ICO Value in IP Free World

May 20, 2019

ICO Value in IP Free World: How To Cope

There are a few components of blockchain technology that go without saying. First among them is decentralization so that no central authority can control the data that runs through the network. Attempts at centralized blockchain have been met with scorn and derision (and no small amount of hacking attempts) from a part of the blockchain community.

The other component is blockchain based projects being open-source. This makes them inherently more decentralized as anyone is able to fork the code and make their own version of whatever the project itself is doing. This is both good and bad for ICOs. It's good because your potential investors and future developers have an easier time getting to know the basic technology behind your business and develop applications that are native to the ecosystem.

The bad news, however, is that any new ICO can simply take what works from the success and discard what didn't from the failures and make something that is arguably better. The spate of new technologies int he distributed ledger sector have all built on the foundations of a few great projects such as Bitcoin, Ethereum and others.

What do you need to do to make sure your ICO has a future in a world where IP does not have the same value as it did in the past?

The Network Effect: Plan to become indispensable

The Network Effect is, simply put, when more users being added to a platform make it more appealing to new users looking to join. Think of a company like Facebook. While their code is not open source, the capabilities to make a Facebook clone are there. In fact, there are scripts that mimic many of the functionalities of Facebook and some that are arguably better.

What they do not have is the sheer number of users that Facebook has, and it was plainly evident that Facebook focused more on user acquisition than on how their platform looked or worked Anyone who was on Facebook in 2005/2006 would tell you the same. Facebook has no competitors because everyone is on Facebook, so it would never make any sense to move to a competing platform.

This is the same for a wide variety of different companies. Uber has the largest number of drivers in the largest number of cities around the world. You might install another app out of spite, but sooner or later you will need to download Uber to get prompt service. Airbnb is a similar example, but there are other examples that are older.

Paypal has many competent competitors but none of them have the same base as Paypal. If you want to pay someone online without a credit card, Payoneer and Paxum merchants are few and far between. Every, on the other hand, has Paypal.

Tipping Point: What's the plan to get there?

Ethereum and Bitcoin have both reached this level of network congestion where there is no need for others to move to compete products simply because everyone is already using Bitcoin or Ethereum. A white paper will point to how a blockchain will affect a particular industry when it has reached critical mass, but very few actually take the time to describe how they will get there.

In fact, many just assume that the community should take care of that when nothing could be further from the truth. Getting to the tipping point and gaining critical mass needs to a priority and explained in the whitepaper. That is the only way an ICO can truly be worth anything.

Author: Ali Raza for Crypto-Rating.com

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