Bitcoin and other major cryptocurrencies such as Ethereum are now widely known in mainstream audiences, however, as token sales have proven to be popular as well, their reputation has been controversial at best.
Plenty of token-based initiatives have since emerged to tap on this demand, but often struggle to live up to the promises behind the tokens. This ultimately perpetuates skepticism and erodes investor confidence.
Token sales present aspiring companies or startups the prospect of raising funds and building a platform to launch their products or services. However, the lack of technical competencies or industry know-how to utilise a token sale may pose barriers to entry, resulting in failure to translate these business ideas into investment-worthy causes.
It is imperative for token issuers to understand the challenges faced in token pre-sale in order to navigate the turbulent conditions. Here we look at some of the biggest challenges that lie before companies looking at token sales:
Ambiguity in regulatory authority
The lack of regulatory oversight for tokens is still a major cause for concern, especially since the Security and Exchange Commission (SEC) has, for the moment, declined to set benchmarks for best practices. Aggravated by differing definitions on whether tokens fall within the classification of assets or securities across different countries, token sales often give rise to the need for costly, exhaustive, and time-consuming legal support from the relevant authorities.
Need for technical competence
Generating tokens for token sale is a complex process that requires a certain degree of technical competence, which often falls on the onus of participating businesses. Hiring skilled workers would then become a challenge as the technology is still very new. Not many programmers in the market have the expertise to keep up with the processes of token generation, which are often highly technical and not intuitive.
Lack of education to combat cybersecurity breaches
Hackers have been known to exploit and attack token sale projects, especially those that are not securely guarded. Anyone from veterans to less experienced programmers may be targeted by fraudsters and cybercriminals, much less new investors who are not familiar with cybersecurity measures. From cold storage to safeguards against fake addresses, token issuers have an active part to play in education, cultivating credibility in the minds of investors.
Driving token awareness for startups
The road to getting listed on an exchange is long and painful for a startup or new group without the right connections. Competition is fierce especially if they are going up against bigger players with presence on financial or crypto-media. Under such circumstances, token issuers should look out for crypto-ecosystems with a robust foundation of supporting resources that will help elevate their presence through the platform’s communication channels.
TOKENOMY platform aims to provide guidance for aspiring companies or startups to navigate through these challenges and get ready to embrace the new token economy.
