Running a cryptocurrency ICO – The story of how Incent got their financial backing
While the idea of Incent was born of a number of factors, the Incent ICO run at the end of 2016 was ultimately what got the company off the ground. After all, financial backing is key to survival and in our case, building the value of Australia’s first cryptocurrency.
For those of us who are non-crypto savvy, ICO stands for Initial Coin Offering. Essentially, it is a fundraising mechanism for projects or start-ups. The most basic understanding of an ICO is that a project will create their own token, participants pledge to purchase the token using cryptocurrency, commonly Bitcoin or Ether. Projects generally compile a “Whitepaper” which outlines the business proposition – in effect, a promise to those who choose to invest. There are very few geographical restrictions on ICO’s, which means that the pool of investors is global. It doesn’t take a genius to realise that the amount raised in an ICO can be incredible. The Basic Attention Token (BAT) raised $35 million in 30 seconds, as just one example.
In 2016, as ICO’s began to grow in popularity, Bitscan (Incent’s parent company) decided to run their own initial coin offering. The team was tiny, with just five people on board, and nobody fully anticipated the trials of running a global campaign for two months straight.
Guy Brandon (aka. @cassiuscrypto) had been writing for Bitscan for two years when the idea of a loyalty token began to take shape – he and Rob had discussed it at length with the original idea being to incentivise engagement on the Bitscan platform, as well as it being a way to create a “crypto ecosystem” between merchants and consumers. Rob took a trip to London in July 2016, and the framework of our ICO began to take shape.
“I’d raised the idea before, and of course we had discussed at length using Waves platform for Incent,” said Guy, when talking to me about the way project originally evolved.
“We met in London and started to pin down what an ICO would look like in practice, and when it needed to happen. I remember telling him it would be easy. At the time, we both believed me.”
Cyrille ( @KarlKarlsson_ as he’s known in the blockchain world) joined the project as community manager soon after the decision to conduct an ICO had been made. Both he and Guy had been involved in ICO’s before, including the Waves ICO which was the second most successful ICO to date at the time – it raised 16 million. Waves is a project that both Guy and Cyrille are still intimately involved in. It was clear to both of them that ICO’s really worked as a way to raise capital for a project, and they were seeing it happen in real time.
“The majority of crowd sales at the time were happening on Ethereum,” said Cyrille, explaining the way ICO’s were unfolding in 2016. Incent was unique in that regard – we were the first ICO to raise money on the Waves platform.
Deciding to take the ICO route and actually launching the Incent ICO were two very different things. As Guy and Cyrille both explained to me, the nature of an ICO is that everyone pitches in. The crypto community is a global one, and so when one time-zone sleeps, another is waking up; there was something going on with the ICO 24/7.
“The first few weeks were non stop and we were all red-lining it, working all hours and never able to switch off,” said Guy, reminiscing. “But there was a moment, I guess somewhere in the middle of those two months and around the $400k mark, where we knew we had the funds to make a go of it.”
Cyrille was juggling work with the ICO with his life as a student, on exchange in Mexico.
“I remember a call during which I had to mute myself because my 7 housemates were partying downstairs,” he said, laughing. “Pretty embarrassing, I have to say.”
And how did Incent host the ICO? Previous projects had built their own ICO platforms, but they were less than perfect and opaque in regards to what was occurring behind the scenes.
“They were black boxes – you’d sign up for them with an email, like any other web services, deposit your BTC, and assume all was well,” said Guy.
“Under the surface, it could get very messy. These were centralised databases that could be hacked and manipulated, and rumour has it that they sometimes were – it’s just that no one really found out.”
Based on this, the team behind Incent built its own ICO platform very differently, with transparency being the ultimate goal. Essentially it used the blockchain itself as a database and calculated the Incent an investor would receive based on the timestamp on the deposit made. Balances couldn’t be adjusted in favour of anyone, whether it be administrators of the ICO or hackers. It was the first platform of its kind.
The platform worked well for Incent, but in terms of being used again or being scaled in any way, adjustments had to be made.
“The platform worked well most of the time, but it was also the cause of a lot of headaches,” said Cyrille, describing some of the crashes and problems raised during the ICO. Despite this, the original team still saw the commercial opportunity that lay in the platform.
Licensing Incent’s ICO to other projects to raise money in cryptocurrency, Incent was able to assist three other projects in raising a total of around $60 million USD. Unfortunately, the platform’s code just wasn’t up to the task in full and there was a seemingly unending list of technical issues. Incent decided to shut down the platform and focus on customer loyalty, our core business.
However, it wasn’t the end for the ICO platform entirely, and Cyrille breathed new life into the original concept.
“In the summer 2017, when visiting Rob and the Incent team in Australia, , I happened to negotiate the purchase of WavesGo, a tiny blockchain start up,” said Cyrille. “Rob came up with the idea to revive ICOtech and distribute it through WavesGo.”
“I knew we couldn’t use the old code,” Cyrille explained. “In the end, we decided to take ICOtech’s code and use it as inspiration. However, the crowdfunding platform we are currently building has been written from scratch and not a single line of code has been re-used. The general logic is the same: each user is given a personal deposit address so we can unambiguously allocate a payment to a user account.”
With additional integrations, and a partnership with a licensed escrow provider in Switzerland, this new platform has been branded “TokenCraft” and it should enter the market during the next few months. And so, in many ways, the essence of Incent’s original ICO lives on.
A lot has happened at Incent since the ICO, including changes in direction, branding and more (check out our News page here). Three years on it has to be asked, does our original ICO still play a part in who we are and what we do?
“In hindsight, I still consider the ICO a huge success. We had a budget of a mere 8 bitcoin and these had to pay for any costs that came with the ICO,” Cyrille said. “We were the first ICO project to raise on the Waves platform – at a time when the functionality to issue a blockchain token was not even released.”
As Cyrille aptly put it to me, it’s all these small stories that are at the heart of Incent and helped us get to where we are today: A professional FinTech startup, based in the centre of Sydney. How could the ICO be considered anything other than a huge success?
Interested in Incent’s new launch? Join our waitlist to stay informed!