Analysis

Initial Coin Offerings: The Results are In

Note: If you have no idea what an ICO is, please check out my introductory post on the subject.

In the interest of research, I participated in three initial coin offerings  (ICOs) during the month of June. Let’s see if I made any money.

Minex

https://minexcoin.com/

Closing date of ICO: June 15th

ICO price: 0.00230755   Current price: 0.00230755 BTC Amount raised: 287 BTC Exchanges listed: None at present some planned for August

What is it?

MinexCoin (MNX) is a global payments system based on a low volatility cryptocurrency which is a part of Minex ecosystem. Thanks to its stable exchange rate, MinexCoin is a reliable means of payment, while controllable growth of coin price makes it an attractive means of value storage. Containment of volatility and price growth are maintained by the system’s autonomous algorithm acting like a central bank, hence the name MinexBank. Financial instruments it employs would allow traders to earn from exchange rate margin without damaging the coin’s ecosystem. On the contrary, they would support it. (Taken from Bitcoin talk forum)

What did I just read?

Offering a stable coin that is guaranteed to go up in value 33% a year, even more if you park in the soon-to-be-developed Minexbank.

Are You Going to Make Any Money on This?

Too soon to tell. Will let you know in a month’s year’s time. Actually, probably longer, considering development schedules always  slip.   If you read through the prospectus and look at what the development team is trying to accomplish, it’s quite intriguing. The team is trying to build a coin whose architecture mitigates against volatility, making it attractive to people who don’t like to see their investments go up and down like a yo-yo.  How they plan to do that is quite interesting to read. I bought the coin because of the geek factor.

Monaco

https://www.mona.co/

Closing date of ICO: June 18th

ICO price:   0.007 Ethereum, Current price:  0.0042  Exchanges listed: Bittrex, Liqui, Gatecoin, Livecoin

What is it?

The functionality of Monaco VISA® Card makes it a must-have item not only for every Ether or Bitcoin holder, but also for everyone who spends money in foreign currency. Core features: – Spend your Ether or Bitcoin with a physical Monaco VISA® Card, wherever VISA® cards are accepted, both online & offline – Only the exact amount that you spend with your Monaco VISA® Card will be incrementally exchanged from ETH/BTC in real-time when you swipe your card, with rest being securely stored in your wallet to which only you have access – Exchange money at perfect interbank exchange rates using Monaco App (taken from Prospectus)

What did I just read?

Bitcoin/Ether backed VISA card…hopefully

Will I Make Any Money?

This is a one-trick pony. IF they get a working VISA card issued which you can pay off with Bitcoin, this would be a massive home run. If they don’t, in a reasonable world, it should go to zero. But of course, this being the cryptocurrency world, it could be a zombie token for a long, long time.

Polybius

https://polybius.io/

Closing date of ICO: June 20th

ICO price: 0.02254 (At least for me, I received a bonus for signing up early)  Ethereum   Current price: 0.027 (June 11th):     Exchanges listed: Livecoin

What is it?

Regulated bank for the blockchain generation. While starting off as primarily a financial institution, the Polybius project is meant to grow into your daily servicer and companion ecosystem. It will aim to enable secure and seamless connections between life and the things we love and use every day.

What did I just read?

Um, it’s going to be a really cool virtual bank. One day.

Will I Make Any Money on This

Look, maybe I had one too many martinis that day. Just kidding. These guys are from Estonia, a country that is just plain crazy about digitizing everything. So the culture is there, in the sense that the country’s government might actually not throw roadblocks in the way But is this nothing but a massive speculative buy? I thought you knew the answer to that already.

Conclusion

So, from an admittedly small sample size, it’s still blindingly obvious that most, if not all of these ICOs are at the “I have a great idea, please give me money to fund it.”

Not that there is anything wrong with that. But there’s a world of difference between let’s say, Elton Musk coming up and asking you for money, and my teenager’s geek best friend who is really into Lego Mindstors with a really cool idea.

And quite frankly, some of these ICO founders are not a whole lot older than my teenage son.

But if you are still interested in investing in ICOs, here are a couple of suggestions that should help cut down the risk factor quite a bit.

  1. Remember that most, if not all ICO offer early-bird sign-up bonuses, often as high as 50% WITH NO LOCK-UP PERIOD. This is very important, please read that last sentence again. Also, a lot of ICOs offer public bounties ie free ICOs to people who publicize the ICO on their blogs and Facebook pages and other social media. Again, these bounties HAVE NO LOCKUP period. So that means in the first week of trading, there are investors with HUGE incentive to dump the coins at the initial offering price (or even below).
  2. So surprise, surprise most ICOs end up below the initial offering price very quickly. That means you might as well wait until the ICO is OVER and buy on the listed exchanges. Yes, after the dumping is finished, the coin may bounce back up in value, but why take the chance? It’s pretty much a given most coins will tank in the first month of trading UNLESS…
  3. The ICO is capped and over-subscribed AND THERE IS COMMITMENT FROM A MAJOR EXCHANGE to list the coin as soon as the ICO is over. And when I say a major exchange, I’m referring to exchanges like Kraken, Poloneix and Bitfinex. So look over the prospectus, check the exchanges that have promised to support the coin, and then NAVIGATE TO THOSE EXCHANGES and check to see they are posting notices that they will support the coin.
  4. In summary: Buying into ICOs with no early-bird bonus = BAD. Buying into ICOs with no listing commitments from a major exchange = BAD. Put those two together = VERY BAD.

One more thing: If you are a US citizen, you may have just wasted five minutes of your life. Most if not all ICOs will not knowingly sell to US citizens because they are terrified of the wrath of Uncle Sam’s securities regulators. Pretty much all ICOs are written up in Switzerland.

One day there will be a massive court battle to determine if these financial derivatives are even legal.

But until then, have fun walking through the gray zone.

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