In 1997, Robert Kiyosaki published his groundbreaking book, “Rich Dad, Poor Dad.” In this work, more than anything else, he made finance and the steps people might take to become financially independent relatable.
I remember when I first read this book and found out about the concept of accredited investors. Essentially, these are banks and high net-worth people who by law are able to invest in what regulators deem to be complex or risky investments. Investments that 97% of the rest of us are blocked from.
The purpose of these laws is, of course, to protect us from getting wiped out by investments that only professionals should really be looking at, that might wipe out smaller investors, and to cut down on the likelihood of scams designed to target the unsophisticated. In general, this is a good thing.
On the other hand, these same investments are the ones that have the really stellar returns that could be life transforming. For Kiyosaki, part of his ‘rich dad’ program was to gain enough income and net worth to be able to qualify as an accredited investor.
A few years ago, along with the rise of cryptocurrencies, a new method of crowdfunding arose, known as an initial coin offering (ICO). Rather than going through angel or venture funding, a project could pitch itself to the public by offering tokens for sale. No one is excluded from taking part. The tokens often (but not always) have some integral use within the project that would create ongoing demand for them (and value) when and if the project is successful.
It should be noted that ICOs are less like IPOs where people buy stock and thus equity in a company, and more like Kickstarter where people contribute in order to get defined benefits like first run production of a product. In this case, they get the tokens which may give them access to use the platform or profit from the rising value of the coins.
ICOs really got their start in 2013 with the issuing of Mastercoin (now Omni) as a second-layer smart contract, and once Ethereum ran its own highly-successfully ICO, that platform became the go-to resource to create all sorts of other tokens. Most ICOs these days are run on top of the Ethereum smart-contract platform.
With this development, a reported nearly 4 billion dollars of funding has flown from regular people into interesting projects all over the world that might otherwise never have seen the light of day.
That’s on the positive side of things. The trouble is that where there is money to be made, there will be scammers and charlatans. So people interested in participating need to be careful. ‘Being your own bank’ with bitcoin means you need to be responsible for the security of your own coins – and that if you make a mistake, get scammed, or forget your password, there really is no one you can call. Not being held to accredited investor rules to invest in these projects means you need to do all of your own due diligence and be very sure of what you are investing in. The fact is that even most of the honest projects will still fail – and that’s just part of investing.
Zilla is a new one-stop platform for Android (beta version here) and IOS (here) to help those interested in taking part in this new economic model of funding and profiting from interesting projects. Here is a summary of what Zilla does:
- It allows for watching and one-click investing in projects you choose
- It verifies and lists projects
- It aggregates information about the projects into easily navigable screens
- It allows users to up or down vote projects
- It provides an easy way for projects to airdrop coins and tokens to participants
- It is multi-lingual allowing people from all over the world to use the platform
In order to provide better due diligence for those using its platform, Zilla has partnered with CoinFirm who will do AML and compliance checks on listed projects.
In order to simplify the process of investing in projects, Zilla has partnered with Dether, a decentralized over-the-counter trading app for Ether. After purchasing ethers, investors can then buy the tokens of the projects they are interested in. Dether is still in development.
In order to allow users to store, manage, and track their investments in one place, Zilla has partnered with Ethos Universal Wallet – a multicurrency wallet complete with a portfolio tracker. Ethos is still in development.
The Zilla Token:
Holders of the Zilla token (ZLA) will benefit by paying lower fees on Zilla services – up to 50% off for projects and 100% off for users. People who hold onto their ZLAs for 3 months will be given a sub-token designated GD which will qualify users to get greater portions of token airdrops.
The ZLA is currently available for purchase on the Houbi exchange with more exchanges expected to be added in the future.
Zilla is a Tool, Not a Solution
The Zilla platform looks to be a great way to learn about great ICO opportunities, and it even does a lot of pre-vetting of listed projects. That will ease the difficulty for interested investors – but anyone who is interested in putting up money still needs to be aware that it is first, last, and always their own responsibility to know what they are investing in and that they are taking on the right amount of risk for themselves.
What to Look for in ICOs
Zilla founder, Abasa Phillips has written about what he feels are the best things to look at when evaluating ICOs, what he refers to as the 4Ts: Tech, Timeline, Team, and Token:
Tech: Abasa says that it’s important to look at the need the project is serving or the problem it is solving. Is it broad based? Is it something that people are really going to want? Or perhaps it solves an existing problem, but is significantly easier to use than existing versions. Or perhaps it adds new features (privacy, decentralization) that people will want. Also, it’s important to look to see that there is significant room for the market for the tech to grow in.
Timeline: For Abasa, a great question to ask about timeline is, “Do they have a prototype?” If not, then the project may be nothing more than sketches on the back of a cocktail napkin, and it may be impossible to judge of there is any real possibility of the project coming to fruition. A prototype means the tech is workable, the team is committed, and that the project is not simply about raising money.
Team: Abasa says that he can spend a significant amount of time researching the team of a project. Who are they, what have they worked on before, and does the experience of the team match the project under development. Abasa exemplifies this in the Zilla story. He has been a founder of two separate projects, PegaPay, a bitcoin purchase and merchant app, and Primo, an affiliate app that allows users to make money by monetizing their social networks. The experience he and members of his team have gained through these projects give them a unique understanding of the problems of launching businesses.
Token: In this article, I have been using coin and token a bit interchangeably because of the term ‘ICO,’ but it should be noted that a coin is intended to be used as a currency while a token is often seen as being use-specific. To know if an ICO is worth investing in, it’s necessary to know how many tokens will be created, how they can be used, exchanged, and redeemed, how they will be distributed and according to what schedule, and how is the project going to support the they’re value.
ICOs are a high-risk, high-reward crowdfunding method, and if current trends continue, we’re going to see a lot of them in the next few years. Be safe, do your due diligence, and make Zilla your go-to place to find out what ICOs are out there.