We are happy to announce a new feature in Coinprism: Crowd Sale Management. Colored coins are the perfect way to run a crowd sale, there is no intermediate currency so you are not tying your crypto-tokens to anything else than Bitcoin.
The crowd sale where YOU are in control
The approach taken by Coinprism for crowd sales differs from alternative systems. With open assets and Coinprism, you don’t have to put your faith in a complex protocol for the crowd sale. The system is very simple and works in two phases. Here is how it works:
1. You create a color address in Coinprism, and publish that address on your website or forums as the crowd sale address.
2. Investors send bitcoins to that address (transactions in blue in the diagram above, this is phase 1).
3. After some time, you go to Crowd Sale Management interface in Coinprism, and enter the price at which you are selling your tokens, as well as a storage address.
4. Coinprism will look at all the transactions which have been sending bitcoins to the crowd sale address. For every single one of those transactions, it will create a new transaction that atomically sends the bitcoin proceeds to your storage address, create new crypto-tokens, and send them back to the buyer (transactions in green, this is phase 2, the “distribution”). The number of crypto-tokens issued will be automatically calculated by Coinprism, from the amount of bitcoins sent by the buyer and from the price you have set for your tokens.
5. The result is a batch of transactions. Coinprism will let you review all of those transaction through a downloadable spreadsheet. All you have to do is confirm the transactions if you are happy with them. They will be signed client side using your password, and broadcasted to the Bitcoin network.
Some nice properties of that system:
- If a buyer attempts a double spend, they won’t receive the tokens, since the phase 2 issuance transaction is spending the output of the initial phase 1 bitcoin transaction.
- Every time you run a distribution batch through Coinprism, you get to set the price for your tokens, so that allows you to change the price of your tokens over time, as you like.
- You can also stop the crowdsale at any time – you just stop doing distributions.
- After phase 2, the crowd sale address is emptied, and the funds are moved to the storage address, so each sale can only be processed once.
- As always, the system is completely decentralized as Coinprism doesn’t have the keys of any of your addresses.
The buyer should make sure to send the bitcoins from a color aware wallet, because the assets will be sent back to the same address. The process is very transparent and open, and the only output of that process is the batch of transactions, which you can review. There is no magic. This differs from the Counterparty and Mastercoin approach, where you have to put your faith in a black box protocol: you are subject to the fees imposed by the protocol, the matching logic, timings, rules and bugs.