November 2018 was a disturbing month for crypto investors worldwide. The value of Bitcoin, the coin with the largest market cap, crashed 37%, bringing the entire crypto market value down by almost $70 billion, reported CNBC. Ether fell 43% and Ripple dropped 18% during the month.
A bearish crypto market is not a new thing. This volatile sector definitely sees its fair share of ups and downs. Different factors contribute to the changing price dynamics in the crypto market. But, the reasons for the crash this time make it clear that it is time for ICO creators and marketers to focus on developing a solid product, rather than investing in building hype about the project.
Regulatory Bodies Toughen Their Stance on Crypto Products
The US Securities and Exchange Commission (SEC) was quite slow in imposing regulatory sanctions on ICOs in 2017. In 2018, it seems to be making up for lost time! On November 30, 2018, the US SEC imposed sanctions and fined two ICO companies for selling unlicensed securities.
Experts believe that this is just the beginning of an incoming enforcement wave. Till 2017, the price of tokens increased tremendously, as part of a speculative wave. But, regulatory bodies are now concentrating their efforts on getting the crypto space rid of bad actors, enhancing global financial inclusion and protecting investor interests.
Now, ICO creators will have to ensure regulatory compliance and that their products are not securities in disguise. It is important for start-ups to get advice from lawyers well-versed in the evolving crypto market regulations. Find a way to structure the token according to the domestic legal jurisdiction, although excluding cross border legislations might lead to some nasty surprises.
Getting the Right Financial Backers and Supporters Onboard
If teams put minimal efforts into product development and its promotion, then they should expect the vast majority of their supporters to be mere speculators, who are only in the project to make quick money. Serious supporters are those who will analyse your project’s fundamentals, ask tough questions and back your team on a long-term basis.
This goes beyond just creating a whitepaper, with a vague idea attached to it. Experienced contributors are looking for mature products that can deliver value to the industry, rather than hype creation on social media channels. Today, investors do their research well and only put in money where the product appears viable and sustainable.
A Working Prototype is Essential for ICO Success
Financiers and industry experts have realised that much of the ICO marketing efforts in 2017 were based on creating a buzz around blockchain and related technologies. There was no substantial product development happening anywhere. The crypto market has consumed $30 billion of investor funds in the last two years, and hasn’t delivered a customer base beyond speculators, says a report on Fortune.
Scams and failures have made investors cautious, which is why many startups today are busy developing working prototypes, and garnering enough customers, before they proceed to crowd-funding or ICOs. A product at hand is useful when you make pitches to venture capitalists, in order to raise seed money for business development. This is also true of blockchain products looking to raise funds via ICOs.
Product Development is Key to Long-Term Branding
In this highly noisy and competitive marketplace, branding is critical to success. Contrary to popular belief, branding is necessary for SMEs and start-ups in the blockchain space. It gets rid of the speculative mania, allowing people to see which companies are genuine.
Product development is an important part of branding. For example, major technology and financial publications demand a solid product, before they even contemplate on writing about your ICO. In short, a mature product inspires credibility and trust. This is necessary, when most social media giants like Facebook and Twitter, are increasing efforts to stop the spread of fake news and speculative articles on their platforms.
Bad projects have created a general distrust in the sector. Blockchain technology has a lot of promise for the future, and if we want to reap its benefits, we need to build products that stand out due to their functionality. Teams have to be experts on the project they are working on, providing information that is of interest to the target audience. Content creation should be dedicated to the product and the future roadmap for the company.