Interestingly enough, traditional ICOs are not decentralized. They have several problems because of their centralization, in fact.
Let’s cover a few here. For a more detailed response, please review Part II of our whitepaper.
First, a traditional ICO takes place on a single node. For instance, you might purchase an ICO token on a website, which is running on a (1) server. The process of making the purchase is handled by this one server. No matter how fast the machine, the software to accept your funds can only accept one transaction at a time.
Second, a user must send their funds to the ICO website, where the funds are held in escrow. This period of holding and validating transactions can takes weeks, if not months, before the ICO tokens are distributed.
The problems with a centralized ICO are legion.
Sophisticated and wealthy bot programmers (often called “whales”) have an unfair ability to purchase the coin supply during the opening moments. Observe the histories of Decentraland and Binance for examples. In both cases, all the ICO tokens sold out in moments. As the demand for the products was highly likely to rise, the whales had merely to wait a few months, and then sell their tokens to the less wealthy and less technically savvy audience at a dramatically increased price.
The dICO process we developed at Komodo creates more opportunity for average investors. More in a moment.
We also can observe that after you make your traditional ICO purchase and your funds are sitting in escrow, it is extremely vulnerable to human foibles, such as theft, hacking, and human error. Furthermore, both your funds AND the ICO coin that you purchased are at risk.
A final problem to point out for now is that ICOs are traditionally 100% traceable, meaning that you cannot buy in private. We observe that as a species we have always had the right to shop and barter in private. It is only recently that the Internet of Information has suddenly made it seem commonplace for companies and other organizations to know everything about our purchasing habits. This is neither normal, nor healthy.
With these understandings, we can see that ICOs have many issues, and our dICO platform addresses them.
First, when a dICO is released, not all of the coins are located on one server. Instead, they are split up and scattered across as many nodes as the dICO administrator chooses (some can use upwards of ~100 separate servers). A whale trying to purchase all the supply would have to purchase everything at each server simultaneously – an extremely hard thing to do.
Secondly, in a dICO, the creator has the option to program the coins to release not all at once, but rather at a customized rate. For instance, 45% of the supply could be available immediately, then 15% releases a few days later, and so on until the entire supply is available. Now, a whale would have to continually compete for days on end to purchase the entire supply.
We believe our dICO process creates a more level playing field for all types of people.
The final points to address for now: dICO transactions in Komodo are instantaneous, and have the option of privacy.
You do not have to sit and wait for your money in escrow, vulnerable to all kinds of danger. The moment you purchase, the swap is made, and your coins come to your wallet. This provides a dramatically increased level of safety both to the dICO administrator and to their participants.
Using our privacy technology, users can perform all of these actions within their human-inherent right to barter in private.