In this article, we list twelve reasons that Sidekick decided not to use its own blockchain or native token. Originally, in 2018, Sidekick developed its own blockchain and native currency, but for certain reasons, we decided to scrap it before launching the private beta.
In an attempt to crowdfund their projects, countless ICOs spent millions of dollars writing a whitepaper, creating a website, and marketing their concept. Their success depended on convincing people to invest in their project, via their coin, because it was “unique” and the tokens could one day go up in value. The result: a majority of projects failed because their tokens had no real use case and they never actually had a plan for profitability.
During the ICO craze, Blockchain engineers were demanding $20,000 USD per month, and “ICO advisors” over $10,000 USD per month. It would have been a large and unnecessary strain on our budget, as we felt development was far more important.
We would have to pay for 100 VPS servers to set up the testnet and mainnet at the same time, and constantly watch for when they expired. Plus, we would need to be careful not to lose any of the private keys of those 100 wallets, on top of making sure we were protecting ourselves from 51% attacks.
Once we knew the blockchain was ready and thoroughly tested, we would need to do a token sale, which could easily be seen as selling securities. In many cases, incorporated entities and even some founders were held personally liable for sales like this. Some, even went to jail for their actions.
Attacks on our website could lead to a hack where the smart contract address QR code is changed without us realizing in time. Ultimately, resulting in all the token sale funds being siphoned off.
The wallets we used could have been hacked (like Parity) and once those funds are gone they would be impossible to recover.
Assuming we were able to raise millions of dollars like everyone else, we would have no way to liquidate the digital assets and put them in a corporate bank account. We would have to hold onto the coins, regardless of how prices fluctuate. Therefore, it would be impossible to be fiscally responsible. As such, making sure the money lasted long enough to actually develop the project would become a challenge. Many projects lost significant amounts of value in terms of fiat, based on this issue alone, some up to 90% of what they raised.
Upon concluding the token sale, a large percentage of the money raised would have gone to pay exchanges around the world. These exchanges charge exorbitant fees to list with no contract or guarantee that the coin wouldn’t be delisted at any time. These exchanges were charging upwards of $500,000 USD per listing and could take months to go live.
As soon as the cryptocurrency went live, pre-sale and ICO buyers would have surely dumped their coins on the exchange, causing a massive crash in the price. One that would, almost surely, be impossible to recover from. Looking at historical charts for almost all ICO projects will show the same massive pump and subsequent crash that never recovers.
To make sure the price didn’t collapse to $0, many exchanges quietly forced projects to hire market makers to fraudulently create volume and liquidity. Most of these market makers charged as high as $20,000 USD per month for their service.
Assuming we made it passed all these issues, we would have to spend millions of dollars on marketing to convince people our coin has value and utility. All this in an effort to keep them onboard and patiently waiting. Which, ultimately, brings us back to our first point: If there are 100 coins doing the same thing, why would any of them, much less all of them, have unique value or utility?
Long-term, no matter how much development we did, we could very easily be called an “exit scam” or “shitcoin” because the market price of the coin fell. Looking at any Telegram channel will show this has happened numerous times.
For all of these reasons and more, we felt it would be better to focus our time and efforts on developing an amazing ecosystem for our users. As opposed to following the path of an ICO/IEO and using our own blockchain and native currency. Rather, we felt it would make more sense to integrate existing coins.
By being inclusive and utilizing other established coins and tokens, with their own communities, we could grow much quicker. More importantly, we would also make people happy to have a new use case for their long-held cryptocurrency.