In March, 2018, I corresponded with J.R. Willett, founder of the very first ICO. Here’s his story.
In 2010, Bitcoin had just been invented. I and my wife were nursery volunteer coordinators for two different churches. I was also a Seattle-based software developer interested in economics, payment system, pay stocks, computer science. There was nothing special about me. I just happened to get into Bitcoin early.
I spent months begging my wife, friends and family to listen to me. I got these pitying looks with people telling me, “Poor man! You’re being scammed by the guys on internet.”
Worse still, people on the Bitcoin forum were already moaning about the speculative bubble from 1 cent to 25 cents. “How could something go up 25 fold?” Everyone was saying, “This is unsustainable, this is a crash, it’s going to end in tears...”
To me, this crazy-sounding thing made sense. I didn't know if it was Bitcoin itself, or some iteration. But I knew whatever it was, would take over the world. Finally, after four months of bickering, my wife gave me $200 for both my birthday and Christmas combined and said, “Flush it down the toilet if you want to.”
So the next thing I did, I paid random people from Craigslist monthly to run my mining software.
I actually lost more than I gained.
2012: The Bitcoin-layer idea
When I first got into Bitcoin mining, my dad told me, “You know J.R., when California had the Gold Rush, it wasn't the miners who made the most money, but the guys who made the infrastructure, who sold the shovels and who doled out the ice cream.“
So, I wondered about the "shovels" in this cryptocurrency space and thought maybe I could build a Bitcoin-based protocol layer, like in computer science where Ethernet is layered by TCP/IP, which is layered by HTTP, the Web. If I layered Bitcoin, we'd solve problems like building dark markets, decentralized exchanges, token sales, and so forth. My tokens would float on Bitcoin, and buyers would own them if they sent Bitcoin to fund its development.
With two kids and one on the way, I wasn't going to quit my job at Cozi nor was I going to ask my wife for money. So, I wrote a white paper and spent a year and a half promoting the idea with no success. I even emailed the white paper to Satoshi Nakamoto who had been quiet for a year; no one knew what he was doing. The only response I got was from one Craig White who claimed to be Nakamoto...
My worst point came when I volunteered to speak at the 2013 San Jose Bitcoin conference - the very first bitcoin conference I ever attended - and I begged the audience: “I wrote a paper that tells you how to raise money. Someone please do this. I’ll send you my bitcoins.”
No one did.
2013: Inventing the ICO
In 2013, I finally titled my paper “The second Bitcoin white paper” to push buttons and published both whitepaper and video on a roughly designed website in a move that I called an “initial distribution”. (Others, later, called it an “ICO”. Don’t blame me for that name - I wasn't that dumb).
Soon I was getting comments like: “I’ve reported you to the SEC, you’re going to go to jail.” Although the SEC was in DC, I imagined a SEC swat van kicking down my door and dragging me off in the middle of the night. (I hadn’t consulted a lawyer.)
The first ICO raised half million dollars. There was this bizarre feeling of, whoa, I published a white paper and an address, and strangers are sending me money.
By the end of the year, Bitcoin went up ten-fold so I was sitting on five million.
I called my idea Mastercoin and later renamed it Omni.
We were off to the races.
In just the first nine months of 2017, Omni raised $2 billion. Today the Omni ecosystem is worth hundreds of millions of dollars, including huge projects like MaidSafe and Tether - we're second only to Ethereum! Omni contracts are carefully constrained. They have never been hacked.
Currently I am working on what I like to call "The Perfect Token Sale": UpToken. Check it out at http://www.uptoken.org.
As regards Bitcoin, my friends and family say they wish they had listened to me earlier.
My crazy ICO concept is all over the place. Entrepreneurs realized they could simply publish a paper and people will send them money. Literally, within a few months of my own success, other projects were doing the same thing - the most famous of which was Ethereum.
How can you publish a white paper that would stick out - and succeed?
Unfortunately, by 2018, we have two huge obstacles to success. There are rapidly encroaching regulations, and there’s getting noticed by the public.
Token sales are spending millions of dollars on legal advice and marketing before they ever see a single token sold.
Entrepreneurs with minimal capital who could benefit the most from this attention are also finding it harder and harder to grab attention. Even with ICOs, it has become another area of life where you already need a lot of money to be successful.
That said, if there’s anything to learn from my story it’s this: The harder things are for you, the more you’ll want to be resourceful and persistent. Hang onto that dream. “Climb ev'ry mountain, Follow ev'ry by-way” as in The Sound of Music. You’ll never know where it takes you.
And if your friends call you crazy - let them.
That craziness just may be your redeemer. It may make you the pioneer of the next Bitcoin, Ethereum - or ICO.