A quick and highly rewarding investment – ICOs (Initial Coin offerings) and token sales are becoming the focus for investors and those looking to invest in blockchain technology and the cryptocurrency market. Market is changing and evolving in such a way that it requires a lot of attention, reading and evaluation before making any significant moves. But what is ICO, and what are the best tips and practices for those looking to learn how to choose the right ICO?
ICO or initial coin offering means someone offers tokens or units of a new cryptocurrency in exchange for funds. The goal of the sale is to gain investments to develop a new cryptocurrency. All those willing to invest will be rewarded. Either with a certain amount of bonus or with the possibility to be ahead of others when it comes to payouts or profit. A number of new startups is growing every day and the market is blooming. It is a clear sign of market demand for new services, cryptocurrency exchanges, regulations, and investors. ICO investment is seen as a lucrative, profitable business for open-minded investors, ready to invest time and money equally not in the right project.
Behind every ICO investment, there is always a well done and well-planned research. In most cases, investors in the cryptocurrency market will choose more than one initial coin offering to invest in and allocate funds in different streams, which lowers the risk. ICO tips available on the community pages such as Reddit or Telegram, are a great source of information for investors looking to choose the right ICO. We would argue that the best way how to choose the right ICO is to find a list of new ICOs planned for the following year. Once you have a list of the ICOs, it is crucial to determine the group they belong to. For example, predictions for 2018 say the financial sector and ICO related to it will most likely be a highly rewarded ICO investment.
How to evaluate ICO?
Your potential ICOs have to be evaluated. Each of the possible ICOs should be assessed in the same way and following a few different categories, including who is the team behind, is there any prototype, what is the problem this particular ICO will help resolve, and what is the community opinion (Reddit and Telegram groups).
ICO evaluation starts by reading the whitepaper. The team behind the ICO will publish a whitepaper on the project’s official website, and this is the first step to present the concept. Think of a whitepaper as a business idea. Whitepaper has to show how everything will work, what the problem the team is trying to resolve is, whether or not there are any plans for the future. Investors should be able to understand the technical details same as a nontechnical side. The role of the whitepaper is to help you better understand ICO’s position in the cryptocurrency world, which in turn allows you to conduct a better ICO evaluation. Lack of the whitepaper or a poorly written one means the team does not have a clear vision, and prospective investors should put that particular ICO on hold until more information is provided.
Check out team members
Another way to decide how to choose the right ICO is by checking the team. The team behind the ICO has an enormous impact on the idea, development and, in the end, the success of the ICO itself. Same as the whitepaper, team member’s profile and business achievements can give a lot of valuable information. Team members can be quickly checked on the official website of the company you’re looking to invest in. In fact, if the company does not have team members section, it is not advisable to invest. A good team should have skilled technical members as well as management people. The technical part of the team should have substantial knowledge on the matter and experience in the field. Team members should have clear links to their business profiles, either LinkedIn or GitHub, plus you should check if they are currently working for some other company or projects. If given ICO is not listed on the personal network as a current occupation, this might be a sign team members are not firmly behind the project, and you should reconsider the investment. Besides team members, it is crucial to see who the advisors are, what is their primary interest and how many successful projects of this kind they have been working on. Same as for team members, if advisors have any cryptocurrency, ICO, and blockchain experience it is more than welcome.
Are there any prototypes of the project?
A prototype of the project is a clear sign the team is working seriously on the idea. Prototype or a beta version, as some also call it, increases the chances for a product or an ICO to be fully developed. Users’ feedback and experience are also present, which can also be a valuable source of information. If there is no clear sign of the prototype, investors should look for a reason why this is the case and see if the roadmap has any signals when the prototype will be available.
Why is a clear roadmap important?
The roadmap is a quick and straightforward way to see the ICO development. As its name says, the roadmap shows timeline and progress of the idea. All of the significant steps such as the release of new websites, wallets, forks should be stated. When looking for a roadmap, investors should be careful how detailed the timeline is. In most cases, ICO will have timeline and goals set in the quarters or seasons. But an ICO with a defined schedule and all events listed by the months is more likely to succeed. If, for example, new wallet release is scheduled for June, this gives more trust to investors than if the time is not specified.
ICO investors should be able to see the ICO like a business and treat it as one, too. This means a lot of research and work are needed before making a financial commitment. The first step should be a through market research and shortlisting potential ICOs. Once you have candidates, a more in-depth research should be conducted. Always make sure you check out community pages and team members. A team behind the project should have a clear idea on future development, and for you as the investor all information should be easily accessible. Keep in mind that the cryptocurrency- and ICO-worlds are fast evolving, and being up to date can help you make the right decision. We are here to help you with that, so check out our other articles and see what else you can learn.
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Author: Ben Prescott
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