Why do a Token Crowdsale?
On Wednesday, HelloGold Foundation announced that we are running a Crowdsale on Reddit
One of the comments stood out: “why would an already-well-running business like HelloGold need an additional $8M fund from an ICO? Is it to expand the business?”
It’s a good question and one I want to answer in more detail than we did in the Reddit comments.
The first thing to note, is that this isn’t a flash in the pan idea following the extreme funds raised in recent ICOs. We’ve been considering this for a year and we began planning for one since the beginning of 2017, while our team continued to build and manage our business. To build trust for our Crowdsale, we wanted to have launched our product before we ran the fundraising, to show that the team can deliver and to prove demand for the product by building a base of real customers.
Like all startups, HelloGold is reliant on fundraising until we reach cashflow break even – we expect to achieve this milestone in either year 3 or 4 depending on how successful we are. HelloGold has received seed funding from friends/family/contacts and is currently closing a traditional round of series A financing which will give us the runway for our next stage of growth.
So why do a Crowdsale?
Of course, the more rapidly HelloGold expands the customer base and builds the rate at which those customers buy gold, the sooner we will become sustainable through internally generated funds. This benefits both HelloGold as we can continue to operate and to expand, and more and more people across the world, who will now have a way to help preserve their wealth via easy and cheap access to gold over the long term.
At a macro level, we believe that 1) the global economy is now closer than ever before to another financial crisis than further away from one and 2) the scale of the next crisis will eclipse that of the 2007/8 crisis. In our lifetimes, these financial crises have tended to happen in 7 to 10 year cycles. For me, 1987, 1997, 2007 are years of major crises that are etched in my mind. Many people share the same sentiment and concern.
I worked in Malaysia during the Asian financial crisis and I saw at first-hand how “bad things can happen to good people” at no fault of their own. In the case of the 1997 crisis, the man in the street saw their domestic currencies hit by extreme devaluation – in the case of both the Thai baht and the Malaysian ringgit, this was in excess of 50%; in Indonesia, the rupiah went from 2,600 to the dollar to over 14,000 to the dollar. For someone in Malaysia who was earning the equivalent of US$1,500 a month, he woke up one morning earning the equivalent of $700 a month with a devastating effect on how he could provide for his family. The inequitable impact of these events on the people who were least able to fend themselves and their families left a lasting impression in my mind.
We therefore want to supercharge the expansion into new markets, to widen exponentially access to the HelloGold product to those who are vulnerable, so that the man in the street will have more suitable alternative savings product that will better protect him for the effects of an increasingly uncertain world from a financial perspective.
As the HelloGold core system has been designed to be migrated to the Ethereum blockchain once the variables have been worked out, we recognised that one way to raise the funds required for expansion would be via a Crowdsale. Discussing options, we also saw a need for a genuine stable coin in the crypto space. As we already have the gold operations in place and developers working on integrating Ethereum into our core system, building tokens for a crowdsale became a logical next step. The reward to the supporters of the Crowdsale would be in a stable coin backed by gold, which in itself increases the potential uses for the core buy/store/sell gold mechanism, the assets under management (AUM) and the sustainability of HelloGold.
We strongly believe in the benefits of the blockchain, which is why we are integrating Ethereum into our core system. We also recognised that the core app wasn’t necessarily something the crypto community would likely use directly. What the core app does do is massively expand the number of people using the Ethereum blockchain. Thus providing a proven use case to demonstrate how the blockchain can benefit massive numbers of people, even if they don’t realise that the system they are using is blockchain based – in much the same way that most people don’t know which programming language, database system or security protocols are used by their current bank.
So the question on Reddit had the seeds of the answer to why we are doing a Crowdsale within it. Yes, it is about expanding the business. Along with that expansion comes the sustainability of the core business, which not only helps the business but also the customers; we prove a mass market use case for the blockchain and develop a stablecoin at the same time.
For further information on the Crowdsale, please visit our Crowdsale website hellogold.org, including the whitepapers (Business Plan, Tech Whitepaper and Crowdsale Info Sheet) plus a link to our Slack channel where you can contact the team directly with any questions.