ICO – investments in the new economy

The classification is somewhat subjective and has the following structure:

The Blockchain category includes all projects that relate to the blockchain infrastructure.

The Payment Cards and Payments category includes a very wide range of projects that include both development of payment processors for the trading sphere and crypto-purse with built-in functions of p2p transfers and other options.

The Decentralized Market category consists of projects which usually correspond with the Decentralized XYZ description starting from the service markets (transportation, logistics, taxi and so on) and ending with commodity markets (real estate, electrical energy and so on) and also universal markets of any type of goods and services.

Although the majority of these projects doesn’t envisage introduction of the blockchain technology and improves already existing technologies and services, they still suffer from the lack of financing although some of them are of interest and have excellent prospects.

The Cryptomarket category includes all types of exchanges and similar platforms which work with crypto-assets.

The ICO Platforms category may include not only similar platforms, which offer decentralized crowdfunding through the ICO mechanism, but also business accelerators (social institutes for supporting startups), young entrepreneur clubs and any projects which declare that they deal with the development of an ecosystem for investors, teams of developers and crypto-enthusiasts.

Identity Control and Advertising also refer to the class of wide categories. The first segment includes projects with a focus on the control of human identity and identity of food products and content. The second one includes everything which is connected, one way or another, with advertising – from identification of a circle of potential clients and advertising events to the network of people that form the public opinion on brands.

We would like to place a special note on those commercial organizations in the Others category, which could be called ‘commodity-secured’. This term doesn’t always mean a traditional commodity such as gold or zinc oxide but also any tangible asset which could be considered or used as a security of a token emission.

This classification not only reflects an increased interest of investors to the blockchain infrastructure and fintech projects. It also demonstrates a higher cost of development of blockchain projects due to their increased operating load and a necessity to obtain a licence and expensive integration processes if we speak about financial technologies. Despite the fact that assessment of the company value and the volume of attracted investments are rarely justified, investors are more willing to invest in projects with high capital outlays.

Moreover, the year 2017 observed a sad tendency of emergence of low-quality projects in the bookmaking segment of the decentralized market, often without obvious diversity and original solutions.

The linear equation system perfectly describes the crypto-asset price dynamics whether they are ‘traditional’ cryptocoins or new tokens issued within ICO. Moreover, the aggregate demand on crypto-assets is identified by intrasystem factors: mainly by the news, investor sentiments and market manipulations of ‘whales’ (holders of big volumes of cryptocurrencies – similar to institutional players in the traditional financial markets), who basically form the value of all crypto-markets.

Even if you are not properly acquainted with the correlation concept, you probably paid attention to the fact that every time the main amount of assets, except for some of them, as a rule, moves in one direction. This phenomenon is well-known to stock investors, especially those who trade assets in the markets with a high degree of political instability. You will easily find interconnection between the volumes of the funds attracted through ICO for one separate month and the Ethereum (ETH) price since these assets mutually influence each other. Interdependence is also very characteristic for the Bitcoin and Ethereum prices.

At the same time, it is difficult to attract long-term investors through ICO at present promising them income at some stage of the company development in the future. A startup, which attracts financing this way, should have a plan of how to achieve this future as soon as possible at a steady pace.

Although the blockchain technology, ICO and tokenized economy bring absolutely new technologies and business models to the world, the investing principles stay the same: long-term prospects, satisfaction of the real market demand and solution of pressing problems.

Vitalik Buterin, a co-founder of the Ethereum cryptocurrency project, wrote recently:

“The whole crypto-society needs to differ making hundreds of digital billions, circulating in this sphere, from creating something really important for the society”.

The ICO market offers many opportunities for speculations and fast income, especially by means of already existing presell discounts and premiums at an early stage of the primary placement of coins. Only a few participants are ready for a long-term game under the current conditions in the ICO market. Nevertheless, the investing approach should be built namely on a long-term strategy.

The key stages of realization of the New Economy strategy are:

• introduction of new technologies, including the blockchain technology, in the developing Asian, African and Latin American markets;
• execution of infrastructural changes with the aim to introduce the ‘new’ or reform the traditional banking system;
• mutual penetration of the cryptocurrency and traditional financial worlds including introduction of the blockchain technology by the state authorities.