When J.R. Willett invented the initial coin offering (ICO) funding model in 2012, few people took notice. The next year, he launched the first ICO, Mastercoin (now called Omni), and raised about $500,000–just five times the amount raised by the aptly-named Useless Ethereum Token earlier this year.
He says he “didn’t anticipate” how quickly the fundraising model would catch on:
“Everything I was doing with Mastercoin (now called Omni) was new and untried. I was really excited about creating a decentralized exchange, and I thought that price-stabilized assets would be a really big deal someday,” Willett told CCN in an email interview. “I knew our fundraising model was unique too, but what I didn’t anticipate was that of all the new cool stuff we were doing, the one thing that everybody would love was the fundraising model.”
Nevertheless, Willett says that he finds the hectic state of the cryptocurrency industry exciting. “I love watching a million ideas bloom and die,” he states. “Nothing could be more fun or more dangerous.”
However, Willett believes that in this digital gold rush, the safest way to secure a profit is by selling “shovels,” not panning for gold. That’s why he is throwing his weight — and money — behind UpToken, a rewards token developed in partnership with cryptocurrency ATM company Coinme, which has been in business since 2014.
Willett, who helped design the ICO, says he doesn’t contribute to many crowdsales and that this is the first one he has been directly involved in since Mastercoin.
UpTokens will function as a rewards points system for the Coinme ecosystem. All Coinme customers will receive 1% “cash back” in UpTokens, and holders will be able to use the token to receive a 30% discount on transaction fees paid at Coinme ATMs and help the company decide what cryptocurrencies the ATMs should support.
Although cryptocurrency purchases are price-driven and some have argued the company could attract more customers by giving a 1% discount instead, Coinme CEO Neil Bergquist says the UpToken rewards program is structured to encourage consumer loyalty and maintain constant buy-pressure on exchanges. Because the token has a fixed supply, the company must constantly buy them to continue giving them out as rewards. As Coinme ATMs become more popular, the token’s price should increase, rewarding early investors.
The crowdsale, which Willett calls the “perfect ICO,” is scheduled for mid-October and has a hard cap of $100 million. He is personally contributing more than $1 million to the ICO — he notes that there no presale discounts — and the company plans to use the funds to build and deploy more ATMs.
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Last modified: May 21, 2020 9:13 AM UTC