Al Zibluk: Just Keeping It Real

Reasons Social Media Marketing Is Still Underrated

Reasons Social Media Marketing
Is Still Underrated

The numbers on social media marketing are impressive.

More than half of small businesses in the United States are planning to increase their social media marketing budgets in 2017, and the number of businesses using social media marketing has increased, year over year, for more than a decade.Still, social media marketing remains underrated. Business owners and marketers frequently treat it as a second thought—something for an intern to handle, rather than a strategically deep mode of building your reputation and attracting new traffic. Some have even abandoned the idea altogether, refusing to spend any time or money on a strategy that nets a positive ROI for up to 92 percent of businesses that use it. So what’s the deal? Why isn’t everyone on board with the strategy?

The "fad" angle.

Believe it or not, some people still believe that social media—or its use as a marketing strategy—is still a fad just waiting to fizzle out. This is an argument I could have understood back in 2007 when social media platforms were only in use by a small percentage of the population. But now that Facebook has reached more than 1.2 billion users and is still growing, with a corporate foundation that rivals those of Apple or Google, it’s a hard argument to defend. Users have gotten used to the idea of socially interacting online, and platforms keep evolving in new ways to maintain their interest.

You get what you pay for.

Psychologically, people tend to place more value on things that cost more money. For example, in a blind taste test of identical wines whose only difference is price, people claim that the more expensive (yet compositionally identical) wine tastes better. Take this principle to social media marketing; it’s free to claim and build a business profile and to post regularly (as long as you aren’t leveraging paid advertising). Because of that, people don’t value it as much as they do paid advertising. They’re also less likely to pay a professional to work on a social media campaign, knowing that—technically—anyone could do it for free (even if they never actually do it).

Unmeasurable effects.

The return on investment (ROI) of social media is hard to measure, and I’ll be the first to admit it. One of your biggest goals is attracting a large following of people who are enthusiastic about your brand, and improving both your brand’s reputation and brand awareness. These aren’t as objectively measurable as on-site conversions, but they can and do lead to greater consumer interest, which manifests as sales eventually. Trying to pin down an exact value for all these benefits is next to impossible, even for the pros, so the value of a social media campaign is almost always underreported.

Anecdotes.

People also use anecdotal evidence as a basis for their opinions about the strategy. For example, they may know of another business who used social media and didn’t see any results, so they stay away from it in the present. However, these anecdotal examples often don’t examine the types of tactics these businesses used, and they certainly don’t represent the average across multiple businesses.

Apples and oranges.

Ironically, these same business owners often cite the fact that anecdotal evidence can’t prove a strategy’s effectiveness for everybody. They point to major influencers or big businesses in the social media world and explain that social media works for them because it fits naturally with their industry, or because they have the resources to invest in a heavy campaign. It’s true that some industries may be naturally inclined to perform better on social media than others; tech companies and consumer-facing businesses are two good examples. However, social media marketing can be used by practically any company—it may just require an adjustment to your approach.

Poor targeting.

Some businesses look at their own results and use those results as a gauge of the long-term potential of their campaign. But they may not realise that their strategic targeting is interfering with their results. For example, if you buy 1,000 followers using some super cheap follower-adding service, but only 4 or 5 of them ever interact with your posts or visit your site, it could be that the remaining 995 don’t belong to demographics relevant for your business, or that you haven’t been using the right engagement strategies to cultivate interest. Don’t underestimate the potential of a well-researched, strategically focused campaign.

Lack of investment.

Effective social media marketing can’t be done on a whim. It needs to be planned, researched, and strategically executed. That means you’ll need to spend a significant amount of time or a significant amount of money to see results; and since many business owners aren’t willing to make that investment, they never see a fraction of their potential results. By that point, they’ve seen what a small investment does, and they’re unwilling to make the jump to a larger investment.

Social media marketing isn’t an “underground” strategy; it’s talked about heavily (and I should know), and there’s no shortage of content covering its feasibility and best tactics. But the perceptions of marketers and business owners are still lagging behind the evidence, and they’re only hurting themselves in the process. The more you learn about the effective implementation of social media marketing, the more plainly beneficial it seems—but you have to treat it as a legitimate marketing strategy if you want to research it appropriately.

Chuck Reynolds
Contributor

Alan Zibluk Markethive Founding Member

Ways to monetize your social media followings

Ways to monetize your
social media followings

Turn your social media presence into a way to generate revenue — even if you don't have a massive following on Facebook or Twitter.

Social media has not only revolutionised the way that people communicate

and stay in touch; it has completely transformed business and marketing practices as a whole. Over the past five years, social media websites have become some of the largest and most meaningful pieces of the digital marketing puzzle. While many still maintain that social platforms are for communicating and not slinging products, others would vehemently disagree; just look at Facebook, Instagram and other networks’ efforts to integrate e-commerce options.

Generating revenue is, by many standards, the sole reason why many attempts to accrue millions of followers; massive awareness often leads to either sponsorships or sales. Either way, cash is the ultimate goal. But is it possible to monetize moderate social followings that don’t reach into the hundreds of thousands and beyond? You bet it is. If you’re ready to start having your social followings work for you, here are five ways to turn your social presence into a bona fide stream of revenue.

Create an online course that educates your followers

E-learning is a gargantuan industry that’s poised to grow exponentially over the next several years, reaching $325 billion globally by 2025. Those who have been watching this trend know that now is the time to double down on their own expertise and create a course to offer their audiences. Kajabi, an e-learning platform that boasts a wide array of powerful features for marketing, selling, upselling and hosting digital learning courses to students, recently published a story on its blog about one of its “heroes” (a person who turned their passion into a profit through Kajabi’s offerings) that clearly shows anyone can turn their social audience into customers and advocates.

Makeup and design artist Tiffany Bymaster was introduced to Kajabi by her mentor, who had already achieved massive success through the platform. Bymaster had no email list or social following at the time, but knew her skill set was stellar. She began making videos on how to grow a person’s outreach process — mostly just to help herself become comfortable in front of the camera. Once she set up her Kajabi website, these videos actually became part of her course training materials. From there, momentum started to build as her social presence grew and her online training program took flight. Today, Bymaster has now launched three successful programs which have earned her $80,000 in the past six months. Bymaster is a perfect example of leveraging social to create revenue, as her method incorporates my next two points.

Unveil new products and services to your followers

In order to generate sales from your audience, you need to have something to sell. By posting about new products or services on social media, you are giving your offering a much larger platform to reach prospective buyers. If you want to significantly extend that reach, start running Facebook ads for your products using Custom Audiences and Lookalike Audiences. This will allow you to target the most relevant individuals to help boost your sales. If you want to add a layer of “exclusivity” to your product releases, you could give your social audiences early access to products and deals so as to create a sense of urgency and privilege.

Integrate video into your marketing stack

Video content is en Fuego. Everywhere you turn there is video content, articles about video content, and even videos about video content; it is becoming inescapable. Nearly every social platform is currently generating billions of video views per day; even Snapchat has broken the 10 billion daily view marker. The point is that video content is becoming a marketing necessity — especially when you consider that explainer videos increase a prospect’s likelihood to purchase by 1.81 times.

Videos help increase your chances of monetizing your audience, as the content is engaging, educational and often entertaining — the marketing trifecta. Leverage this by creating video content about your products and using live streaming services like Facebook Live to connect with your audience and explain exactly how your product will help them reach their goals and make life simpler.

Become an affiliate to market products to your audience

Affiliate programs are another sales model that is increasing in popularity. Becoming an affiliate advertiser for brands like Amazon is a relatively simple endeavour which allows entrepreneurial-minded folks to acquire advertising materials for various brands to market to their audiences. These adverts can be circulated across an individual’s blog, website, and yes, social media accounts. Affiliates are paid a commission based on the revenue their particular set of ads generates.

Just be sure when you are promoting these links to your social followers that you are honest with them about your affiliate status and the items you are highlighting; pandering will get you nowhere, except maybe unfollowed. Create long-form reviews on products, and let your followers know your honest opinion; as a bonus, you can even create video content on these items to boost your engagement.

Create a Facebook shop and sell right through social

Social media platforms are integrating all sorts of shopping options for brands and consumers to take advantage of. One of the most comprehensive and in-depth social selling toolkits comes from Facebook. By using Facebook’s shop section, you can list physical products directly on the platform for followers to browse and buy. It just doesn’t get any easier to reach so many people in such an efficient and effective manner.

Selling has never been so easy

The digital age affords brands and entrepreneurs a vast array of options for generating income in a much less back-breaking way than past generations. These are only a few of the many ways that you can monetize your social following and build an online business.

Chuck Reynolds
Contributor

Alan Zibluk Markethive Founding Member

Essentials for a Winning Social Media Marketing Strategy

Essentials for a Winning
Social Media Marketing Strategy

social-media-marketing-strategy

Social media continues to be a powerful way for brands to reach their audiences. They can use it to create more awareness of their brand, to build customer loyalty, and to increase sales.But just having a presence on social media is not enough to do any of that. You need to create a thoughtful social media marketing strategy that incorporates the latest best practices so you can maximise your results.

Here are a few tips for doing that:

Identify Your Goals

This should be step #1 in any marketing strategy. You can’t know what tactics to use if you don’t know what you’re trying to accomplish. You must identify your goals, and you must be specific. Your goal shouldn’t be “get more followers,” but rather “get 1,000 more followers in the next month” or “increase brand exposure 30 percent this quarter.” Your goal should also be measurable. So if your goal is “create more positive brand associations,” you have to have a way to determine if you’ve met that goal. You might look at the number of reviews you get or the number of positive brand mentions. Whatever you decide, you must choose a way to specifically measure your goal to determine if you’ve been successful.

Research the Competition

The competition provides a wealth of data that can improve your marketing strategy.

To start, you should be researching your competition to find out what those brands are doing to reach their audiences. What social networks are they on? How frequently are they posting? What kind of posts are they sharing? How many followers do they have? From where are they getting brand mentions? With intensive research, you can identify the strategies that are having the most success with your target audience and then you can try to replicate them on your own channels.

You also need to research your competition to find opportunities that these brands are not exploring. For example, you might notice that none of your competition is sharing live video, but since you’ve had success with it, you decide to offer more of these videos to set yourself apart. Getting as much information as you can about the competition can help you find new opportunities for growing your brand and ways to distinguish your brand.

Have a Separate Content Strategy

Most people don’t think of social media as a place to share content, except to share links to content. But you can and should create original content specifically for sharing on social media. Many social networks are making this easier. Facebook is rolling out a new feature that displays articles instantly in the news feed. LinkedIn has a publishing platform that lets you originate content right on site. Even Twitter users are finding ways to share content through the use of images that aren’t capped by the character limit.

When you share content on social media, you are able to engage your users better and you create more opportunities for sharing. You can share more in-depth content than what the standard update allows, which lets you offer useful information, engaging stories, and more. By sharing unique content on your social media channels, you give your followers a reason to be there. They know they aren’t going to get that same content on your website, so they follow you on social media so as not to miss anything.

Create a Team

Two heads are better than one. Ten heads are better than two. And so on.

A lot of brands put a single person in charge of handling their social media, but they would be better served by having an entire team responsible for the job. With more people on the team, a diversity of ideas can be generated. One person may become narrowly focused — a team of creative thinkers can play off each other to come up with unique ideas that get more results. Assign each team member a specific role, such as handling all video content or researching the competition. Don’t overlook jobs like customer service or lead generation. Determine what the team members’ strengths are, and assign everyone where they will make the most impact.

Hold a weekly meeting with this team and encourage regular communication. With more people sharing responsibility for the same goals, you have to make sure that everyone is on the same page and that individual efforts are working together to achieve the same resolution. There may well come a day that social media is obsolete, but we can’t see that day arriving anytime soon (if at all). You can’t afford to treat social media like a novelty or an accessory to your marketing strategy. You need to create a dedicated strategy to your social media marketing, and these tips will help you make it a successful one.

Chuck Reynolds
Contributor

Alan Zibluk Markethive Founding Member

The Cold, Hard Truth About Social Media Marketing

The Cold, Hard Truth About Social Media Marketing

Reality bites and sometimes what we picture in our head doesn’t always play out in real life.

At this point, most businesses know that Social Media Marketing and Advertising are crucial for growth and success. However, some businesses still have some misconceptions about how Social Media works versus the reality. Here are 5 cold, hard truths all businesses need to understand.

Success will take longer than you thought or planned it would take.

The truth here is that Social Media is not a magic bullet, success doesn’t typically happen overnight. Social Media Marketing and Advertising are a vehicle to get your business and its products/services in front of as many people as possible and as often as possible so your business will have success, but it will take time and a serious commitment.

Solution:

Just because it isn’t going to work overnight doesn’t mean it won’t work. Implementing a consistent and aggressive marketing and advertising campaign will generate Social Sales Success in the long-run.

Your customers (and your competitors) are using Social Media, they are there and you should be too.

Nearly 70% of all online adults, of all age groups and demographics, are using Social Media. Over 90% of Millennials are using Social Media (in case you haven’t been paying attention, Millennials are the new consumers!) No matter your industry or location, it is a safe bet your customers ARE using Social Media. If you aren’t reaching them through Social Media it is likely your competitors are taking advantage of the fact you aren’t there.

Solution:

Get your business on Social Media. Use the sites that make sense for your industry. Each Social Site has a somewhat specific demographic, and Facebook is a pretty safe bet. Most online adults primarily use Facebook. The bottom-line is you need to be where your customers are, and your customers are on Social Media.

It DOES work.

If you have tried Social Media Marketing in the past, posting here and there throughout the past few years, or you ran ads on Facebook without any results this does not mean “it doesn’t work.” Social Media Marketing and Advertising has changed so much in the past few years that what you tried a year or two ago is likely not an issue today. Or, perhaps you had your assistant or intern give Social Marketing a try, they are young and “hip” and have been using Social Media nearly all their lives and it still didn’t work. If you did not have a formal strategy with a consistent and professionally run Social Media Campaign it is no surprise it did not work.

Solution:

Hire someone who knows what they are doing. A professional Social Media Marketer will know the ins and outs of the platforms and how to use them to your business’ advantage. Keep your campaign running consistently, don’t start, and stop, don’t abandon your efforts, and don’t think that your college intern knows how to seriously market your business because they have been using Instagram since they were 12.

Success does not necessarily mean only generating direct revenue.

There are Social Media Marketing firms that will “guarantee” that you will make back 3 times or 4 times or 50% what you spend, they will sell you on the idea that your ads will do nothing but generate revenue. While this can happen (and does happen) it is not the only reason to use Social Media, and generating revenue comes from several other places than just running an ad.We understand the importance of revenue and sustaining your business, we get ROI, but sometimes that return is not immediately monetary. Additionally, if you are trying to use Social Media to just generate direct revenue and ignore its other benefits you are missing the entire point of Social Media.

Solution:

Understand that the return on your investment of monthly Social Media Marketing and Advertising is not just direct revenue. Social Media helps your business improve Search Rank on the internet and optimises your entire business and assisting with your SEO efforts. It creates branding and recognition, develops your online visibility, provides word-of-mouth referrals, and creates warm (sometimes hot) leads and, finally, when combining all of this together it will assist in generating revenue.

You can afford it because you can’t afford to not do it.

Traditional Marketing efforts cost a lot for what you get in return. Spending thousands of dollars a year to get in front of people once a month or quarter is not a wise investment or good use of your money. If you are still running ads in the phone book, sending out coupon mailers or mailing postcards and you aren’t getting any response it is time to rethink your marketing efforts. If you are getting responses, but not establishing quality leads it is time to rethink your budget.

Solution:

It typically takes 7 “touches” to get a response. You need to showcase your business to your audience as many times as possible. The more people “get to know” your business the more likely they are to call when they need you. It’s time to put Social Media first and use Traditional Marketing as an adjunct to your online efforts. Furthermore, don’t let your competitors overshadow your business. Get out there and be where your competitors and your customers are, it’s a wise use of your money.

Chuck Reynolds
Contributor

Alan Zibluk Markethive Founding Member

Does Your Company Really Need to Focus on SEO?

Does Your Company Really Need to Focus on SEO?

Q: Is search engine optimioptimisation important to your digital marketing strategy?
A: Yes and no.

Firstly, let’s break down SEO as I think businesses and marketers have a tendency to overcomplicate it, which results in an overwhelming feeling of "this isn’t for us" or "we don’t have the expertise/time for this." Actually, SEO is quite simple when you dispel the SEO myths and break it down to its core fundamentals: on-site (changes you make to your actual website) and offsite (things you do outside of your own website). On-site SEO is simply the process of making your website search-engine friendly. This includes tactics like optimising your title tags, publishing great content and being strategic about your website’s structure.

Offsite SEO is the process of getting validation from other websites that your website is useful to searchers. The best way to do this is by earning backlinks — in other words, having other websites link to your website (Note: it’s very important that you don’t try to earn what Google calls "unnatural" links — this could result in a penalty if done at scale!)

If that doesn’t make sense, perhaps my blind date analogy will work. Let’s say you’re at work and you see a cute guy or girl that you like. They showered, combed their hair, put on good clothes and perfume, and you like the look of them. What they’ve done is nail their on-site SEO. In other words, how they look on face value to the searcher — or in my analogy, the person looking for love. Naturally, you ask another colleague what the deal is about this mystical human. You learn that they completed their MBA at Harvard, are on the lacrosse team, and they volunteer every summer for a charity you support. What they’ve done is nail their off-page SEO — meaning, other people are telling you they’re great meaning your opinion of them is validated.

In my opinion, the most important component of SEO is on-site SEO. These are things that you can control, and on-site SEO factors quite literally tell Google what your website is about so that they know where to rank it in its search results. As for off-site SEO, it should always be secondary to nailing your on-site SEO. You have control of what’s on your website, so it’s much easier to focus on getting this right first, evaluating the results, and then look into whether off-site SEO is something you should think about doing. When it comes to improving your on-site SEO, the best place to start is by optimising your content for both users and search engines.

Content is important for a few reasons. First, if you don’t have great content, then you have nothing to share on social media, via email marketing, on your website, in ads or on affiliate sites to grow your marketing funnel. These are all core components of digital marketing and are the primary reasons you should be investing in creating content. It benefits your business on so many levels; it’s not just for SEO. When publishing content, the secret to maximising any on-site SEO benefit is being strategic with the keywords you’re using and the way you’re optimising for them on the page itself. Learn how to select the best keywords to drive more traffic, and then make sure you optimise your web page for those keywords to make sure you’re capitalising on all your hard work from an organic search perspective.

But most importantly, creating great content is actually what causes other websites to link to you. Consequently, this improves your off-site SEO metrics because people are more likely to link to your content as a useful resource or reference it as point of discussion. So focusing on great content kills two birds with one stone: it improves your on-site SEO and your off-site SEO. However, there’s a problem: Most people don’t really know what good content is. You may be thinking, “Oh, those people… I’m not one of them.” I’m sorry to break it to you, but you probably are. Head over to your company’s blog or Facebook page now. Do you see any posts that talk about the product or service that you sell? If you do, then you’re probably not doing content right to attract more traffic at the top of the funnel.

Here's one example. I wear glasses. If you’re an online glasses retailer, you most likely create content around new trends or top styles. For example, you might have a blog post titled: “10 Best Glasses Frames for Oval Faces.”Now, this may work for attracting people like me to your website, because I’m already aware of my problem (that I’m short-sighted), and I’m considering my options for solving that problem (I’m thinking about purchasing the solution). However, the largest opportunity for most businesses to scale their traffic and database is to use content to also attract people that don’t know they need your product yet. So, using the same glasses example: what would people that need glasses, but are not aware of this need, search for online?

They may search for things like:

Why do I keep getting headaches at work?
How to stop squinting at work?
Why are my eyes blurry?
What are those black dots I see on my eye?

An online glasses retailer that creates great content would already know this after doing buyer persona research and identifying their persona’s challenges. If you’ve not done so already, here’s a great free tool to create buyer personas for your business. They may create a blog post that has a few reasons why you may get headaches at work. Some advice they could give to appeal to this persona at the start of their buyer’s journey could be:

Leave your desk every 30 minutes and go for a walk
Turn your computer brightness down
Look at something in the distance every 10 minutes
Get an eye test to check on the health of your eyes

This gives the target buyer the option to solve the problem for themselves, without directly trying to sell to them too early. And in the event that walking, turning the brightness down, and looking in the distance doesn’t work, they may very well get an eye test and then buy some glasses from you after remembering how helpful your content was.

Now this is an exaggerated and accelerated example of someone moving through the three stages of the buyer’s journey: awareness (of problem), consideration (of options) and decision (on which product/service to use). However, the point is, when you create content that helps people and is great quality, they’re much more likely to share it on social media, link to it from their personal blog and tell their colleagues about it. If you can pair that with thorough keyword research and a solid on-site SEO strategy, then you have a much better chance of ranking well in Google’ search results.

So, while SEO is an important part of digital marketing for attracting traffic at the top of the funnel, it’s by no means the most important — SEO works best when you implement it as part of a wider content-led marketing strategy. Focus on creating great content and you’ll see benefits not only on the SEO front, but across all of your digital marketing activities.

Chuck Reynolds
Contributor

Alan Zibluk Markethive Founding Member

Cryptocurrency Exchange Poloniex Set to Delist 17 Altcoins

Cryptocurrency Exchange Poloniex
Set to Delist 17 Altcoins

Cryptocurrency exchange Poloniex

recently announced that it will be delisting 17 altcoins, effective May 2, which saw the price of the coins drop significantly.

On Twitter, the U.S.-based cryptocurrency exchange said:

On May 2, 2017, the following will be delisted: BBR, BITS, C2, CURE, HZ, IOC, MYR, NOBL, NSR, QBK, QORA, OTL, RBY, SDC, UNITY, VOX [and] XMG.

Since Poloniex’s tweet, the prices of the listed currencies have dropped in value by between 31 percent and 92 percent over the past seven days. The biggest drop in value was C2, which is currently ranked 323rd on CoinMarketCap. Over the last seven days, it fell by 91.08 percent. Boolberry, who was one of the altcoins mentioned to be delisted, and who has had a 64 percent price drop over the past seven days, responded to Poloniex’s tweet., and asked:

“Hey Poloniex, anything we can do to avoid delisting?”

Coin Magi XMG, which suffered a 58 percent drop following the announcement, also reached out to Poloniex via Twitter, stating:

Poloniex Magi is with you for a long time. Last months volume is growing, new developments are in progress. Pls reconsider!!

Many, however, have taken to Twitter to either voice their support in the expected removal of the announced altcoins while others have voiced their anger in how Poloniex have handled the situation.

One person responded by saying:

They opened a company to make money … @Poloniex in the same breathe [sic] screw people over …

While another said:

Lol our hedge group only lost like $250000 in earnings in like 20 minutes … 11 failed transactions trying to close positions!!! All gone.

A third said:

@Poloniex who the F%^& makes these decisions? I see at least 4 with active develop, solid community & solid project that should remain.

Criticisms of Poloniex

In the past, the cryptocurrency exchange has received its critics about its security procedures. Last October, an anonymous security review undertaken by Xavier59, revealed three vulnerabilities after alleging that Poloniex had failed to reply to his emails with information relating to security bugs. Furthermore, last year, the exchange announced that it was suspending its services in New Hampshire due to that state’s digital currency regulations. It added the same suspension to the state of Washington earlier this month for the same reasons.

Of course, while the cryptocurrency exchange is considered one of the biggest, this latest news from Poloniex and its planned delisting of 17 altcoins is not going to do any favours for the exchange. It begs the question, then: is this the start of more delistings from the exchange?

Chuck Reynolds
Contributor

Alan Zibluk Markethive Founding Member

Bitcoin breakthrough? Russia moots cryptocurrency green light

Bitcoin breakthrough?
Russia moots cryptocurrency green light

Cryptocurrencies may be recognized in Russia by 2018,

according to Deputy Finance Minister Aleksey Moiseev.Moiseev says monitoring cryptocurrencies could be an instrumental tool against money laundering, and Bitcoin and other digital currencies could be recognized by next year as the central bank works with the government to develop rules against illegal transfers.

“The state needs to know who at every moment of time stands on both sides of the financial chain,” Moiseev said in an interview, as cited Bloomberg. “If there’s a transaction, the people who facilitate it should understand from whom they bought and to whom they were selling, just like with bank operations.”

Last year the idea of a national cryptocurrency had been considered by the Ministry of Finance and the Central Bank, which would see the banning of all other virtual currencies in Russia. The idea had not been discussed by the Kremlin, however, according to Presidential Press Secretary Dmitry Peskov at the time. Russian officials had been opposing all virtual currencies, arguing their cross-border nature, transaction anonymity and lack of a supervisory body makes them the perfect vehicle for illegal transactions. In 2014, Moiseev suggested a ban on cryptocurrencies could be introduced because of their use to fund illegal activities such as money laundering, the buying of illicit goods, rendering illegal services or funding terrorism.

Chuck Reynolds
Contributor

Alan Zibluk Markethive Founding Member

The rise of cryptocurrency (and what the heck it even is)

The rise of cryptocurrency
(and what the heck it even is)

Cryptocurrency is making its entrance

and even though a lot of people don’t want anything to do with it, venture capitalist need to pay attention.

Coins unlike the ones you find in your couch

What’s an Initial Coin Offering? While it sounds like the beginning of an intrepid relationship with a metal-loving deity, turns out ICOs have nothing to do with actual coins.

No parents, no rules

ICOs, aka “token sales,” are part of blockchain technology fundraising. An ICO is essentially a crowdfunded cryptocurrency.

Tokens for new cryptocurrency are sold as a fundraising effort for technical development.

Whenever a new cryptocurrency is born, its startup parents arbitrarily decide its worth. After supply and demand smack it around for a bit, participants in the price dynamic testing then settle on a value.

Instead of a central government, the network of participants determines how much the cryptocurrency is worth.

Unlike Initial Public Offerings, acquiring a token does not mean owning stakes in the company.

Why VC firms care now

Although venture capitalists have been giving ICO the cold shoulder, things are starting to look up.

Cryptocurrency investors made bank last year, with some doubling their investments.

Investors see returns more quickly with ICOs due to the liquidity of cryptocurrencies.

Instead of waiting for a startup to playout via an IPO or acquisition, investors can bail if things aren’t going well.

It’s easy to pull funds—or profits if things did work out. All investors have to do is use a cryptocurrency exchange to pull their profits, then use an online service to convert this to real people money.

Who’s afraid of the dark(web)?

If this sounds sketchy, you’re not alone. Traditional investors aren’t really fans of the regulatory uncertainty.

The world of ICO can be full of scams and schemes, with little control over financials and strategy.

U.S. Securities and Exchange Commission and friends are still investigating ICOs. But technically ICOs fall outside legal frameworks.

ICOs don’t offer equity in startups, and only give cryptocurrency discounts before they release them to the exchanges.

Additionally, ICOs are global, not national. Theoretically, anyone can invest on a semi-anonymous level. Oh, and they’re not funded by central authorities or banks either.

Reform and re-adjustment

Criminal activity is now mostly self-regulated within the community via crowdsourcing and external groups.

Some companies are even working to establish Know Your Customer frameworks and make ICOs Anti-Money Laundering compliant.

Those who support ICOs argue traditional methods of investing only benefit those already dominating the system.

Investing outside of the system provides more freedom, especially for startups.

ICOs mean startups can raise funds without worrying too much about looming stakeholders. Non-profits can also benefit if they want to build open source software to raise capital.

Call me ICO-shmael

From their humble beginnings, bitcoins are now worth around $1,120. Bitcoin’s market cap is around twenty billion.

Allegedly, half of that is owned by “bitcoin whales,” a group of less than one thousand people who bought into bitcoin early.

Bitcoin whales have a huge impact on most ICOs. Most live in China, but some investment and hedge funds also have huge stakes in bitcoin. Fortunately, some of the bitcoin whale’s profits are reinvested in innovation. Since 2013, over $270 million has been raised in ICOs. Overall, ICOs are dominating in crowdfunding, with most top raises coming in as cryptocurrency.

Though it’s still kind of murky and mysterious, blockchain technology is starting to be seen as more legitimate. Initial Coin Offerings demonstrate the success of an industry. As more investors become comfortable with ICOs, blockchain innovation will continue creating new possibilities.

Chuck Reynolds
Contributor

Alan Zibluk Markethive Founding Member

Top Altcoins: All You Wanted to Know About Bitcoin’s Contenders