VooGlue Focuses on Burgeoning OTC Art Market

In the art market there’s a growing gap, both economic and cultural, between the old world and the new.

 

In the old world, the traditional art market continues to set auction house records for art works produced at least decades and often hundreds of years ago. In the new world, we have the emergence – thanks to democratizing technologies that enable the production of high quality art at vastly reduced costs – of a new generation of artists who produce, market, and sell their art completely outside of the traditional channels.

 

From a buyer’s perspective, the barrier to entry in the traditional art market is extremely high, and growing. $50,000 can be considered a reasonable minimum to purchase artwork through the traditional channels such as auction houses and galleries.

 

A new generation of buyer’s however, has emerged to purchase the artwork of the new generation of artists. In this new world, which we can call the “over the counter” (OTC) art market, $5000 is considered plenty to make a purchase of high quality artwork by a well-known artist.

 

For Art Market historians, the last twenty years have seen more significant structural changes than throughout the entire 20th century. Artprice.com, a leader in the aggregation and documentation of artistic styles and mediums, has released some fascinating statistics in this regard:

 

In 1997 their databases showed 127 artistic movements since the birth of the art market. That number is now up to 325 (more than doubling in the last 20 years). Even more indicative of the rapid changes brought on by the digital revolution, regarding artistic techniques, Artprice’s art historians and experts in 1997 counted 212 artistic techniques since the origins of art. That number is now at over 850 and counting.

 

A few more statistics illustrate clearly the changes that have come to art world. Again according to Artprice’s databases, the number of artists who have – in the traditional channels – at least one public sale to their name from the 14th century to the present day totals just 657,000.  

 

The number of actual artists in the present day, however, is much higher; Artprice estimates 1.2 million living OTC artists. These are people defined as those whose primary source of income is the art they produce, yet to the traditional art world, they hardly exist.

 

Taking just one genre of art – “street art” – we can see, again according to Artprice’s data, that the traditional market has represented fewer than 3,285 Street artists – ever – yet more than 125,000 Street artists currently live off their work.

 

Adding to this 1.2 million OTC artists, we have an even larger pool of what may be termed “part-time artists.” Artprice has developed analytic tools with strict criteria to select OTC artists on Facebook whose pages are exclusively dedicated to their artistic production and distribution. The result: at least 1.8 million pages.

 

All of these artists crave access to global sales networks. If they get it, they will thrive, and by extension so will art itself.

 

While VooGlue has in its roadmap a plan to enable buyer access to highly priced “traditional artwork” through its tokenization and listing on our marketplace, it’s these OTC artists who form our primary initial market.

 

VooGlue’s gluing of a digital multimedia counterpart to a wall hung artwork – which itself can be considered a new artistic technique to be added to the 850 and counting documented by artprice.com – is another tool that artists can use to promote and monetize their art.

 

VooGlue is actively adding selected seeder artists to its platform to experiment with this new style and movement, and create collaborations between art, music and film.  

 

Additionally, VooGlue’s system of affiliate links in combination with the creation of a marketplace that enables low-cost transactions for the buying and selling of art, add to OTC artists’ ability to disseminate and profit from their work. By serving them, we aim to push forward the quality of art itself.

 

For more information on how to benefit from connecting digital media to your artwork through the VooGlue app, please contact pr@vooglue.io.

 

VooGlue Token Sale Registers 1,000 Buyers

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Interest in the VooGlue token sale has been gaining steam since the launch of the pre-sale on January 19th. Over 1,000 buyers are now registered at http://vooglue.io/ico/ to be eligible to purchase VGC tokens, with the first million tokens offered at the highest bonus rate steadily selling out.

 

To celebrate this milestone, VooGlue is giving away 200 VGC tokens (valued at over $350 at today’s ETH price!) to three lucky winners! To be entered into the draw you must either:

  1. Share the pinned post on our Facebook Page and comment on the post or:
  2. Retweet and comment on the pinned post on our Twitter Page or:
  3. Copy this message and send it to as many people as you know including a CC to pr@vooglue.io.

Doing all three of these triples your chances of winning! The deadline to enter the competition is February 23rd and the winner will be randomly selected using http://www.randomresult.com/. Full terms and conditions can be found here.

 

The public sale of VGC tokens will run from March 21st for three months, with tokens being offered at a rate of 500 VGC per 1 ETH.

 

For the pre-sale, however, which runs until March 20th, significant bonuses are offered at a descending rate as tokens are sold. In the first stage of the pre-sale, 1 million VGC tokens are being offered at 80% bonus. This means that by purchasing 1000 VGC (for 2 ETH) you will actually receive 1800 VGC. An additional 10% bonus is applied to any purchase of 5000 VGC or greater. In this case, by purchasing 5000 VGC you will actually receive 9500 VGC. For the second million VGC tokens, the bonus rate is reduced to 70%, the third million to 60%, and so on. Full details of the token sale structure can be found here. You can register to purchase tokens here

 

How the Decentralization Movement Will Change the Art World

The decentralization movement is currently experiencing massive growth thanks to distributed ledger technology (“blockchain”). This movement and the technology that supports it are set to have a huge positive impact on the art industry in the coming years. The impact includes the protection of artists’ rights, the improvement of investors’ access to art, the opening up of an overtly centralized art community, the enabling of galleries to finance more purchases, the crowdfunding of art projects, and even the addition of an extra dimension to art itself. All of this together has the potential to usher in a renaissance of art over the coming years.

Provenance

The changes on the horizon are many, but the lowest hanging fruit is the recording of an artwork’s provenance on a public blockchain. This is likely to be the first innovation to positively affect the art world and will form the foundation upon which all other benefits of the decentralization model are built.

At any point in a work of art’s history, its authenticity can come into question. Art is often accompanied by documentation (commonly known as provenance) that confirms this authenticity. Good provenance is meant to leave no doubt that a work of art is genuine. The current system of assigning provenance, however, is a fragmented patchwork of databases overseen by centuries old institutions. This system, like any that relies on a centralized trusted authority, is vulnerable to corruption and counterfeit. In the modern context, where records have been digitized and are held in centralized databases, the information additionally becomes susceptible to hacking.

Assigning provenance using a public blockchain solves the problems of corruption, counterfeit, and hacking once and for all. A fundamental tenement of a public blockchain, after all, is that it provides a permanent immutable record in a “trustless” environment that is essentially immune to hacking. When all participants can know that a record is correct without having to trust that it is correct, there will no longer be a need to rely on centuries-old institutions to verify the authenticity of the art. All other benefits of the decentralization model flow from this initial system of immutably recorded “trustless” verification.

Intellectual Property Rights

The assignment of intellectual property rights recorded and managed on a public blockchain is a layer of information that can be added once a system of recording provenance has been established. This would enable partial or complete ownership of a piece of art, particularly (at first) in a digital media like photography, to remain with the artist as the artwork is disseminated around the world. By using a public blockchain to immutably assign rights to a photograph, for example, photographers will be able to easily prove that they are the rightful owners of the copyright for that photograph. In the near future, as the information recorded in certain public blockchains becomes integrated into legal frameworks, courts will accept such information as legally valid. This will greatly reduce legal costs, cut down on unlawful duplication, and legally protect artists.

Resale Royalties in Real-Time

When information about art is immutably recorded on a public blockchain, an artist’s rights are never forgotten or discarded. Moving forward it should be possible, therefore, to enable applications such as a system in which the art can be rented out to a gallery with the payments generated being sent directly to the artist in real-time based on the number of people who view the art.

With more artists earning a fairer price for their work, the incentive to produce quality work increases, raising the overall quality of art with it.

Tokenizing Art

The next layer to be added to the publicly distributed “trustless” ledger of information about art is likely to be a system of “tokenization” of art. Tokenization is the process of assigning digital value to a physical object such that the value can be divided up into representative tokens which can then be freely bought and sold on an open market. The tokenization process will have a huge impact on the art industry by enabling wider investment, fairer prices, and crowdfunding models.

Art as an Investment

Fine art, as an asset class, can be an integral part of a serious diversified investment portfolio. Modern art and 19th century art have in fact out-performed both the S&P 500 and T-10 Bonds since 1998. The status quo market environment, however, makes it very difficult for small and medium investors to gain access to this asset for several reasons.

To begin, the safest and best performing investments into fine art are considered to be in well-known, high-priced art works. Investing in a Monet, for example, is a safer bet than investing in a lesser known artist. With Monet’s paintings being priced in the millions, however, small and medium investors are effectively priced out of the market.

Next, the art market is far from liquid. The options for buying and selling fine art are extremely limited. Auction houses are perceived as the safest, but charge fees between 12–25%. Art galleries and art dealers charge less, in the range of 6–10%, but they are considered less trustworthy. Additionally the price of art is dictated by auction houses and galleries with very limited market participants, so fair price discovery can be difficult.

A final additional factor that works against smaller investors is the high costs associated with the maintenance of fine art. These costs are so high that an estimated 90% of even high net-worth buyers would rather not have to personally manage the maintenance of the art they purchase.

The tokenization of art presents a huge opportunity to drastically change art markets for the better by alleviating the above inefficiencies.

Buyers

From the buyer’s perspective, it will now be possible to own a piece of an expensive work of art. This is something that is particularly valuable for small investors who, due to the barriers to entry described above, have so far been unable to meaningfully invest in fine art.

Imagine someone wanted to invest $100,000 in fine art to diversify their portfolio. Currently they would only have access to less expensive (poor “performing”) artworks. But by tokenizing a Monet, for example, anyone could in theory buy a piece of it, thus gaining access to the best performing art investments.

Next is liquidity. By enabling a more transparent market in which a much larger pool of participants have access to a much larger pool of provenance-verified artworks in a “trustless” environment that largely eliminates the need for intermediaries, a vastly more efficient and liquid market is created. In this environment, not only can overall fees be drastically reduced, but also fair market prices can emerge.

Finally there are maintenance costs. When purchasing a portion of an artwork that has been tokenized, the arrangement could be such that the artwork itself is maintained by an agreed upon professional custodian who already has the resources and experience required to maintain a collection under the highest standards. The cost of this maintenance is distributed across all token holders and because the art itself is maintained by professionals and doesn’t have to be moved, efficiencies are achieved.

The increased pool of art investors and improved efficiencies enabled by tokenizing art should equate to significantly more demand for fine art, leading to a gradual overall increasing of art prices and by extension, an explosion in the production of new art.

Sellers

From the seller’s perspective, the implications are no less profound. Imagine a serious art collector or a gallery that wants to expand their collection but lacks the funds to do so. Previously they would have the option of, for example, getting a 3-year art-secured loan at 13.5% annual interest. On a million dollar work of art, this would come to $400,000 interest paid over three years. But by tokenizing some of the art they already own and offering it for purchase to small investors as described above, they would be able to finance their purchases at a much lower interest rate. The Maecenas project, which raised $13 million in its September ICO, claims to be able to facilitate this process at between 2–6 %.

Funding Artists

Crowdfunding using blockchain technology has exploded in the last year, making it by far most successful application of blockchain technology thus far.

A version of blockchain-based crowdfunding can easily be applied to individual artists who would like to procure funding for an art project. They could make a proposal for funding, with buyers entering into the terms laid out in a smart contract. The conditions of this contract may, for example, outline a scenario in which anyone who contributes to the funding of the art project gets a proportional share of the tokenized value of that project. The artist could write the contract such that the artist maintains a share of the artwork produced, the tokens from which they would then be free to sell on the open market should they later need cash. This scenario enables the artist to get the funding they need to produce art, while still maintaining at least partial ownership of the art they produce. At the same time, it enables anyone to invest in an artist at the earliest stage, gaining ownership of the art that is eventually produced.

Easier access to funding for artists combined with the direct relationship between artist and consumer enabled by this decentralized model will positively contribute to the production of more and better art.

Adding an Extra Creative Dimension to Art

Projects currently working on all of the above features includeArtex,Maecenas, and of course VooGlue.

The VooGlue platform, in addition to the features described above, has already developed a prototype application that adds an extra dimension to art by giving the option to integrate a digital media counterpart into the physical art. The digital media counterpart could be something like a time-lapse video showing the process of the making of the art itself, it could be an augmented reality feature that adds to the experience of viewing the art, or it could be audio or video that is similarly designed to add to the art in some way.

From a user’s perspective, the digital media counterpart can be accessed simply by pointing their mobile device at the physical artwork. Adding an extra layer of information on the public blockchain, VooGlue permanently connects the artwork to its digital media counterpart so that the digital media becomes part of the artwork, adding to its value.

The decentralization movement currently being enabled by blockchain technology gives us the opportunity to create a bigger, fairer, more transparent, and more liquid market for art. This technology also brings features that protect artists’ intellectual property rights, give them a way to raise funds for art projects, and enhance their ability to fairly earn from the work they produce. Further layers of innovation can be added to artwork, such as VooGlue’s “gluing” of multimedia counterparts to wall hung artwork. All of this combined should open up and rejuvenate the world of art for a new generation.

What Can We Expect from VooGlue in the Near Future?

Amazing things. First keep an eye on our social media platforms and our VooGlue web platform VooGlue.com for new art creations in the VooGlue style. A group of collaborators in the art, music and film spaces will be creating innovative new art pieces on the platform using our web app to WOW us all. At the end of the ICO we will be launching our mobile app, which will allow fast and easy access to all VooGlue facilities for anyone in the arts ecosystem. Remember, VGC token owners will receive the mobile app first. Look out for enhancements to our platform that will allow our mobile app to fingerprint sculptures and installations and add augmented reality to the digital experience. Increasingly you will see VooGlue art pieces in museums and galleries around the world as we roll out the platform. Later the VooGlue API will allow every gallery and museum globally to easily integrate the VooGlue mobile app into their existing websites and business model.

VooGlue Bounty Campaign Kicks Off

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VooGlue is excited to announce the start of its Bounty Campaign. This is your chance to earn VooGlue Tokens (VGC) while helping to spread the word about a completely new art-ecosystem.

A total of 5% of all VGC tokens generated will be distributed in the bounty offering. This means that if all 55,000,000 tokens are sold, 2,750,000 of them will be distributed amongst bounty participants.

Bounty participants earn “stakes” for completing tasks that help VooGlue achieve its goal of distributing all VGC tokens amongst a wide variety of buyers around the world. These tasks include things like translating our whitepaper and publishing content about VooGlue. Translating the whitepaper, for example, earns you 1000 stakes.

At the end of the token generation event, all of the stakes earned will be added up. In order to determine the value of each stake, the total number of VGC tokens allotted for bounty reward (2,750,000 if all goes well) is divided by the total number of stakes earned. So for example, if the total number of stakes generated is 100,000 and number of VGC allotted for bounty is 2,750,000 (the maximum amount), then each stake will be worth 25VGC.

VooGlue is about to start its token sale with the price of VGC set at 500 per Ether. This means completing a task like translating the whitepaper could earn you a very lucrative bounty!

So get excited about VooGlue! Learn about our platform by reading our whitepaper and this blog. Ask questions directly to our team through our Telegram channelContribute to a project that is going to bring some much needed disruption to the art world!

The Meaning of “VooGlue”

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When people first hear “VooGlue,” they often wonder aloud what the name means. “Sounds like a cross between Voodoo and glue,” is a common reaction.

VooGlue founder and CEO Brian Carew-Hopkins did in fact come up with the name as a combination of those two words. But since Voodoo has, like many ancient words, taken on a skewed meaning in popular culture (namely that of magical dolls with pins stuck in them to inflict pain on one’s enemies and the resurrection of the dead as zombies), it’s worth explaining Voodoo’s true meaning and how that fits together with VooGlue’s vision.

Voodoo is in fact a West African animist tradition that goes back at least a thousand years, with the current pop-culture component of it deriving much later from interaction with Haitian immigrants to the US. Benin is regarded as the birthplace of the Voodoo tradition, with the name itself simply meaning ‘spirit’ in the local Fon language.

What sets the real Voodoo apart in the modern context, however, is the way it survived in the face of the enslavement and cultural annihilation perpetrated in West Africa between the 16th and 19th centuries. At the time, Voodoo became a cultural “folkway”: a common understanding among local inhabitants that could not be destroyed by the European slave traders. Traditions and beliefs were passed down, often secretly, through the generations, surviving the invaders best efforts to obscure or eliminate them.

It is this reference to a truth that cannot be destroyed that makes Voodoo the perfect word to encapsulate what VooGlue accomplishes. Just as Voodoo was a way for a cultural truth to survive despite the efforts to destroy it, VooGlue enables the truth of an artwork’s origin, ownership, and meaning to survive no matter who possesses it and where it is located. This is accomplished with the use of a distributed public blockchain.

The “glue” in VooGlue refers to the permanent “gluing” of a multimedia counterpart to a physical artwork, again accomplished with mechanisms enabled by a distributed public blockchain. This multimedia counterpart could be anything from a time-lapse video of the art being produced, to a clip of the artist explaining the artwork. By permanently attaching this counterpart to an artwork, the artist’s true vision has a greater chance of surviving throughout the lifetime of the physical art, and even beyond.

Inspired by a culture that could not be destroyed, VooGlue’s mission is to ensure that art’s providence and meaning survive, and that the art world thrives for a new generation.

VooGlue Team Shares Thoughts on Project

VooGlue brings together a global team of art lovers, community managers, and blockchain developers. Each team member adds to VooGlue’s vision of enabling a fair and transparent art market, enhancing the ability of artists to connect directly with their audience, and using technology to add an extra dimension to art itself.

For the benefit of the VooGlue community who may wish to understand the motives behind individual VooGlue team members, here is some information about the VooGlue team and what excites them about the project:

 

Brian Carew-Hopkins

CEO

“It sometimes takes people a while to really ‘twig’ to what VooGlue is all about. It took me a long time, even after I had the idea of connecting an artwork to its speed painting via a mobile device. It was not until I experimented with the technique I realised artists could add hidden meaning inside the artwork, and then a longer time before I realised the VooGlue facility actually ‘unlocks’ wall hung art. It dawned on me that that artists no longer had to be confined to the surface layer of paint. I realised the opportunities for collaboration between artists, musicians and film studios using VooGlue in new and inventive ways, and the further opportunities with augmented reality and whole gallery spaces. It really is mind blowing. After people get it they can’t stop talking about it. That’s really exciting.

 

The blockchain allows VooGlue to so neatly act as an enabler in the art ecosystem, with the connecting of digital counterparts beyond digital media, into e-commerce and related products with mobile transactions at minimal costs, and when connected with tokenization of art it beautifully transports historical art into the 21st century preserving providence whilst engaging a brand new audience.”

 

As CEO my role is to lead the development of the VooGlue enterprise, with our shared objective of bringing VooGlue to all art lovers, artists, galleries, museums and users globally so it is self sustainable. The VGC token is at the heart of this as it is the means of exchange which allows the art ecosystem to function more effectively and for a wider audience. It brings new creative experiences, and new opportunities for prosperity to people all over the world.

 

Kristine Buenvista

Head Community Manager

“As the Community Manager of the Vooglue Team, I work closely with determined and talented social media specialists to be sure that we are present every time someone needs answers about this new and unique ecosystem.

I am thrilled by the enormous possibilities this social innovation brings to the world. As an artist myself, I am rooting for an art world that is decentralized, inclusive, and fair. I am so looking forward to discovering artists and navigating around new worlds through beauty, concepts, and insights that evoke and challenge my personal truths or deepen my intuitive wisdom about life, others, and myself.”

 

Tania Pickering

Head of Public Relations

Imagine if we had the ‘VooGlue’ concept back when Michelangelo or Leonardo Da Vinci created their famous paintings. To know what they were thinking or what really inspired them to paint their art pieces. PRICELESS!

My job is to help artists showcase their work on an international scale. I’m so excited to be able to give artists a great opportunity to articulate the meaning or journey behind the piece created in their own unique voice and style.

 

Ratko Stambolija
Chief Marketing Officer

Art has evolved together with humankind for thousands of years. And now, I think the time has come to help art come to life; to see what the artist saw, to hear his words and to feel at least a glimpse of what he felt while creating the piece – to catch the true meaning and see the invisible weaving behind the beauty of a completed masterpiece. VooGlue aims to make that possible. That’s why I love it.

Besides that, I am a big supporter of decentralization, as it allows the market to become free and fair. And nothing makes me happier than seeing artists being able to follow their dreams. That is another reason why I am so eager to see the change this project of ours will bring.

 

Graham Stone

Content Manager

We are in the very early stages of a technological revolution; perhaps the dawn of what may someday be called the “decentralized era.” Just as in the early days of the Internet there was a lot of confusion about what the new technology meant, presently a majority of people lack a basic understanding of the direction we are moving. My role is to explain to newcomers the implications of, for the first time, being able to create digital scarcity. As it applies to art, this new technology is very much needed so I’m excited to be able to facilitate the positive disruption by helping people to understand what’s coming and so enabling them to make the informed decision to join early-on. Personally, I can’t wait to see how this technology changes art for the better.

 

Daniel Spyralatos

ICO Advisor and Growth Hacking

Having advised several ICOs, Daniel ensures VooGlue follows best practices in the space while additionally advising on organic network growth techniques.

I love the VooGlue concept. Most decentralized projects now offer just another coin for transaction purposes, but not many are so innovative as to include and use the blockchain technology on something like art/museums etc. When looking at a piece of art and being kind of “bored” because there is no explanation of what you’re seeing, VooGlue perfectly fills that gap, providing visual video content for a more interactive experience.

 

Lilian Lim

Customer Care

This project excites me because interlinking art and technology embarks a new era of art evolution. The “gluing” technology brought by VooGlue provides artists more opportunities to flourish. Building a distributed marketplace on the public blockchain promotes the preserving of art while advancing its future. I’m excited to assist customers in their issues and inquiries as this project evolves.

 

Manmohan Rawat

Graphic Design

As a graphic designer I understand the challenge of bringing life and meaning to images. I’m excited to, in the early stages, help make VooGlue’s concept easily understood. In so doing I hope to contribute to the development of a new form of art.

 

Neerja Sharma

Social Media Marketer and Assistant Community Manager

VooGlue is all about art & that’s what makes it an interesting project to work on. I’m quite an art lover which is why I found myself apt for this project.

 

VooGlue’s Token Pre-Sale Begins

VooGlue Cryptocurrency

 

VooGlue is now conducting a pre-sale for its token generation event in order to raise funds to develop its new art ecosystem for the blockchain era. This is your chance to be an early contributor to the VooGlue project by directly investing in VGC tokens.

 

What is the VGC Token?

The VooGlue Token is listed as VGC and adheres to so-called “ERC-20” token standards. The ERC-20 standard establishes a common set of rules for tokens issued via Ethereum smart contracts. It currently serves as the basis for the majority of tokens that have been released through token generation events, often called initial coin offerings (ICOs).

 

By defining a common set of rules for ethereum-based tokens to adhere to, the ERC-20 standard allows developers of wallets, exchanges and other smart contracts, to know in advance how any new token will behave. This is the main reason VooGlue has chosen the ERC-20 standard.

 

VGC acts as the fuel for the VooGlue art ecosystem, facilitating the efficient buying and selling of art and granting access to the other features of the platform such as the “glued” digital multimedia counterparts, and affiliate marketing opportunities.

 

This is explained in detail in the VooGlue whitepaper.

How to Participate in VooGlue’s Token-Sale?

Once you get cryptocurrency into the crypto-ecosystem, you can quickly and easily use it to buy VooGlue’s token.

Please visit our token sale page and follow the instructions. You can purchase with Bitcoin, Ethereum, and cash using PayPal, credit card, and by bank transfer.

The pre-sale is behind held from January 19th to March 20th.

The public sale of VGC tokens is set to begin on March 21st and run for three months.

VooGlue’s Token Sale Structure

  • The pre-sale is behind held from January 19th to 20th March 2018 (at midnight GMT) or until fully subscribed.
  • The public-sale of VGC tokens is set to begin on March 21st and run for three months.
  • Total amount of tokens available: 36,000,000 VGC
  • Price: 1 Ethereum = 500 VGC
  • Personal Limit: Individual purchases are limited to 1% of total offering.

 

Bonus Structure

Volume Bonus

  • Any investment of over 5000 VGC receives an extra 10% bonus on top of any bonus shown below. (pay for 5000, receive 5500)

Timing Bonus – “first come best dressed”

  • First 1 million VGC sold attract an 80% bonus (pay for 1000, receive 1800 )
  • Second 1 million VGC sold attract a 70% bonus (pay for 1000, receive 1700)
  • Third 1 million VGC sold attract a 60% bonus (pay for 1000, receive 1600)
  • Fourth 1 million VGC sold attract a 50% bonus (pay for 1000, receive 1500)
  • Fifth 1 million VGC sold attract a 40% bonus (pay for 1000, receive 1400)
  • Sixth 1 million VGC sold attract a 30% bonus (pay for 1000, receive 1300)

 

Other Important Details

  • There are bounty opportunities during the pre-sale and public ICO. Details can be found here.
  • Pre-sale funds are employed immediately for business development & ICO marketing.
  • ICO funds are held in escrow.
  • VGC tokens migrate to full Dapp token managing business rules after ICO, and tokens are placed for open trading on exchanges.

How to Avoid Scams When Investing in ICO’s

There were 235 Initial Coin Offerings in 2017, raising a total of $3.7 billion. In the still largely unregulated world of ICOs, and with that much relatively “easy money” up for grabs, it’s not surprising that some of the 235 turned out to be scams.

Notable in its brazenness was a project called DeClouds, whose founder went so far as to photoshop a picture of himself seemingly giving a talk at UBS Bank after claiming to have a partnership with said bank.

Image source: https://hashclub.org/topic/1269/declouds-another-scam-ico

Several projects were accused of running Ponzi Schemes. PlexCoin, which promised investors a more than 13x return within a month, had the dubious distinction of being the first target of the newly formed Cyber Unit of the US Securities and Exchange Commission (SEC) in December.

While the new funding mechanism enabled by the “Token Generating Event” has certainly attracted some bad apples, the vast majority of ICOs in 2017 were legitimate projects seeking to raise funds to kick-start valuable businesses. People who invested money in the best ICOs were handsomely rewarded, in some cases with much higher returns than even traditional first round venture capitalists have ever been able to achieve.

So moving forward into 2018, here are some tips to help not just avoid the scams, but also to choose a good overall ICO investment:

Watch Out for Buzzword Overload and Put in the Time to Learn the Vernacular

With so much euphoria for anything having to do with “blockchain,” scammers are simply throwing around buzzwords like “token economics” and “smart contract architecture.”

But with so many new concepts associated with this emerging technology, the only way to really know if the buzzwords make sense or not, is to put in the time and do the research. A serious investor will read whitepapers and Google everything they don’t understand.

Beware of Unrealistic Goals

If a project claims to be able to fix a huge problem practically overnight, consider that a red flag. Additionally, no serious team will ever make a price prediction about their token or claim it can bring world peace. The best teams clearly and soberly present their project, leaving it up to the investors to decide how valuable it is.

Clear Roadmap

Check the project’s roadmap. Is it realistic? What needs to be done in order to achieve the goals on the roadmap?

Consider the Structure of the Token Sale

Many token offerings give significant bonuses to early investors to kick-start investment. While this is often warranted due to the fact that earlier investors are considered to be taking on higher risk, if the bonus is too large, the project risks becoming a Ponzi scheme. If early investors receive huge bonuses, as soon as the tokens hit the market, they can simple dump their tokens at a profit and move on to the next project.

So in general, the lower the bonus given in the token “pre-sale,” the better for people who buy in at the “public sale.”

Make Sure Funds are Held in Escrow

When you buy into an ICO, you should check that there’s a clause in the fine print stipulating that any funds raised are first held in escrow. The best projects lock up funds meant for development into escrow accounts with strict stipulations on how and when those funds can be released. This is often tied to reaching (or not) specific targets laid out in the roadmap.

Is There a Working Product? If Yes, Try It!

One way to get a better idea of what a project is capable of, is to actually test out their working product. Many projects already have these; some are in beta stage, while some have been working outside of the blockchain environment for years and are in the process of being adapted to blockchain. Putting in the time to try them out will give you a much better idea of how far along the project is and, judging by things like the design and functionality of the product, how professional the developers are.

Check the Code

Many, if not most, blockchain projects are open-source. This means you can go to their github and actually look at the code. You don’t have to be an expert, or even really understand anything about coding at all. Just have a look at how much activity there has been recently. Is it an active community? How many people have been contributing?

Forums

The developer community lives on forums like reddit and bitcointalk. Many projects will open a channel on these platforms, giving anyone interested a chance to “Ask Me Anything.” Checking these forums is always a good way to gauge not only the legitimacy of the project, but also the level of community involvement. Additionally, many projects open a public Telegram channel (usually linked to from their website) where you can again ask questions to team members and see what other people are saying about the project.

Team and Advisors

This is a major consideration. Take the time to dig into the team member’s backgrounds. Check their Linkedin profiles, see how active they have been in the blockchain space and what other projects they have worked on.  Are there any superstar team members?

Most new blockchain projects will also have a list of advisors. These people can be instrumental in the success or failure of a project, especially in its early stages. Some useful advisors that a project should have are:

ICO Advisor

This is someone who has already gone through the ICO process and can use their recently gained connections to help the project succeed at things like getting the token listed on top exchanges.

Industry Insiders

If the project is a decentralized casino that runs on the blockchain, having top players in the online casino industry as advisors is a huge plus.

Legal Compliance

Many blockchain projects open up a mountain of legal questions, so it’s crucial have a good legal team.

Shortcuts

Ultimately there’s no substitute for putting in the time to do your due diligence before investing. That being said, there is a growing list of third-party resources that may advise you along the way.

Check ICO Ratings Sites

The following website seek to advise on the quality of upcoming ICOs:

ICOrating

ICOindex

ICOtracker

Smith and Crown

While these sites certainly contain valuable information, it can be hard to determine how independent the information presented is. It’s entirely possible for a project to pay such a site to be featured as a good investment opportunity.

The Future: Crowd-sourcing Decentralized Wisdom

In an attempt to solve this problem, platforms like Wings are being developed. In this blockchain platform, projects are scrutinized by a decentralized community of WINGS token holders. The goal is t crowd-source decentralized wisdom to give investors an unbiased prediction of how successful a project can be without having to research it themselves and without having to trust a single centralized entity.

Some Additional Useful Questions to Ask Yourself

This list of questions was published by the SEC in December in a long-awaited public statement about the legality of ICOs:

  • Who exactly am I contracting with?
  • Who is issuing and sponsoring the product, what are their backgrounds, and have they provided a full and complete description of the product? Do they have a clear written business plan that I understand?
  • Who is promoting or marketing the product, what are their backgrounds, and are they licensed to sell the product? Have they been paid to promote the product?
  • Where is the enterprise located?
  • Where is my money going and what will be it be used for? Is my money going to be used to “cash out” others?
  • What specific rights come with my investment?
  • Are there financial statements? If so, are they audited, and by whom?
  • Is there trading data? If so, is there some way to verify it?
  • How, when, and at what cost can I sell my investment? For example, do I have a right to give the token or coin back to the company or to receive a refund? Can I resell the coin or token, and if so, are there any limitations on my ability to resell?
  • If a digital wallet is involved, what happens if I lose the key? Will I still have access to my investment?
  • If a blockchain is used, is the blockchain open and public? Has the code been published, and has there been an independent cybersecurity audit?
  • Has the offering been structured to comply with the securities laws and, if not, what implications will that have for the stability of the enterprise and the value of my investment?
  • What legal protections may or may not be available in the event of fraud, a hack, malware, or a downturn in business prospects? Who will be responsible for refunding my investment if something goes wrong?
  • If I do have legal rights, can I effectively enforce them and will there be adequate funds to compensate me if my rights are violated?

 

Stunning Pieces of Cryptocurrency-themed Art

Art has always been used as a way to describe and depict revolutions, so it’s no surprise that artists are choosing the themes associated with blockchain technology as inspiration for art that is relevant in the modern climate. Bitcoin of course has its origins in the disillusionment and anger caused by the 2008 financial crisis and the subsequent bailout of the banking elite. It was created as a radically new (revolutionary?) alternative. Artists clearly sense the revolution that has been started by the decentralization movement. Themes that are being explored in the crypto-inspired art include the quest for freedom, trusting in math rather than people, globalized decentralization, regulation, new governance models, and balance of power.

Fine Art

These themes have first and foremost been expressed in fine art that is sold online and in galleries around the world. London-based Italian artist Valentina Picozzi is exploring them in her Satoshi Gallery, a collection started in 2015 with the idea to “make Bitcoin cooler from an iconographic point of view, in order to reach more people and help them embracing Bitcoin values.”:

A screaming George Washington, selling for ₿0.5

A famous quote from Bitcoin’s “founder” Satoshi Nakamoto, selling for ₿0.8

Another well-known visual artist working in this space is Vesa Kivinen, who started ArtForCrypto.com. Vesa produces mixed media works by taking photographs of his oil and body-paintings as well as images from nature. The digital collages are then printed onto high end diasec, canvas, re-painted canvas and poster prints:

“What Color Lamborghini Should I Get?”

Pop Art and T-shirts

The themes currently being explored are also increasingly expressed in pop-art form and on T-shirts and other accessories.

Julia Tourianski is one artist in this space. As a promoter of anti-state mentality, she makes videos, writes articles, and helps organize events such as Toronto’s Liberty Now. She also produces and sells pop-art through her website Bravetheworld.

Another active artist in this space goes by the name Cryptograffiti and creates art through the lens of “the blockchain challenging the status quo.”  Early in his career he was on the first artists to utilize a public-facing wallet to receive crypto donations for street art. This enabled passersby to send bitcoin in support of his art.

Cryptograffiti’s “U Pay” street art

In addition to the usual media that artists work in, crypto-inspired art has been evolving into a few unique platforms:

Cold Storage Artwork

This is a medium that is being notably explored by Texas-based CryptoArt, which helps people understand, enjoy, and collect digital currencies.

The crypto-themed artwork doubles as a public address (displayed in a QR code on the front) and a cold storage wallet (with the private key sealed under a security sticker on the back).

Physical Coins

Cyptocurrencies of course have no physical form, but a thriving niche of collectors and enthusiasts have created demand for artists to produce beautifully crafted coins inspired by them. These coins serve the double purpose of giving a physical representation when explaining cryptocurrencies to newcomers, and as a collector’s item for those who see them as a piece of the technology’s history.

Maxfield Mellenbruch, expanding on the ethos of cryptocurrencies through his stunning series of physicals, is behind Kialara a collection of intricately designed physical coins with high-quality craftsmanship. Some of the coins, like the cold storage artwork, can be loaded with actual crytpocurrency.

A different form of physical Bitcoins is being created by Los Angeles-based German artist Matthias Dörfelt, who uses the hashes from 64 random blocks combined with his unique software to make an eccentric pattern that in its way is a physical representation of a coin. Dörfelt says every bill is created entirely with code except for the signature. Dörfelt has created a series of 64 banknotes from the blockchain.

“Block Bills” by Matthias Dörfelt