Pascal Coin: an introduction

Pascal Coin – deletable blockchain, very fast, 0 confirmation (and free) transactions, simple account numbers, no ICO, no pre-mine …. what’s not to like?

Pascal Coin ($PASC) is not a Bitcoin clone. It is not a fork from Bitcoin. It has been written from the ground up in Pascal, yes you heard me right. This is one of the things that first attracted me, Pascal is a seriously underrated and elegant language.

Pascal Coin was developed by Albert Molina and released in August 2016 to provide an infinitely scalable cryptocurrency and fast transaction times.

How is this achieved?

A deletable block chain – you do not need the full chain to operate safely – just the last 100 blocks and the latest SafeBox – more on that later. The choice is yours however, if you want to run a full chain you can. But the ability to run a validated chain on the SafeBox and a small number of blocks means that PascalCoin is quick to get up and running and will ideal where space is at a premium such as mobile devices.

An additional benefit of the approach is the addressing scheme.

When you want to send $PASC you do not use public key style addresses like Bitcoin (3MHjwfs6W2HYHWoufmps98sjvYhVqgpXqT) or Ethereum (0xA03199200CDD8AEfe81C0c9EECcd60fDe54D884f ) but account numbers (known as PASA) which look like 127501-23. In fact the last bit, -23 is just a check sum and you can use just the first part. You still have private and public keys, you just don’t need to publish them to have people send you $PASC. In fact you can make it easier by giving an account a name.

The use of account numbers is part of the SafeBox implementation. The problem with using keys is that there is pretty much an unlimited supply and this would mean the SafeBox size would be uncontrollable. Unlike keys which you can generate at will, the generation of account numbers is part of the mining process so is controlled. So how do you get an account number? Well:

  • you can mine one
  • you can buy one: the cost is dependent on the actual account numbers with, in general, the shorter numbers costing more. You can but through the wallet or from one of the PASA sites.
  • you can get one from the Discord or Telegram Bot (for both you will need a wallet – see links at the end).

What is SafeBox?

The SafeBox is a technology unique to PascalCoin and it is basically a snapshot of the balances in each PASA using a checkpointing. The SafeBox (checkpointing) is calculated every 100 blocks. So having the last SafeBox plus the blocks created since then gives you the complete state of the blockchain. The SafeBox is cryptographically secure, retaining the aggregated proof of work difficulty within the SafeBox. This means in order to create a malicious SafeBox you would need to re-mine the entire history of blocks even those blocks are unknown.

So what else is there?

If that’s not enough, each transaction can carry a payload. This is a 256 byte of user data and can be public or encrypted making it a useful element extending the transaction functionality. One use is by exchanges where it is often used as a way of identifying user holdings.

Strong 0 confirmation guarantees: Because PascalCoin isn’t based on UTXOs but a state based currency the reliability of a transaction without any confirmations is much stronger. It is virtually impossible to undertake a double spend transaction as it is a delta operation against the accounts involved and the buyer is unable to erase the transaction from the pool. This is being made even more secure by PIP-013 (see below) which allows nodes to check other nodes unconfirmed transaction pools.

Monetized APIs: The principle is that not all smart contracts need to be completely processed on-chain. In fact recent analysis has shown that contracts, on the whole, are rarely accessed.  The chain is used to secure external data and control work flows – an example is the escrow system currently in development.

Updates with Block 210000 (29th May 2018): Version 3 (V3)

The last 12 months have seen an incredible amount of activity and there are a range of PIPs (Pascal Improvement Proposal) being implemented over the next couple of months. So what are they?

Inflation reduction (PIP-10): At present the total amount of $PASC that will be created is 87,000,000. This PIP reduces that by 50%.

Developer Reward (PIP-11): This allocates a portion of the mining reward to fund future development. The aim is to provide faster time to market for improvements. PIP-18 extends this to allow for work to be commissioned on the underlying development environment (Free Pascal and Lazarus).

Pending Transaction Access (PIP-13): This allows nodes to pull some or all of the pending transactions from connected peers. This further strengthens the 0 confirmation security.

Anonymity (PIP-17): This introduces anonymity via transaction mixing (phase 1) which will

“immediately provide “better-than-DASH-level” anonymity and serve as foundational component for subsequent full anonymity. It will also facilitate Layer-2 applications such as decentralized exchanges in a manner that other cryptocurrencies cannot achieve

And for the future?

Here are a couple of things in the pipeline.

Layer 2 Protocol Support (PIP-16): which will facilitate the transfer of data between account. This will allow clean enveloping of Layer-2 protocols inside Layer-1 much in the same way HTTP lives inside TCP.

Proof of Work: One of the problems surrounding PascalCoin has been the centralisation of the mining process as it has been a good secondary coin for dual Ethereum Mining. One of the current aims is to create a mining algorithm that makes PascalCoin an attractive option for a large number of people. One proposed candidate is Random Hash Proof of Work (PIP-09). This is a multi hash process that is designed to be CPU friendly giving very little benefit to GPUs and ASICs.


White Paper Version 2 (June 2017)

Medium Blog

PASA Sites and

Discord | Telegram |Twitter


Declaration: I hold PascalCoin and a member of the key team on Discord.

The articles on this site are opinions and for information purposes only.  It is not intended to be investment advice.  Seek a duly licensed professional for investment advice.

© copyright 2018 Russell Weetch


DYOR, sure.

At the Consensus NY conference there was a protest by Bankers Against Bitcoin!

Here they arebankers against bitcoin protest

This has been shared a lot and the reactions quite extreme, like “this makes me really angry. I hope all banks go bankrupt”.

People read the headline and didn’t visit the site where they would have seen that this is not all it seems!

This is satire pushed by Genesis Mining. As the site says

“This protest is representative of what will happen to those industries and companies that fail to understand times have changed. Legacy industries that have gone unchallenged for decades will soon begin to see their monopoly slip away.”

They are highlighting an attitude that has existed for centuries – just check out the Luddites. They destroyed weaving machines which they believed were being introduced to replace their role in the industry.

But this episode also highlights something else. If you didn’t visit the website and had a pop as these “bankers” then you failed the golden crypto rule – you didn’t DYOR!



Catching Up – what has been going on?

I have been very sluggish blog wise so far this year  – mainly due to work (big system going to release candidate if you really must know), so I thought I’d do a catch up post and take a look at what we ‘might’ be looking at in the next month.

The market – well what has happened here?

Bitcoin, and most other crypto currencies have taken a massive dive since December although the last week or two has seen a bit of recovery… or bull trap if you listen to the TA (technical analysis) guys. Although I’m not hugely into TA myself there are a few who get a lot of respect from me, in particular John Wilson – read his “Will The futures market do to Bitcoin what it did to gold?” from December 9, 2017.

Anyway, the market has been a bit depressing so to avoid looking at Blockfolio throughout the day I am tracking the markets by seeing what the reward is on FreeBitcoin1 – at least on the dice roll you get more as the price of $BTC drops, but that’s not much consolation.

Despite the slight volatility ? in the market ICOs have been coming thick and fast. It is impossible to keep up with what is coming up. The problem is that unless you can get in on a good pre-sale deal it’s often better to wait until it hits the markets. Some that have caught my eye are Debitum, Neon Exchange, Hoard and some others.

Getting involved at Middlesex University

Had a great time giving an introductory lecture on blockchain as part of the Middlesex University Science and Tech Employability series. Giving talks is great for making you assemble your knowledge in a sensible way rather than just have all over the place in Evernote. Something I enjoy, so if any conference organisers are looking for a speaker, get in touch.

All gone quiet on the Carbon Coin Slack?

Well, simple answer, yes. There was a lot of active flurry of activity during the coin swap (see my interview with Chris), but the promised ICO is on hold as they cover off the regulatory and legal aspects needed. Who’d have though 12 months ago that “ICO, regulatory and legal” would appear in the same sentence? Anyway, the objective is still good and we wait for the outcome of this work and the white paper. Take a look at the website and forum.

The only problem with the delay is that there are others coming into this space, a space that Carboncoin has had to itself until now. I’ll be taking a look at this area soon.

Gems – what a gem of an ICO…not!

As you have probably seen in earlier blogs, I liked the Gems project a lot. It really looked a great application of the blockchain and looks like it could reduce the cost to  consumers and increase the pay of producers. To get on the presale you had to show support for the project and the level of support dictated the level of bonus. As a nice touch they used their own app to get turkers (read the blog post linked to above) to evaluate submissions. All seemed going great guns, and then they announced the ICO structure……

That didn’t go down well at all! Just look at Reddit for some idea of the angst it caused. But fair dos to the team they listened, pulled the ICO and have come back with a different approach – an airdrop, as well as announcing the first paid task. Take a look at the update here.

On the blog soon(ish)

These are the areas I have been looking at and will probably write on them soon.

Pascal Coin: Pascal Coin ($PASC) is one of the hidden delights of the crypto world.  Launched in 2016 this is self funded without an ICO or airdrop, Pascal Coin is not a Bitcoin clone, it is written from the ground up in Pascal, providing infinite scaling (you don’t need much of the blockchain thanks to its SafeBox tech), friendly account numbers rather than wallet addresses, and reliable and instant transactions. Lots of things happening I’ll blog about this soon.

ICO Listings: Where you can list your ICO will be out lists of listing sites.

Blockchain and other animals: a brief look at the Bitcoin chain and alternatives.

Identity and the Blockchain: This is an area of anticipation and there are a few offerings here: CivicKey, CoveIdentity, SelfKey and others.

Climate Coins: as mentioned above I’ll be taking a look at coins that try to address the power consumption issues at some point.

1 referral link

The articles on this site are opinions and for information purposes only.  It is not intended to be investment advice.  Seek a duly licensed professional for investment advice.

© copyright 2018 Russell Weetch

Getting to grips with Gems Alpha  (see our intro here) have released their alpha product to the World and can be accessed here

First things first you will need Metamask installed. Then as this is a test implementation link your Metamask to the Ropsten test network – that’s where your sample earnings will be stored.

First page is pretty simple: a slide show of 3 slides telling you about Gems and a Start button:

Click “Start” and it will tell you to log in with Metamask, so click the Metamask icon on the browser tool bar  and click “Sign” and you’ll be logged in and shown a list of sample tasks.

Click “Join” and you will be presented with a maths problem and a warning that no real Gems will be earned  (mind you if I could something for the sample tasks I’d be here all day ☺). When I first tried this I got an error at this point, told them and it was fixed very quickly – great response!

Once in you are assigned your first task – mine was calculate 0 – 4 (is this different for everyone?)

 Once you have you submitted the answer the Total Pending increments and once validated you get a the opportunity to undertake another task.

This is a very clean implementation and if they can keep the simplicity it will be an amazing application. They obviously have a very clear vision of where they want this to go, hopefully it doesn’t get cloudy. Sometimes you use an application and even in the early stages it just feels well constructed and this is the case here. From one dev to those on the Gem team well done!

It will be great to see some samples of more complex tasks. I look forward to following this project.

Gem Alpha:

Gems website:

The articles on this site are opinions and for information purposes only.  It is not intended to be investment advice.  Seek a duly licensed professional for investment advice.

© copyright 2018 Russell Weetch

Mechanical Turk and the Blockchain

The original Mechanical Turk was a fake chess playing automaton from the 18th century – a mechanical illusion that allowed a chess master to hide inside the machine1. The term has more lately come to mean a service that can be used to place small tasks which require human intelligence (a major use is for enriching AI data, or in China for internet censorship) – a market of employers and providers (Turkers). Amazon provide such as crowd sourcing market place through the AWS service ‘Amazon Mechanical Turkas do others such as CrowdSource and RapidWorkers3.

The market is there – a 2015 World Bank Report4 estimated that there were 500,000 workers registered with Amazon Mechanical Turk and according to Alexa.com4 the site had 750,000 unique visitors in December 2015.

One issue centres around fees – validated work costs a lot for the employer and the worker gets very little. The enabling sites charge fees of up to 40% (looking at the Amazon site, it seems a nightmare to work out5);

Secondly, validation of work can be difficult. One method is to recruit 5-15 workers for each task – a very expensive overhead.

Another issue is that the pool of labour is constrained by a huge number of people not having access to a bank account.

Gems is a new project from Rory and Kieran O’Reilly looking to improve the whole process using the Ethereum blockchain. The aim is to provide a protocol for contracting workers to perform micro tasks and a mechanism to prove validity of the work do based on a solid economic supply and demand model with no central fees.

As a protocol Gems provides the basis for others to develop dApps to run on it – that makes it a highly extensible platform.

Overall the aims of the project are:

1. Removing the middleman taking a large fee
2. Verifying accuracy of results from crowdsourced tasks
3. Supplying and building reusable interfaces
4. Removing the need for existing banking infrastructure
5. Properly incentivising and disincentivising miners and requesters

 This is a project backed by a very strong set of advisors: Biz Stone (Twitter, Medium), Joey Krug (Pantera), Ben Maurer (reCaptcha), Luis Cuende (Aragon), Joe Urgo (district0x) …. wow!

This is one to watch.

The articles on this site are opinions and for information purposes only.  It is not intended to be investment advice.  Seek a duly licensed professional for investment advice.

© copyright 2018 Russell Weetch






What’s happening at Carboncoin? An interview with Chris Carbon

Carboncoin ($CARBON) has been in existence since February 2014 now and it’s aim is to provide a crypto currency that can be run on an eco friendly framework and also pay back to the environment by planting trees across the World.

On the surface little seems to have happened in the project for quite a while, but that has masked the developments that have been going on out of sight.

A member of the community known as Chris Carbon is driving the rejuvenation of the coin and things are starting to happen fast. One of the key things needed is investment and to this end an ICO is imminent. This will involve the issuance of two forms of standard Ethereum token, one form for the existing holders and the preICO, and the other for the ICO itself. The first, an ERC20 token called Carboncoin Eth (CCE) is live on the Ethereum blockchain and is intended to be a placeholder for existing network participants until the fundraise is completed and the new network is released. Once ready these CCE, and tokens bought in the ICO will be exchanged for coins in the new network.

Existing CARBON holders can get into the new coin ahead of the ICO by exchanging half their stash for the corresponding amount of tokens.

I caught up with Chris to ask him about what’s going on.

Me: Hi Chris, Carboncoin is nothing to do with carbon credits is it?

Chris:  That’s a good question! As it stands at the moment Carboncoin has two main objectives as an entity

1) To remove the energy consumption from the Bitcoin technology while remaining as similar in terms of functionality, operation and legality as possible.

2) To keep an amount of coins we call our environmental wallet to one side to be released when they can have as beneficial an impact as possible:

Imagine if, before Bitcoin’s value went the way it has done, someone openly got a substantial number of large coin donations into a wallet to be spent doing good things for the environment. That could make a real difference if the coin then got adopted.

We looked into Carbon Credits at length, due to the obvious application of blockchain technology to the field. We found a lot wrong with the industry so we decided to stick to what we knew worked: Bitcoin, and what we knew was the true motive behind Carbon Credits: looking after our habitat.

In the course of our research we encountered a lot of good people deployed doing great things for the environment and requiring funding to do so. It is absolutely our intention to do as much as we can to support those people.

The new version will increase funding to those projects in the Carbon Credits markets which we feel are aligned to our ethos.

Me: how long have you been working on these developments now?

Chris:   It’s safe to say I’ve been around since the genesis of the network, although neither myself, nor anyone else I know of, knows anything of the issuer of tokens (our very own Satoshi Nakamoto)

Me: once up and fully running how many trees a year do you hope to get planted?

Chris:   As many as it is possible for us to! We can get trees planted by third parties for £4-5 per tree in the developed world, substantially less than that in developing countries, and even less if we do it ourselves.

Part of the funds we are looking to raise are to be spent on a flagship site to establish best practices for every aspect of the initiative going forward. Not only will this site become a biodiverse forest, our calculations show it should be possible for it, and all other sites we set up, to expand independently of funding from the currency.

“As many as we can” is not to say we’ll be doing anything silly – we want to see biodiverse forest on land that isn’t being used for anything else – we’re out to do good things, clean air, clean watercourses, regenerate soil – we’re not trying to do anything more disruptive than that.

Me: When will the white paper be available?

Chris: The original idea is quite simple. Secure the bitcoin technology at low hashrates having removed the built-in incentive for competitive energy consumption, grow the user base and encourage use of the coin for payments (which is harder than it sounds), then take the coins that we have set aside and directly plant biodiverse forest using the best knowledge available for doing so, and supporting other projects doing the same thing, or otherwise helping to maintain the planet that we live on.

The scope of the explanation of an *actually* benevolent technology is very wide. Our justifications come from disciplines as far reaching as philosophy through natural sciences, before you even get to economics and money theory. It is not without many attempts that the white paper remains incomplete. Dyslexia may have something to do with it also.

The idea is very simple: Bitcoin, and all of the benefits of a financial system that is independent of any political governance, but without the energy consumption and with a direct and increasing flow of funds to environmental conservation – supporting Mother Nature and helping to reduce the damaging impact that humans continue to have on the planet, by doing things that are absolutely good for it.

Since we started work technology has moved on substantially. There are now many features we can add into a new blockchain which will make us a more effective payment system and assist us in achieving widespread adoption. I should also add that is has been frustrating to watch how little we have actually achieved for the environment since we started. Our ICO will give a huge boost to our development, distribution and the environmental initiative.

In summary:

  • For the damage humanity is doing to the environment: see the justification for the Carbon Credits initiative
  • For the benefits of biodiverse forestry: see research on Rainforests/Carbon Sinks
  • For the technological benefits of a self regulating payment system: see the Bitcoin whitepaper.
  • For the potential good that we can do: see the price of Bitcoin.

Me: How much are you hoping to raise in the ICO?

Chris: We’re doing the ICO to kickstart the project, because the world needs this to work. We’ve got quite far trying to make it happen without formal funding, but progress is slower than that which is really needed by everyone. The funds raised will enable our payment system to compete on the world stage.

Our ICO is for tokens which will be redeemable for half of our total coin circulation (so half of 16 Billion coins). If we are successful we will raise $10M from the sale of these tokens.

The market capitalisation of existing coins only needs to multiply some 20x for our ICO supporters to break into profit. Hitting this fundraising target will mean we can multiply our active user base by more than 20 – it doesn’t take much imagination or knowledge of the network effect to see the business case here.

Me: So what is the plan, what are the significant areas you are going to invest in?

Chris: Our plan is to deploy half of the funds raised to acquiring the flagship site and providing it with the facilities it needs to become a biodiverse forest and conduct all the research into biodiverse afforestation we feel is lacking in the current state of the art.

The other half of the funds will be deployed in the running of the organisation which makes it happen. We have many developers who are very keen to help us full time when they can be paid enough money to eat. They will be tasked with bringing the new version of carboncoin up to the state of the art for our use case, operating securely and efficiently as a payment system with a distributed ledger, and ensuring that we are always able to meet our transaction volume requirements.

We have a complete business model for distributing the technology in the real world. This business requires staff at every level, and it will be scaled so that we are able to cross the chasm, however long that takes.

Me: will the CCE tokens be tradeable or will they be locked until they get swapped out when work is completed?

Chris: We aren’t exercising any control over the CCE tokens, other than at initial delivery. Users must evidence their holdings so that they qualify to exchange half of their holdings for tokens. Users are free to do as they wish with their coins and tokens but we recommend that users keep hold of both.

The existing Carboncoin network has operated for coming up to four years, it is still very fast and the full client fits on substantially less than 1GB of hard disk space. Indeed we have approximately eight times the transaction capacity of legacy Bitcoin at the moment, and all on less energy than your average electric kettle.

New coins will only be exchangeable for CCE tokens and the ICO tokens. To exchange existing coins for tokens, users must be able to demonstrate ownership of their entire holdings, and they will qualify to exchange no more than 50% of those.

We are not approaching any exchanges to list the CCE tokens, and the other tokens will be smart contacts operating independently of exchanges. If exchanges wish to list either of our tokens, or the original coin then we will not hinder them from doing so. They exist to satisfy the demand of their customers and if they find a business case for listing any of our assets the who are we to stop them.

Me: What will be the big changes that the new development will bring?

Chris: We’ll be able to build everything we’ve designed! Our existing core will be maintained and improved. Our new core will take the best developments in crypto – specifically to do with payment functionality, add our custom carbon-credit-style* interface, and our decentralised consensus mechanism to create an autonomous system for making money flow to people who do good things for the planet.

We have an extensive range of services waiting to be built also. It should not take long for things to get rather exciting.

Me: So what happens to the existing CARBON that has been traded in for the token?

Chris: The plan is for the Carboncoin swapped for CCE to be given away as bonus to new ICO participants at the conclusion of the ICO.

This means every ICO supporter will become an existing network user as soon as the fundraise is completed. Adding the number of users we hope to in this process has the potential to enable ICO participants to break into profit even before the new network is deployed.

We will also be awarding some coins and tokens as bounties to anyone who wishes to help us with the huge amount of work we have to do at this time.

Me: Will the development as a result of the investment be on the existing CARBON network?

Chris: We will be maintaining the network and doing what is required to keep it secure. We will continue to do so, and to innovate on this network, in the course of our future operations.

The ICO is to fund the development of an improved network and our environmental testbed/flagship biodiverse forest.

Me: If a new platform is developed, what happens to the existing CARBON network and the coins?

Chris: Our plan is to maintain the network and the security of the coins into the future. Our environmental ethos is paramount.

Me: What will happen to any CCE tokens that remain unclaimed after the swap out?

Chris: They will be sold as a Pre-ICO to help fund the ICO and initial development

Me: And when is the ICO?

Chris:  we’re aiming for mid January, but there’s lots to do first

Me: So, if I’m a CARBON holder how do I exchange my coins for the token? Can I do it from YoBit or do I need a local wallet?

Chris: To exchange existing coins for tokens you have to contact us directly. The best way to do this is by contacting us on twitter (@truecarboncoin) or to request an invitation.

You will need access to your coins, the ability to send them and an Ethereum client capable of viewing and receiving custom tokens. A web based service such as is suitable for this.

You need to do the swap by Midnight (GMT) on the 21st December 2017.

Me: Many thanks for your time Chris, let’s hope a lot of people get behind this.

Find out more and get involved at:


Disclosure: I hold Carboncoin and CCE

The articles on this site are opinions and for information purposes only.  It is not intended to be investment advice.  Seek a duly licensed professional for investment advice.

© copyright 2017 Russell Weetch

A dozen things I want to know about your ICO

ICOs are now a huge part of the crypto landscape. So many are appearing each day that it is impossible to keep up now.

My original article on how I find ICOs is almost antiquated even though it is less that 2 months old. While I still glance through lists it is hard to identify how I actually find them, perhaps I should keep a record (that is way too sensible).

When I do find a project I am interested in these are the questions I am looking for you to answer and in this order. Now, you might not answer them all, but someone will take a look and try to. I’m just going to give you brownie points if you don’t make me hunt it all down – that’s not to say I won’t cross check 😉

  1. What is the aim of your project?
  2. What benefits does the Blockchain bring to the project? Why is it the most appropriate solution?
  3. Why does it need it’s own token? Why can’t it just use Ethereum or another token for payment – or maybe just credit card would be best?
  4. Do you have a product/prototype/just a white paper?
  5. Who’s on the team?
  6. Who are your advisors? Why are they your advisors? Are they investing?
  7. How much have your team invested in time and money?
  8. How much is your token sale aiming to raise?
  9. What are you planning to spend it on and why is that reasonable for this stage of the project?
  10. How does your sale rank you with the other ICOs in the last, say, 6 months? (You might as well say as someone will do it anyway)
  11. What is your soft cap and hard cap? If there is a big difference, what are you going to do differently if you exceed the soft cap?
  12. What is the structure of your funding?
    • What is the total number of tokens being minted?
    • How much was raised in a private placing?
    • How much is offered in the pre-sale?
    • How long is the pre-sale?
    • How much is offered in the pre-sale?
    • Actually, why are you doing a pre-sale?
    • How much is offered in the ICO?
    • What happens to the tokens not sold in the pre-sale/ICO?

That’s your dozen (see what I did on Q12?) for starters!

There are a lot of questions, but there again you are looking at raising a lot of money.

When the (hard and soft) Cap fits

What should you set as your soft and hard cap for your token sale?

It’s a tricky question. If the soft cap is costed well and is the amount needed to get your project off the ground, then why isn’t that the hard cap with remaining tokens reserved for issuing in a secondary and tertiary coin offering tied to milestones? It is, after all, an Initial Coin Offering. The feeling that you only have one bite at the apple is the same as a token investor’s FOMO.

I often hear investors backing away from ICOs with what are considered high caps in general terms – “I only participate if the cap is below $25m” or the like is common. When you think about it even $25m is a considerable sum for most start ups. That said, this is a much too simplistic approach. For a start it is the overall token capitalisation that you need to look at. $25m for 20% of the issue is very different to $25m for 50% after all.

What is important is what amount is right for the project. Can you justify the need for raising the amount you are asking for. How much do you really need to get you to the next stage? How many stages is realistic to ask investors to cover? Do you need a pre-sale or even a pre-pre sale? (another blog coming there I think). What will you do with your stash before you need to spend them?

Some will buy tokens because they are interested in your product and see the benefit of future use most will be looking for a return on their investment -probably quickly. As they are not buying a stake in the business that return needs to come from an increase in the value of the tokens. In most cases this will be driven by the demand to use them (or in the short term the perceived future demand for them) to use your product.  In turn this will be affected by the number in circulation, which is why burning unissued tokens is popular amongst investors.

Both groups need convincing if your ICO is to be successful.

As I said earlier,  it is an ‘Initial’ coin offering, the implication being that you’ll be back for more – everyone seems to get that with IPOs, not so much ICOs – probably because you have to be a competent investor to take part in an IPO.

However, so many people are looking for the issued tokens to be finite and won’t want to see a flood of new tokens at a later date. Just my opinion but probably the best way is to announce the full amount that will ever be issued with only a percentage released in the ICO and keep the rest in the contract with the right to do further sales in tranches at certain dates or milestones.

An ICO – Having your cake and eating it

Without doubt the ICO phenomenon has changed the course of funding for tech companies. A huge amount of money has been raised in what has seemed like the wild west of finance. In fact one of the key things about the tokens being offered is that they are for use in the service  – unregulated for the large part but that is changing very fast.

One of the key aspects of this has been that the money has been raised from large numbers of individual investors rather than through venture capital and angel funds. This has been called the “democratisation” of funding, but not only has the source of the funds changed, the process has also changed and what you are buying has too.

Under the traditional process to raise the kind of money that is now being raised by ICOs went from raising money from family and friends, probably a bank loan, through angel investors, onto venture capitalists and IPOs. Crowdfunding has changed this a bit and allowed individuals to invest directly rather than through funds, but there is still a lot of investor protection regulation in place.

That seems very long winded process compared to an ICO (have an idea; write a white paper; launch an ICO), but it had sound underpinning. Each step undertook a level of due diligence. Family and Friends must at least trust you to some extent. A bank will look at your business plan, accounts and history and probably ask for security, so testing your commitment to the business. The angel will really take a good look and get to know you. The venture capitalist will put you through the mill.

Also, the business has been developed throughout the process. By the time you get to the angel and venture capitalist there is usually a functioning business in existence. Compare this to a lot of companies who don’t even have a prototype available when they announce their ICO.

The other key difference about this process is that, apart from the bank loan, these people will actually own a part of the business. They will be shareholders and have some say in how the business is run.

One of the major things about the tokens being offered in ICOs is that they are for use in the service being proposed and NOT an investment in the company. This is what get’s them away from current investor protection legislation but one of the consequences is it also removes the provider of funds from any direct input on how the company is run. A lot of effort and convoluted thinking has gone into working out how a service can be tokenised whether it needs it or not, but that is for another article.

What you are buying is the right to use future services. For the value of your tokens to increase you are reliant on the company increasing the demand for its services. A strategy you have little control over.  The white paper is a sales document and what the company decides to release is not regulated (yet). For the investor the integrity of the team becomes paramount.

The position can be summarised by this chat (shortened and anonymised) in a Telegram channel for token holders:

token holder: Can you tell me …..
company: Well we are a private company so right now that is what we can share
token holder: Just want to make sure you have some accountability
company: yes but no one here is a shareholder
token holder: I said stakeholder on purpose.
company: this is a token, not a piece of the company…. 

So one of the advantages for the ICO issuer in that when you raise funds this way you don’t, on the whole, give away any of the equity. On the other hand an ICO is a sale, so could have unexpected tax consequences (Sales tax anyone?).

For the investor, just know what you are buying for your money and do lots of research.

The articles on this site are opinions and for information purposes only.  It is not intended to be investment advice.  Seek a duly licensed professional for investment advice.

© copyright 2017 Russell Weetch

How to “do” crypto – brotherly advice

My sister and nephew asked me about how to get hold of Bitcoin the other day, and this was followed by a few of my friends asking the same question so I thought I’d just publish the email I sent her here (spellings and grammar corrected) as others might find it useful. It’s surprising how hard it is to stop writing once you start!

If you want to buy some of this stuff you will need to open an account – but remember this is a really risky investment, it could go to the Moon or crash to the floor ( I obviously think the Moon ☺ ) so do NOT invest more than you are prepared to lose. It’s all highly exciting when it is climbing by 500% in a few months and as scary as hell when it falls 30% over a few days. You need a calm hand and probably best not look at the daily charts.

Now to get started. You will need to have something called a wallet. This doesn’t actually hold your Bitcoin, it’s more like a keyring that lets you prove the bitcoin are yours.

The easiest way is to open a CoinBase* account1. If you use this link then when you buy your first $100 (about £75) we both get a free $10 (about £7) worth of the currency. You can buy 3 types of coin here ( the main ones ) either by Credit Card or by Bank transfer (but that’s in € or $ not £ so it depends on how much your bank charges for that. Anyway, before you can buy you need to be approved and that can take a while. There are charges for by credit card so you have to weigh up that against the cost the bank will charge for transferring from £ to €. 

Once you have opened an account you have a wallet and you can start receiving Bitcoin (BTC), Ethereum (ETH) and LiteCoin (LTC).

You can start getting some free! Well you have to put up with adverts, but can be a bit of fun. This is not going to make your rich as we are talking pennies, if that, but you will start to gather some – mind you it won’t take long to realise it isn’t worth the time. Look at it this way, the two below pay out when you get to 30,000 satoshi (that’s  0.0003 BTC) about $1.16 (£0.87)1 – and it is a lot of work to build up to that!

Roll the dice at FreeBitcoin* : this is a bit of fun where you click a button and a number is generated which determines how much you win. You can play once an hour. Top prize is $200 worth of BTC, but the odds on that are miniscule.

Or claim some BTC at MoonBitcoin*. Lots and lots of adverts here – don’t click on any of them as most are scams (even Moon used to warn about them) or ICOs (I’ll tell you about them later). It often opens secondary browser window (what, is this the 1990s?).

Actually, bookmark this site BadBitcoin and if you are ever tempted by a site promising the Earth, then that’s a good place to start a sanity check.

Also, you can use some of your computer power to mine some coins. MinerGate* is not the most efficient but is probably the easiest to set up. Alternatively you could pay someone else to mine for you such as Genesis Mining* – enter in the code fl4R29 to get a 3% discount. I’ll send you another email on mining later, it is not the route to untold riches it sounds like and sometimes it is cheaper just to buy!  

Anyway, have a play with these will get you some experience with working with your wallet as you will need to enter a wallet address to get started. This is getting a bit long now, so I’ll drop you another email with how to do that once you have set up.

* This is an affiliate link.
1 Conversion rate as at September 21 2017

The articles on this site are opinions and for information purposes only.  It is not intended to be investment advice.  Seek a duly licensed professional for investment advice.

© copyright 2017 Russell Weetch