90% of the best performance ICOs had a prototype.

Introduction

Last year is arguably the FOMO (Fear of Missing Out) year of ICOs. About 40 ICOs come out everyday, making up ‘too much noise’, making it really hard to isolate and identify the good ones. Over $3.4B was raised through ICOs in 2017 alone. Initially, every good ICO seems to hit the target amount. Nowadays, it seems like investors either lost confidence or simply haven’t got any significant returns yet that they’ve become smarter. Many ICOs don’t even hit their soft cap and may be canceled due to lack of collected funds. -That’s why we need this another criterion in screening out risky ICOs. We need to set a high benchmark.

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What is MVP (Minimum Viable Product)?

MVP (Minimum Viable Product) is part of a product development process which is in essence, a new product's prototype or website which is developed with enough features for early adopters to try. The final, completed product with final settings and features is only released after considering user feedback from the public and redesigning the product.

An MVP can be a 'free trial' software or a demo version of a product that can be useful enough to be released. An MVP usually has the following good characteristics:

It is valuable enough.

People must be willing to try it out or buy it before it becomes popular. They will be like 'beta testers' for software products so they might be given the privilege of using the product before it's made available to the general public. It must showcase future benefits in order to attract and retain early users/adopters.

It has a closed (complete) feedback loop.

It provides a way for users to submit feedback in order to guide future development.
The biggest challenge to this approach is that it relies on early users to understand the full potential of the final product and provide the much-needed feedback to guide developers/designers in improving the product. This means that products used by technical users may benefit the most in this part of development process since they can provide not only their user-experience but their technical suggestions as well.

With that being said, it doesn't necessarily follow that one is a good ICO just because it has a working prototype. Some ICOs may even offer a fancy user interface, only to disappear later due to lack of long-term planning (which we'll discuss separately).

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Here’s another example of NO MVP

As you can see, there isn't any working software yet and the Pro Beta is scheduled to come out by the third quarter of this year. I quickly passed on it and checked the next ICO I wanted to review that day. Overall, this screening process saves time. It eliminates some of the guesswork and significantly reduces risk since I don't have to gamble and bet on the future success of the project without any proof of something they have already done.

It’s generally better to pass on a somewhat good ICO due to a very strict screening process than to invest in a bad ICO due to a sloppy screening process.

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Here's an example of for me, a better ICO

The software is open-source and the code can be tested and evaluated. The ICO hasn't even started yet. We can't underestimate the importance of an MVP because if the product is good, in itself, it is already considered a proof of work. At the very least a good MVP gives us proof of having a competent team working on the project.

A little dose of history

Let’s take for example Ethereum.

Several prototypes of the Ethereum platform were developed by the Enterprise Ethereum Alliance (EEA) Foundation. It was an important part of showcasing their Proof-of-Concept, prior to the official launch of the network. The last prototype and public beta pre-release was dubbed "Olympic".

The Olympic network gave users a reward of 25,000 ether for stress testing the network and pushing the limits of the blockchain. The "Frontier" code name marked the tentative release of the experimental Ethereum platform in July 2015.

"Homestead" was the version first deemed stable. It included improvements in transaction processing scheme, security and gas pricing. Since the first launch, Ethereum went through a few planned protocol changes and upgrades, which are important in improving the underlying capacity and structures of the platform.

We can see a lot of planning and development with Ethereum and if a project promises to beat Bitcoin or Ethereum, they shouldn’t make such claims out of thin air. - But many did and still do everyday. That’s why it’s really important for us to know about the product and how the team is planning to develop it to reach its full potential.

A word of Caution

I'm not your financial adviser and I'm just showing parts of the screening process that I use in order to minimize risk. Please exercise your own due diligence in deciding which ICOs to invest in. Feel free to share your opinion in the comments below.

We will continue our discussion with another criterion for screening ICOs. Please stick around.

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