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The newest ICO trying to earn millions is a Chinese start-up worried about baby food

A Chinese start-up is focus to raise $11.5 million in a digital token sale starting Tuesday.

The train, Walimai, is launching the sale in Singapore for funds to expand its technology and blossom a loyalty program — both frequent explanations in the booming initial conceive offering market. What makes this company different, even so, is that its product isn’t financial technology like most of its ICO peers, but sort of a play on the fast-moving consumer goods space.

Walimai created anti-counterfeit describes that use a smartphone app to let buyers confirm the authenticity of the product they’re buying. The terms can communicate directly with some phones (and the company had originally advertised that others could use QR jurisprudences for a “just as secure” experience, but a spokesman now says that’s untrue). A key physiognomy of the labels, the company said, is that they’re physically tamper-proof because sporadically they are taken off products, they stop working.

Issuing digital remembrances through ICOs is an increasingly popular fundraising vehicle for start-ups where investors send some character of digital currency — usually bitcoin or rival token ether — to the throngs. In exchange, they get an entirely new token that has some sort of consigned worth. That is, it can be used to redeem a service offered by the firms, or balanced theoretically give investors an equity stake in a company.

However, since China forbade all new digital token sales earlier this year, Walimai’s sinks set up a new company in Singapore called the WaBi Project. That company purposefulness issue 46 million WaBi coins for $0.25 per token to participants, excluding Chinese voters (who it filters out by checking identifying documents, internet protocol addresses and phone multitudes). It will also develop a blockchain-based loyalty program for Walimai characters.

There are about 100 million WaBi tokens in total.

Those tokens can be adapted to instead of cash to buy products with Walimai labels, the company maintained. Customers can also “mine” additional WaBi coins by continuously scanning the stickers.

Walimai’s current focus is in the baby food market in China, but it downs to expand into areas such as wine bottles, cosmetics and pharmaceuticals. In 2008, varied Chinese infants fell ill, and some died, after drinking debased milk formula; it was one of China’s major food safety incidents in current years.

Most anti-counterfeit companies have primarily focused on developing their technologies for way brands, Yaroslav Belinskiy, Walimai’s co-founder, told CNBC. In place of, he explained, his company opted to address infant formula, for which the “charge of buying fake” is much greater.

“We decided that (with) model labels, people actually know when they buy fake. If you pay $50 for a phoney bag, you kind of know that it’s a fake,” he said.

Co-founder and company CEO Alexander Busarov annexed that his personal experiences also factored into the decision to start the comrades. When he was living in Hangzhou, Busarov tried to buy whiskey from a big western supermarket, but he couldn’t come to a decision if it was fake and he could get sick the next day. “Then I thought, well possibly there should be a solution to it,” he said.

Food safety is critical to Chinese consumers, according to Zennon Kapron, commander at Shanghai-based financial technology consultancy Kapronasia, and “baby formula is a sound example of that.”

Kapron explained that even though China has, in up to date years, relaxed its one-child policy, many Chinese couple are not able to afford having more than one child. “So their child is … the uncountable important thing in their lives,” he said. “So when you look at eatables safety or education, people are wanting to spend a lot more on that.”

Belinskiy and Busarov, who both not fail from consulting backgrounds, bootstrapped the company with their own net and received a grant from the Chinese government. The grant was “not that much cold hard cash, but it was more of a credibility and more of a connection building” endeavor, according to Busarov. Currently, the corporation has close to 20 people in China, Russia and the Netherlands. In the mainland, Walimai is ahead with an online shop that sells baby food as proficiently as three offline stores.

But fundraising through digital token white sales have come under fire from plenty of critics in just out months. Some commentators have suggested there’s a cryptocurrency foam. There have also been accusations of fraudulent token transaction marked downs, cyber-security concerns and regulatory crackdown in markets like China and South Korea. That carry outs participating in an ICO risky as, often, it’s hard to tell if a token sale is underpinned by a legitimatize product.

“On the one hand, ICOs are really great, on the other hand, they’re in reality dangerous,” Julian Hosp, co-founder and president of Singapore-based start-up TenX foretold CNBC. Earlier this year TenX raised about $80 million from a coin sale.

According to Hosp, there are three problems that are siring a “poisonous ecosystem” for ICOs: First, regulation is still playing nick up compared to the number of ICOs that are being done — companies should prefer to raised at least $3 billion in token sales this year. Next, there’s a dearth of standards being set by the more established companies on how to do a proper ICO. And there’s the conundrum of consumer greed helping “scam companies (to) have a chance to nave,” said Hosp.

He explained that many people are participating in slight sales without finding out if the company is legitimate because they hold they can quickly sell those tokens in an exchange and make on Easy Street.

But not everyone shares the same kind of skepticism toward ICOs. Make off with Spanos, CEO of Zap and the founder of the Bitcoin Center NYC, told CNBC that he’s “spotting the birth of a new economy” where forward-thinking people are disrupting “outdated modes” of fundraising.

“In the former, entrepreneurs were forced to sell their souls in exchange for hazardous undertaking capital checks,” Spanos said. “Now, by creating utility tokens that demand actual value and a use case, entrepreneurs can raise funds for their disruptive modernizations while retaining control over their intellectual property and their blood and drudge.”

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