management, KYC Facilitation, Two Factor Authentication, etc.

Ideation costs

This step does not cost that much but is essential to determine the project’s timeline. It’s necessary to allocate a portion of money to make the project fairly feasible. Also, the timeline of a project plays a major role in deciding the overall budget.

Technical architecture

If you are building an ICO, you will need a team of developers and testers to handle the technical areas of your project. They are in charge of developing an array of things for you, such as developing tokens, smart contracts, a website, and blockchain and testing everything. This whole technical aspect of the budget alone will cost around $11,000.Token developers usually charge per hour, and it takes at least 4-5 days to create a secure ERC20-compatible token. So, you would hire /pay token developers for token development and testing alone. And then have to seek other developers to create and test a website, smart contract, and blockchain system. Investing in Smart Contract development is crucial, as any good blockchain development company would advise you. The blockchain development part of an ICO is one of the most expensive services because of the number of subsets in it – Token Creation, ICO Smart Contracts, MVP, etc. The starting ICO price cost range for the ICO development of different dSolutions would come out to be 10,000 USD.

Security audit costs

Now you would not want hackers and others to sabotage your fully developed project. This process includes deploying not only the cost of security software and tools but also the relevant workforce. Here the cost depends on the nature of your project. If your ICO is prone to hacking, spyware and phishing, it’s advisable to go for a bit expensive but efficient, trustworthy security audit team. However, it shouldn’t exceed $50,000, no matter how good or robust the security service is.

Whitepaper drafting costs

A whitepaper is a document that basically contains everything from the aims and strategies to the overall roadmap of your ICO project. You must ensure that it isn’t problematic, incomplete or hastily written. You write/publish this paper to influence current and prospective customer or investor decisions. To achieve real success, you need to chalk out a concrete whitepaper. For that, you’ll require the help of an agency or a stand-alone freelancer (to write the whitepaper)

The whitepaper quality usually depends on your budget and can range anywhere between $100 – $1,000.

Read more: What are the Essential Things to Know for an ICO?

Legal aspect

The crypto world is largely unregulated, which leaves it vulnerable to damage by some crafty or malicious individuals. You have to employ attorneys or seek legal consultancy for your ICO. This will help you avoid potential legal troubles in the future and lay down some T&Cs, compliances, and disclaimers backed with legal representation that can make you look credible to investors. We know proving yourself to be genuine can be frustrating, but it’s necessary in the world of cryptocurrency. The price of attorney / legal consultants varies according to their credibility, which ranges between $5,000-U$50,000.

Marketing and website launch costs

The fundraising process is incomplete without launching the website and promoting your ICO. A rough estimate of the starting price of designing and developing an ICO website would be around 10,000 USD.

Currently, ICO marketing agencies charge between $1000 and $50 000, depending on several factors, including the selected marketing strategy, content, paid media advertising, social media marketing, etc.

Closing thoughts

Stating a time & price range of an ICO project is very difficult. Time still can be summed objectively as compared to price. Usually, it takes around four to 10 months to complete the preparation of the ICO and then another month to launch and market your ICO, which stays live in the market for investors to put their money in for around two months. Cost is very subjective and varies from stage to stage, from person to person, and sometimes from place to place. Thus, hoping our article helped you gain some insights and understanding of the costs incurred in an ICO(in general). And you are able to map out your own ICO budget.

How to Evaluate an Initial Cryptocurrency Offering (ICO)

Posted on by Shipra

 

How to Evaluate an Initial Cryptocurrency Offering (ICO)

Initial Cryptocurrency Offerings (ICOs) are the flavor du jour in the sprawling Crypto-Tech market. I’ve been following and analyzing their development early on, in addition to being in private conversations with several entrepreneurs who are planning or have done them already.

At their essence, they represent a fundamental shift in how companies get funded, when compared to the traditional Venture Capital driven methods, as I described these differences in How Cryptocurrencies and Blockchain-based Startups Are Turning The Traditional Venture Capital Model on Its Head. What I inferred from that post is that the way forward is a clever combination of both worlds, the old and the new, a point that Zenel Batagelj from ICONOMI picked up in ICO 2.0 — what is the ideal ICO?, a good post that I recommend you read.

For background, I’ve already described the Best Practices in Transparency and Reporting for Cryptocurrency Crowdsales in a lengthy post, about two years ago. Re-read it, because much of it still applies increasingly so, and for a new reason: there are several more ICOs today than in early 2015.

I’d like to expand my own thoughts on how to evaluate an ICO by categorizing the criteria along 4 dimensions:

  1. Startup Characteristics
  2. Operational Transparency
  3. Crypto-Sale Resiliency
  4. Business Model Relationships

Arguably, the bar is higher now because if you want to comprehensively evaluate an ICO launch platform, you need to look at some new dimensions instead of just the one about being a startup. But at the same time, the bar can appear to be much lower because no one is forcing new investors to examine these four areas with the same required rigor that venture capitalists typically exercise, and specific ICO regulation appears to be lax or non-existent, which is OK initially, but let’s not digress.

Startup Characteristics

That’s where all the traditional VC stuff goes in. In a non-Crypto-Tech world, VCs would continue their jobs as they always have, by making investment decisions based on evaluating startups, one at a time. This is where the traditional “team-product-market” trifecta evaluation comes in, and I’m not going to rehash what happens in that dimension. It often takes a career lifetime to perfect how to invest based on pattern recognition and drawing your own guideposts for making decisions. You can’t replace that, and you can’t fake it either. Here, you can add such topics as competition, go-to-market approach, product roadmap, and implied valuation.

A warning signal emerges when newcomers start offering broad brush evaluations without having had the benefit of direct investment experience that includes lessons learned from having made good and bad decisions.

Read also: ICO Consulting 101 – Your Ultimate Guide Before Launching an ICO

An additional requirement here is that someone evaluating the markets or solutions being targeted by these new companies needs to know something about the emerging crypto-tech space. Many of these companies are not targeting traditional brick-and-mortar or existing online markets. Instead, they could be basing their models on the assumptions of a new ecosystem of blockchain-based users, applications, and novel types of marketplaces, with new types of services that didn’t exist before (e.g. around identities, naming, proofs, verifications, rights, smart assets, smart contracts logic, etc.)

Crypto-Sale Resiliency

Here we enter the crypto-tech territory. This part covers the sheer mechanics of the cryptocurrency sale, including its legal and regulatory aspects.

Some questions to ponder include:

  • In what jurisdiction is the company incorporated?
  • What legal structures are being disclosed?
  • What is the token distribution structure?
  • How is security handled?
  • What are the apparent, perceived, or real regulatory risks?
  • Are there plans for external or internal audits?
  • If there is a DAO-like component, is its articulation realistic and well-grounded?
  • Who has written up the token issuance contracts and actual token issuance software?
  • Which blockchain infrastructure is backing-up their sale?
  • Have they published the terms and conditions of the sale in clear language?
  • Have you talked to at least 3 other entities who have successfully done a token sale before?

The Coin Center has published a very good analysis, Could your decentralized token project run afoul of securities laws? that is worth reading. It mentions two important points to keep in mind: 1/ tokens must be a utility to the operations of the business, and 2/ they should only become available after your operations, not prior.

Operational Transparency

With public money comes greater responsibility. Doing a public crowdfunding campaign is a two-way street. It’s almost like being a public company from day one. It’s not easy being in the public eye. If you can’t deliver transparency, don’t take that path. And if we don’t self-govern to higher standards, the regulators will come and put a damper on this journey.

Read also: How to Start an ICO & Successfully Raise Funds

This is all still true and applies 100%, and relates to how you plan on communicating progress visibility.

Some questions to ask:

  • Is the company providing public dashboards?
  • Does the company have independent auditors?
  • Are their delivery promises well articulated so that they could be later measured?
  • Does GitHub or another public repository reflect their progress, and has a given track record?
  • How will they continue to communicate their progress?
  • Are they blogging regularly about their work?
  • Are the team members well-identified with links to their LinkedIn profiles?
  • Do they have external advisors?
  • Do you have plans to list your cryptocurrency on public exchanges, and which ones have you talked to?

Business Model Relationship

This is a critical part that should not be taken lightly, and it should be figured out early on. It pertains to building a case for why a cryptocurrency model is a right path for this company. The basic premise is about how tokens are related to the business model of the company. The token is supposed to tie everything together. For example, in the case of the Bitcoin blockchain, Bitcoin as a currency is totally ingrained in that blockchain’s operations, and it is at the center of a variety of actions: transaction validation, value exchange, miner’s rewards, store of value, transaction fee, the currency for services, etc. In the case of Ethereum, ETH is used to reward miners, as “fuel” that funds smart contracts, and it is also a proxy for other tokens that can be created and managed on the Ethereum infrastructure. For Steem, it is the currency that rewards contributors, and it’s a currency they can spend on other services.

Fundamentally, some questions must be answered:

  • What is the purpose of the token?
  • What function or utility does it perform?
  • Is it absolutely necessary?
  • Can you describe a viable economic model behind it?

Here’s another important question that deserves its own dive:

How does value flow from the outside of the ecosystem to the inside, and vice versa (not counting speculatory trading on public exchanges?

There are two types of segments for generating value:

1) Inside your own market

2) Outside of your market and into the cryptocurrency markets in general or the real world.

For example, can your users just spend and earn their coins inside, or can they also spend them outside of your application? If you are using a currency that has available liquidity (such as BTC, ETH, or even recently STEEM), you benefit from the broader network effects of these currencies, but if you are creating your own proprietary currency, your interdependency liquidity may take a little longer to materialize. For example, Steem has done a good job crossing boundaries between their cryptocurrency-governed site Steemit, and the real world and demonstrated it at their recent Steemfest in Amsterdam. Here are 4 examples I describe in a recent article, Steemit’s First ‘Fest’ Reveals the Power of Blockchain Community that showcase this cross-pollination of transactions between the crypto-world and the non-crypto spaces.

Read also: Top 5 Upcoming Cryptocurrency ICOs in 2022

“Many of the attendees paid for their travel using Steem dollars they had earned on the platform, As a bonus, each attendee received a number of Steem Power as a reward for attending. Furthermore, a fund was made available to reimburse attendees in financial need. One small exhibit area featured Maurice Mikkers, a “tear catcher” who photographs your tear via a special microscope in high resolution for 25 SBD (Steem-backed dollars).”

Do You Really Need an ICO?

Amidst all the excitement generated by ICOs and the prospects of freedom from the strings of venture capital money, and the creation of new business models that we haven’t seen before, there is a fundamental question that must be asked:

Do you really need an ICO with its own currency or perhaps you may just want to use an existing cryptocurrency that attaches to your model, in which case the ICO might be burdensome and risky?

Of course, you can spin your own coin and hope the economics of the business model will natively support it for the long term, but you could also decouple the token from your model and treat it like a currency that is pegged to an existing popular one (e.g. BTC, ETH or STEEM).

On the positive side, despite the current Wild West appearances of the ICO market, some known best practices are emerging to create and evaluate ICOs. Whether you are an entrepreneur planning for an ICO, an investor trying to decipher how to evaluate them, or a regular pondering their future, do not ignore the guidelines proposed in this article.

Blog Credits: Medium

Why Blockchain is Hard

Posted on by Shipra

The hype around blockchain is massive. To hear the blockchain hype train tell it, blockchain will now:

Solve income inequality
Make all data secure forever
Make everything much more efficient and trustless
Save dying babies
What the heck is a blockchain, anyway? And can it really do all these things? Can blockchain bring something amazing to industries as diverse as health care, finance, supply chain management and music rights?

And doesn’t being for Bitcoin mean that you’re pro-blockchain? How can you be for Bitcoin but say anything bad about the technology behind it?

In this article, I seek to answer a lot of these questions by looking at what a blockchain is and more importantly, what it’s not.

What is a blockchain?

To examine some of these claims, we have to define what a blockchain is and herein lies a lot of the confusion. Many companies use the word “blockchain” to mean some sort of magical device by which all their data will never be wrong. Such a device, of course, does not exist, at least when the real world is involved.

So what is a blockchain? Technically speaking, a blockchain is a linked list of blocks and a block is a group of ordered transactions. If you didn’t understand the last sentence, you can think of a blockchain as a subset of a database, with a few additional properties.

The main thing distinguishing a blockchain from a normal database is that there are specific rules about how to put data into the database. That is, it cannot conflict with some other data that’s already in the database (consistent), it’s append-only (immutable), and the data itself is locked to an owner (ownable), it’s replicable and available. Finally, everyone agrees on what the state of the things in the database are (canonical) without a central party (decentralized).

It is this last point that really is the holy grail of blockchain. Decentralization is very attractive because it implies there is no single point of failure. That is, no single authority will be able to take away your asset or change “history” to suit their needs. This immutable audit trail where you don’t have to trust anyone is the benefit that everyone that’s playing with this technology is looking for. This benefit, however, come at a great cost.

The Cost of Blockchains
The immutable audit trail uncontrolled by any single party is certainly useful, but there are many costs to create such a system. Let’s examine some of the issues.

Development is stricter and slower
Creating a provably consistent system is not an easy task. A small bug could corrupt the entire database or cause some databases to be different than other ones. Of course, a corrupted or split database no longer has any consistency guarantees. Furthermore, all such systems have to be designed from the outset to be consistent. There is no “move fast and break things” in a blockchain. If you break things, you lose consistency and the blockchain becomes corrupted and worthless.

You may be thinking, why can’t you just fix the database or start over and move on? That would be easy enough to do in a centralized system, but this is very difficult in a decentralized one. You need consensus, or the agreement of all players in the system, in order to change the database. The blockchain has to be a public resource that’s not under the control of a single entity (decentralized, remember?), or the entire effort is a very expensive way to create a slow, centralized database.

Incentive structures are difficult to design
Adding the right incentive structures and making sure that all actors in the system cannot abuse or corrupt the database is likewise a large consideration. A blockchain may be consistent, but that’s not very useful if it’s got a lot of frivolous, useless data in it because the costs of putting data into it are very low. Neither is a consistent blockchain useful if it has almost no data because the costs of putting data into it are very high.

What gives the data finality? How can you ensure that the rewards are aligned with the network goals? Why do nodes keep or update the data and what makes them choose one piece of data over another when they are in conflict? These are all incentive questions that need good answers and they need to be aligned not just at the beginning but at all points in the future as technology and companies change, otherwise the blockchain is not useful.

Again, you may be wondering why you can’t “fix” some broken incentive. Once again, this is easy in a centralized system, but in a decentralized one, you simply cannot change anything without consensus. There’s no “fixing” anything unless there’s agreement from everyone.

Maintenance is very costly
A traditional centralized database only needs to be written to once. A blockchain needs to be written to thousands of times. A traditional centralized database needs to only checks the data once. A blockchain needs to check the data thousands of times. A traditional centralized database needs to transmit the data for storage only once. A blockchain needs to transmit the data thousands of times.

The costs of maintaining a blockchain are orders of magnitude higher and the cost needs to be justified by utility. Most applications looking for some of the properties stated earlier like consistency and reliability can get such things for a whole lot cheaper utilizing integrity checks, receipts and backups.

Users are sovereign
This can be really good as companies don’t like the liability of having user data in the first place. This can be bad, however, if the user is “misbehaving”. There’s no way to kick out the user that’s spamming your blockchain with frivolous data or has figured out a way to profit in some fashion that causes other users lots of inconvenience. This is related to the above observation that incentive structures have to be designed really, really well in that a user that figures out an exploit is not likely to give that up, especially if there’s profit for the user.

You may be thinking that you can simply refuse service to malicious users, which would be very easy to do in a centralized service. However, unlike a centralized service, refusing service is difficult because no single entity has the authority to kick anyone out. The blockchain has to be impartial and enforce the rules defined by the software. If the rules are insufficient to deter bad behavior, you’re out of luck. There is no “spirit” of the law here. You simply have to deal with malicious or misbehaving actors, possibly for a very long time.

All upgrades are voluntary
A forced upgrade is not an option. The other players on the network have no obligation to change to your software. If they did, such a system would be much easier, faster and cheaper to build as a centralized system. The point of a blockchain is that it’s not under the control of a single entity and this is violated with a forced upgrade.

Instead, all upgrades have to be backwards-compatible. This is obviously quite difficult, especially if you want to add new features and even harder when thinking from a testing perspective. Each version of the software adds a lot to the test matrix and lengthens the time to release.

Again, if this were a centralized system, this would be very easy to correct by no longer servicing older systems. You cannot do this, however in a decentralized system as you cannot force anyone to do anything.

You can also read : Top 3 Crypto ICOs to Invest in 2022

Scaling is really hard
Finally, scaling is at least several orders of magnitude harder than in a traditional centralized system. The reason is obvious. The same data has to live in hundreds or thousands of places than in a single place. The overhead of transmission, verification and storage is enormous as every single copy of the database must pay them instead of those costs being paid just once in a traditional, centralized database.

You can, of course, reduce the burden by reducing the number of nodes. But then at that point, why do you need a decentralized system at all? Why not just make a centralized database if scaling costs are the main concern?

Centralization is a lot easier
If you notice a theme, it’s that decentralized systems are very difficult to work with, expensive to maintain, hard to upgrade and a pain to scale. A centralized database is much faster, less expensive, easier to maintain and easier to upgrade than a blockchain. So why do people keep using the word blockchain as if it’s some panacea for all their problems?

First, a lot of these industries that are being sold on blockchain are really overdue for IT infrastructure upgrades. Health care has notoriously terrible software. Financial settlement is still running on software from the 70’s. Supply chain management software is both difficult to use and hard to install. Most companies in these industries resist upgrading because of the risk involved. There are lots of infrastructure upgrades that cost hundreds of millions and end up being rolled back anyway. Blockchain is a way to sell these IT infrastructure upgrades and make them a bit more appetizing.

Second, blockchain is a way to look like you’re on the leading edge of technology. Like it or not, the word “blockchain” has taken on a life of its own. Very few people actually understand what it is, but want to appear hip so use these words as a way to sound more intelligent. Just like “cloud” means someone else’s computer and “AI” means a tweaked algorithm, “blockchain” in this context means a slow, expensive database.

Third, people really don’t like government control of certain industries and want a different adjudication mechanism than the legal framework which is often slow and expensive. To them, “blockchain” is really just a way to get rid of the heavy apparatus of government regulation. This is overselling what blockchain can do. Blockchain doesn’t magically take away human conflict.

The result is a lot of people that are hyped up on the promises without actually understanding the abilities or costs. What’s worse, the actual technical details and costs are abstracted away from a lot of VCs and executives in such a way as to obscure what a blockchain can and can’t do. Everyone under them become afraid to say that the emperor has no clothes and we have the situation that we have now.

You can also read : Modeling Bitcoin Value with Scarcity

So what is blockchain good for?
We’ve already established that a blockchain is very expensive relative to centralized databases. So the only reason you should be using a blockchain is to decentralize. That is, remove the single point of failure or control.

This naturally means that the software or database must not change things around often, if at all. There should be little upside to upgrading and much downside to screwing up or changing the rules.

Most industries are not like this. Most industries require new features or upgrades and the freedom to change and expand as necessary. Given that blockchains are hard to upgrade, hard to change and hard to scale, most industries don’t have much use for a blockchain.

The one exception we’ve found is money. Unlike most industrial use cases, money is better if it doesn’t change. Immutability and difficulty in changing the rules is a positive for money and not a detriment. This is why blockchain is the right tool for the job when it comes to Bitcoin.

What’s clear is that a lot of companies looking to use the blockchain are not really wanting a blockchain at all, but rather IT upgrades to their particular industry. This is all well and good, but using the word “blockchain” to get there is dishonest and overselling its capability.

Conclusion
Blockchain is a popular term these days and unfortunately, this “blockchain not Bitcoin” meme won’t die. If you are a centralized service, a blockchain doesn’t get you anything that you can’t do a thousand times cheaper with a centralized database. If you are a decentralized service, then you’re probably fooling yourself and not thinking about the single points of failure that exist in your system. There wouldn’t be a “you” at all in a truly decentralized service.

Biggest joke in this entire article
Back in the early 2000’s, there was a push by a lot of executives in the tech industry to use Java and XML. Despite these two things being tools and not actual products, many executives insisted on their use, no matter how poor the fit was to what their engineers were trying to achieve. Blockchain is very much like that. Focus on the problems you’re solving and the tools will make themselves readily apparent. Focus on tools that you want to use and you’ll end up making Rube Goldberg machines that don’t do anything particularly well.

In a sense, current conceptions of blockchain are trying to do the impossible. They want the security of a decentralized system with the control of a centralized one. The desire is the best of both worlds, but what they end up getting is the worst of both worlds. You get the costs and difficulty of a decentralized system with the failure modes of a centralized one.

Blockchain is used way too much as a buzzword to sell a lot of useless snake oil. The faster we get rid of the hype, the better off long-term we’ll all be.

Credit : jimmysong.medium

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