What is an ICO?
An unregulated means by which funds are raised for a new cryptocurrency venture
Are ICO’s more commonly tokens or coins?
Tokens
What are the 4 types of tokens that seem to circulate?
- Payment tokens = cryptocurrencies = coins
- Utility tokens - give access to product or service
- Security tokens for underlying assets (eg gold)
- NFT
What is Ethereum’s token template?
ERC-20
What is ERC-20?
Universal language all tokens on Ethereum uses
How are ERC-20 tokens created?
Smart-contracts
What are some examples of precursors of tokens?
- Games - valuable in game tokens bought for real money
- sports arenas - sell personal seat licence to season ticket holders (reserves seat)
- royal albert hall - can purchase seats indefinitely
What does Filecoin do?
Provides decentralized storage using a global network of computers with available space
How do you earn tokens with Filecoin?
Storage nodes bid to host files and minors earn by validating files via “proof of space” algorithm
What is the payment you receive from Filecoin?
Filecoin token (FIL)
Why would a company use tokens rather than currency?
- incentivise to recruit new users
- allows customers to share in the value created
What is the allocation of Filecoin tokens?
- 70% to minors
- 15% to protocol labs
- 10% to investors
- 5% to Filecoin foundation
How are ICO scams advertised?
“get rich quick” scheme
What are some examples of red flags that indicate ICO’s?
- claims of high guaranteed returns
- Celeb endorsements
- claims of “SEC” complaints
- investing with credit cards
- pump and dump scams
What are the 2 major regularity issues with ICO’s?
- are ICO’s covered by securities laws?
- What are the tax consequenses?
Why is it important that ICO’s are covered by the securities laws?
- disclosure - cost of filing/ release of competitive info
- Potential liability
