What ICO investors and companies need to know about tokens, and don’t
There is a huge debate about if crypto assets generated in an ICO event are a security or a utility. Thats probably the biggest legal issue ICO companies and investors struggle with. But lets say they are a utility, that is, a commodity served to give utility to its holder. how many companies who sell commodities have no idea who is buying their stuff or how they use them?
SkyHighDex, a made-up crypto company, did an ICO, user bought their tokens. Lets say all parties expect that those tokens will be used for something of value. A digital permission to use a software lets say. SkyHighDex becomes very successful in selling those tokens and even more so users continue to buy them because the demand for the software is very high and in order to use the software you need the token. Can you imagine the executive management and directors doing their quartly meeting, presenting a great status report, detailing how great everything goes. All of a sudden someone asks, where are our token holder from? how much on average they hold our token?
Boom…. silence in the room. Nobody knows the answer because the company has no idea who is buying or holding their token, where from and how much. If that company is in the business of selling tokens and making sure they are valuable than its incredible that such a simple piece of information is simply missing.
Crypto was built on privacy, or rather pseudo-privacy. That is, the information is fee to all to see but the identity behind it is hidden. This property is important, its very fundamental but we can do great things with the crypto financial information we hold and still maintain that anonymity. The aggregated data is much more interesting than the individual information anyhow.
By aggregative data i mean combining data points from many token holders into groups. A group can be for example all BTC holders, all Binance users and so on. This ensures the individual holdings of a user is not exposed but interesting insights can be created.
Lets explore what aggregative data might be super interesting for ICO companies, investors, token holders and more.
- Token holders Geo-Location — of the most fundamental insights anyone who ever built a website/ mobile app has used is a simple geolocation user distribution of the incoming user stream. Its important to understand in what languages to build the app, detect trends, track the effectiveness of marketing compaigns and much more. By aggregating Geo data from token holders, such insights are easily built.
- Token Velocity — one of the most talked about aspects of token models is token velocity. How many hands a token passes in a unit of time. Its an extremely important aspect of token value and prospect, written extensively by Vitalik. Yet its very hard for ICO companies, token holders and investors to evaluate a token velocity correctly. By aggregating the true holdings data of willing crypto holders we can calculate token velocity.
- Average token holdings value —Its extremely important insight into the movement of tokens, the dedication of its holders and its future prospect.
There needs to be a mechanism by which individuals will be ready to share their private crypto financial data in a secure and private way to generate income for themselves and value for others. Imagine you could make money of your social media accounts. Why should you crypto financial data just sit there. This data is worth a lot. Some will want to keep it private, many will be ready to share it for a passive revenue stream as long as they feel its done in the right way.
There is a growing alignment of interest between valuable crypto financial data people hold and others who desperately need better insight into the market. Lou Kerner presented it in a very interesting way here.