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Finance & Financial Services

Raising money through cryptocurrency offerings – how to do an ICO

By Adrian Pietrzak, FinTech biz dev manager, Future Processing
Header a pietrzak


Whether we like it or not, cryptocurrencies are the next frontier in the world of money and finance, with initial coin offering (ICO) being the biggest trend in the cryptocurrency industry today.

Hundreds of millions of dollars pumped into ICOs each month prove that there's no slowdown in sight.

Let’s take a closer look at this phenomenon to find out if and how ICO can be beneficial for your business.  

What is an ICO?

Initial Coin Offering is an exciting instrument for talented investment teams with great business ideas to quickly raise funds. The purpose of an ICO is to create and sale simple tokens or coins of a blockchain or a cryptocurrency project to gather the money necessary to finance development of a new idea. Investors are interested in buying the coin as they hope it will be used a lot and be in high circulation, which would result in the future raise of the value of the currency.

The major difference between ICO and IPO (initial public offering) is that an ICO does not result in investors having partial ownership stake of the company they are giving money to.

Sounds like an interesting way of financing your project? Here are some tips on how to do it right:

Five steps to launch an ICO

1) Create a product that can benefit from its own cryptocurrency

This is the first and the most important step in launching an ICO. To create a buoyant demand for the token, a real utility is necessary. The token must be somehow integrated into the project and suitable for the business model in a meaningful way. You need a stable, robust, scalable and secure product based on blockchain, that actually provides value. Consider preparing an MVP (minimum viable product) to convince the crowd you have a winning, market-changing solution in hand.

2) Prepare a detailed strategy and an action plan

Success or failure of your coin is predestined long before the actual ICO, as it relies on a clear, feasible and exhaustive strategy that will empower you to move towards with the goal in mind. How much money you’d like to raise? How will you spend it? How many coins will you put up for grabs? How much will you retain for yourself? Do you plan a pre-sale? What’s your plan on creating more coins in the future?

3) Focus on the marketing

ICO is basically another form of crowdfunding, and for the crowd to really buy your idea, you need to generate the hype and buzz to make sure enough investors know about it. That’s why creating a community around the product is the second most important step in the ICO process.

A clear website focused on the problems your coin intends to solve is just the beginning. Prepare a white paper, which must simultaneously be a business and marketing plan, a pitch deck and a technical manual. Keep your communication channels always open (such as Slack, Telegram, Reddit, LinkedIn) and actively participate in the discussion. Get some publicity that will build confidence and trust that legitimises your ICO.

4) Create a token

In fact, this might be the easiest part of the process. Focus on creating an asset that your business needs to survive. It can be literally any tradeable good, such as digital coins, tokens, loyalty points, certificates or in-game items. Think about it as a share in an IPO transaction. Then just follow instruction on chosen blockchain or cryptocurrency platform (like Ethereum) and enjoy your newly created token! Just don’t forget to get a formal legal opinion and a description of the offering.

5) Get the token out on exchanges

Finally, make sure your coin is available in places that enable investors to buy and sell it on the open market. Identify the most popular industry websites and make sure you get listed as a trending ICO. This will drastically increase your chances of success.  

The other side of the coin

The ICO market raises concern as it’s still mostly unregulated with its standards yet to be defined. It can be an incredible way to generate large profits, but there’s also a chance of large losses. ICO is considered perilous as it has a high potential for scams. With barely defined legality, ICO is currently relatively easy and paperless to fund. However, the possible result of decentralisation of creating and selling stock sparks doubt regarding the future of this instrument, with some countries (like China or South Korea) completely banning ICO already.

Bottom line

We can expect that cryptocurrencies will get further embedded in the financial world. This increases the chance that ICO will revolutionise the system as we know it and become the security and share of tomorrow. So far, the potential of this trend looks immense. The idea of every company or every individual being able to easily release freely tradeable tokens to raise funds sounds very promising indeed. But, as with other trends, no one is able to predict the future.

ICO is not a tool to just quickly raise money and bypass the long and costly process of registering a public offering. To run a successful ICO, it is crucial to develop a deep understanding of cryptocurrencies and blockchain itself.

Are you curious to learn more? We’re happy to share our knowledge!

You can contact me on apietrzak@future-processing.com or call +48 32 438 44 34

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