I can always learn something from conversations with Mike. He is so knowledgeable and gentle. I like the way he talks. Mike explained to me that my understanding of public sale and ICO were wrong:
An ICO is an initial coin offering, one component of it is a private sale.
Another component is crowd sale,
Another component is token issuance,
KYC/AML is another component.
Yes, that’s the way he talks, and then he asked me, can he start to explain:
Imagine the ICO as a pie chart,
- ICO Presale
- ICO KYC/AML
- ICO Public Sale
- ICO Airdrop?!
- ICO Token Event
- ICO Listing
People might say, we had a private sale and no presale. Or, a private sale and no public sale……An ICO replaces the traditional IPO stock issuance model, any issue of token is an ICO, whether pre, private, public, or crowd.
About community coin
I mentioned Grin, they claim that they do not have ICO, and no funds raising, they are totally a community-driven project. Much the same as BTC.
I still don’t understand why they can be on exchanges without ICO — please ignore my ignorance for a while.
Mike said, Grin was a pre-mined coin, so if a whale mines a lot, he will have an invested interest to ensure he obtains the highest ROI for these coins. There are some huge people interested in Grin who have big connections and far reach. Many VCs moved to mine Grin because of the hype surrounding it.
So my question comes again, if people can buy tokens anyway, why there are ICO and non-ICO projects, what’s the difference? And why does a project need an ICO, why not everybody just like bitcoin, let miners join in the network by themselves?
Mike: Yes, you can buy the tokens upon listing. Some community projects list on smaller exchanges, the others list on bigger exchanges. Something like Grin has such a strong sentiment in crypto circles, I can imagine most exchanges wanted to list it. Plus, it’s known Charlie Lee (LTC) is one of the whales behind it.
About if ICO is a need, it all depends on the roadmap and vision. Community coins can be powerful. But, that said, we also have projects like Holo which had an ICO, but didn’t allow big VC funding. They have thriving communities.
There are some VCs that take ROI and damage the reputation of projects. Look at Quark and Aergo. It’s important projects vet VCs rather than just take the capital. People’s visions should be aligned.
An observation with RIF:
Part of the problem is OTC has killed the secondary market, demand for it.
- VCs have made their gains via OTC
- The majority of retail investors purchased at different buy-in points at OTC (6 or 7)
- VCs have no real incentive to drive the price up in the secondary market.
- Anyone who would have normally purchased it on the secondary market, probably purchases it OTC.
This was a prime example of something that was bad. VC had no interest in the project or long term development. It became a cash grab and now, nobody cares for it. Once a project has this issue, the community become very bad towards a project, regardless of whether a team is working hard.