ICOPedia

ICO Rating System Breakdown – Use of Blockchain

The blockchain is the backbone of every decentralized network. A great product, as such, should demonstrate innovative use of this technology, and in a manner that genuinely provides a disruptive advantage. Appropriate use of the blockchain, however, stretches a little further than just having a proper development with disruptive advantage. The use of blockchain should also encompass custom tokenization, adequate system decentralization, and a contribution to the blockchain ecosystem.

Blockchain Development

Most of the ICOs that the public witnessed in 2016 through 2017 had simple Ethereum-based tokens that promised utility shortly. A proper ICO, however, should have a novel blockchain and an accompanying service.

At the very least, though, the ICO team should present an Ethereum-based coin and a platform that has an element of smart contracts functionality. It is better if the blockchain development presented has some aspect of automation and enhances convenience. An ICO will get an excellent rating if the blockchain is novel and offers service.

Disruptive Blockchain Advantage

With regards to the disruptive blockchain advantage a decentralized network can provide, there isn’t much wiggle room; the idea must be fundamentally disruptive. While blockchain has trailblazed a path in the financial services, its disruptive features are now bringing useful innovations to other segments of the economy as well. With possibilities in traditional industries such as healthcare, energy markets, and even public service provision, the sky is the limit. Also, you can expect investors to get even keener in future and scrutinize the projects some more before they put in money.

Custom Token for the Network

Necessarily, every credible ICO should have a real and tangible token that offers utility-based value. It probably is important to highlight the reason why a token if this claim is to remain valid. While explaining the essence of a coin, Anton Telitsyn, the CEO of Lordmancer II ICO, said, ‘tokens fund the development of the project, marketing it and, enhance the access and utility of the platform.’

Increased demand to access the platform means increased utility, which in turn increases the demand and value of the tokens. Such encourages token holders to actualize their reasons for holding the coins; sell, exchange them for goods and services or access the platform.

Decentralization of the System

Any ICO rides on the back of the blockchain technology and is incomplete without a properly decentralized system that allows users to validate the transactions. Most ICOs, so far, have been decentralized and, as such, score highly in this category. However, the market is seeing a combo of hybrid systems that are decentralized as far as circumstances allow as well as some centralized systems that hold the promise of decentralization. Such systems are allowed as long as the pledge is achieved in the end.

Contribution to the Blockchain Ecosystem

The blockchain technology is relatively new and every input into the field at the moment, is a lot similar to a research topic. At the end of it all, it should contribute to making the blockchain ecosystem better.

However, such contribution needs to go past making donating new knowledge. Instead, the information so made must be captivating or even, have a wow effect on the users.

In summation, the use of blockchain in an ICO is essential and should be apparent. Anything less may not meet the requisite scores of a credible offering.

Previous rating system breakdowns:

  1. Whitepaper
  2. Product

Leave a Reply

Your email address will not be published.