As a new unknown industry, ICO is full of myths. The myths are usually spread by so-called big names of the industry with the only goal to push their agenda.
Here’s the list of most popular myths you should not believe.
1. Most ICOs a scam. — FALSE
In order for it to be a scam ICO founder have lie about something, usually it’s putting fake people in team section or raising money purely for disappearing with it later.
However having a poor ICO is not a scam. If an ICO failed at their promise because of bad execution it’s not scam, it’s just bad business.
Sure from investors point of view investing into scammy or crappy ICO is the same: your money is lost. But from legal point of view there is nothing illegal at executing bad business. Most of businesses are actually executed very poorly, because business is hard.
So as investor, rather than blaming ICOs for failing at their goals and loosing your money, you should educate yourself to avoid such mistakes in the future.
2. Too many companies are doing an ICO. — FALSE
Many of popular blockchain people are screaming unison that there are too many ICOs. In their opinion too many companies that should not do an ICO are doing it.
Hold right there. Doing an ICO is not a privilege for a selected ones only. Any one is free to do an ICO if he wants to. Sure not everyone will succeed, but they are still allowed to do it.
Making something a privilege for a selected group people is unjust on all possible levels.
3. An ICO advisor who advises too many ICOs is a bad advisor. — FALSE
ICO industry must be only industry in the world where some people say that having a big client portfolio is a bad thing. I have never heard that people say: “I won’t go to that doctor because he have treated too many patients” or “that consultant have consulted 50 different companies, better stay away from him”.
Seriously? Where did this stupid idea come from? The only way to become good at something is by doing it, and the more you do it the better you become. Experience is proportional with the amount of time you spent doing something.
Sure there are bad ICO advisors, but they are usually the ones who have advised only couple project and don’t have enough knowledge and experience yet.
4. Launching an ICO is expensive. — FALSE
Sure launching is expensive, but it’s expensive in 5 number figures (in USD or EUR), not 6 number number figures. Making a smart contract does not cost $ 100'000 as some companies charge for it. ICO is still much cheaper fundraising method compared to traditional seed investment round.
There is also huge difference in marketing cost. Some ICOs are wasting tens of thousands $/€ on ICO listing sites when same amount of quality traffic can be bought with only a fraction of it.
5. ICOs will die soon or get banned. — FALSE
In this ICOs are similar to Bitcoin who has died already 288 times when this article was written, but still somehow is alive and stronger than ever before.
ICOs will not die, and they cannot be banned and cryptocurrencies in general cannot be banned. That’s why they are so powerful and bring economic freedom to us all.
As Bitcoin will replace FIAT money, ICOs will replace traditional investment rounds and soon all clever start-ups will be having an ICO.
However it is true that 90% of current ICO token will become worthless within 1 year. Only the best ones will survive, the ones who will be able to develop real business or bring actual value like they promised.
6. You should exclude investors from USA, China, South Korea, Singapore etc. — FALSE
If you are not citizen or resident of these countries nor have an ICO company established there you don’t have to obey the laws of those countries. You only need to obey the laws of the country from where you manage your business.
By excluding USA will loose 25% of all investment and by excluding all of those countries the amount will be closer to 40%. Don’t make stupid decisions based on fear.
7. You should do KYC and AML. — FALSE
Most countries do not have any ICO legislation and if you set up your ICO company in these jurisdictions you are not obligated to do KYC or AML. Doing KYC or AML voluntarily has absolutely no benefit and may even scare some investors as they would not want to share their private information.
Also doing a KYC and AML procedures is the only way to get caught if you happen to take investments from restricted countries. Otherwise there is just no proof that you ever accepted any investments from those countries as blockchain transactions are anonymous and cannot be traced to a specific person.
You should do KYC and AML only if it’s mandatory by the jurisdiction where you ICO company is found, but wiser option of course is your legal entity migrating to tax haven.
When you look at these myths you can see something in common in all of then. They are all trying to decrease the amount of ICOs and ICO people, or setting unnecessary barriers to entry.
This is the sole reason for spreading these rumors. Some people who came first to ICO industry are trying very hard to keep ICO club small as possible, so that they will raise more money with their ICOs and get more ICO related work. They only focus on keeping new ICO experts away, therefore they for example never judge ICO investors, who also make huge mistakes and are the only reason why crappy and scammy ICOs have chance of raising money.