Bitcoin Forum

Hello ! I'm a newbie, but I am currently seeking informations about ICOs and, more precisely, how a company could make an ICO.

I am not talking about an ICO based on a new tech', or whatever. I'm talking about a company that, instead of doing the standard IPO on the "real" market, would create a coin, and sell it as a share. There would be no value, nor any use of the coin, except that it would literally be a percentage of the company's marketcap (a share, in a nutshell)

The thing is: what if I had a very healthy company, that could make a 10-fold turnover increase in a 3-year lifespan? Would you buy their coins if it was just an asset, and not a tech ? In which extent ? How should I define the numbers of coins / ICO prices ? That's be a shame to fail on that part if everything else is fine.

Something like this. I am really bad with how cryptocurrencies works, and more especially, on what ICO are based off.

Please, enlighten me

Depends on the country, if its US based - Best of luck to you.

Also there are several coins like this that essentially do a buyback of their coins which is equivalent to x percent of their profits.

France-based, even though we already entered the market of nearly 30 countries.
They do a buy-back ? Like, they buy all the coins back from investors ? What do they do, then ?
Please develop :)

I'm not on a personal computer to find the actual tokens/token names but for example:

Selling 1,000,000 tokens for $10 each (Usually much cheaper per token, just an example).  Lets say they raise $7,000,000 - 300,000 tokens are burnt.
The company has a buyback policy that 25% of their profits every 3 months will be used to buy back the outstanding 700,000 tokens at 5% below market price.

So 3 months rolls around and 25% of their profit is 1.5 million, enough to buy back 150,000 tokens at ICO price; However the stipulation is market price - 5%.  Market price in this scenario is $15 per token, so they place an order for $14.25 or approximately 100,000 tokens this allows people that would like to sell to take their profit and also lets the company honor its buyback policy.

Another example of this is a direct exchange option on the company's website:

Same ICO information as above.

Except in this scenario the company after x period of time buys back all tokens at a fixed rate (I'm thinking of the plastic company ICO) where its a specified buyback rate.  Creating a permanent floor for the lowest possible point the tokens would rationally ever be sold at, but they make no effort to personally go and buy off exchanges.




Scenario A) could lead to a token valuation of 10,000 each as the supply dries up
Scenario B) leads to a fixed cost where a company can factor this all in as a future expense. 

There a lot of ways you could structure it. There really is no right or wrong in getting creative with it. You could do a buyback or you can distribute dividends. You could even use the tokens as an exchange for a product or service that the company is producing which is essentially what kickstarter is doing.

Downside is the dividend distribution tends to exclude US based investors for whatever legal reason (I don't know the specific why reason though)

If it's a company hatched out from nowhere, trust me, it will look like a bunch of beggars on the street with begging bowls. Of course if it is a reputed company with strong credentials and proven track record of successful ventures, it would just look like another business venture :D

lol

In the U.S.  a dividend automatically  makes the token a security. Once it is a security it has to be registered as such. It is cost  prohibitive as it can literally cost you millions of dollars.

To get around U.S. laws you have to create as much utility in the token as possible. make it  look more like a product than an investment.

This is  a gray area but it is currently the strategy for companies that want to launch domestically in the U.S.