ICO for beginners: Things to consider before contributing on an ICO
An ICO or Initial Coin offering is equivalent to IPO (initial public Offering), the only difference is that the offering is made in cryptocurrency rather than an equity. An ICO is totally an unregulated way to crowd funding using cryptocurrency as medium of exchange. ICO, also known as token sale events, where royalties/ownership of a project are offered by the means of crypto-tokens.
The market is flooded with multiple ICOs popping everyday and claiming to be the best ones till date. This precarious business is no doubt profitable but owes a lot of uncertainties along with it. It is really hard to separate the genuine ones from the fakers. This article is all about throwing light over various aspects of an ICO and analyzing it in depth to get a better catch over real vs fake.
So, How to identify the real ICOs?
Definitely, there is no clear recipe over this. You cannot claim but you can analyze for sure. I have compiled few cues which will help you in analyzing.
Cue #1 Whitepaper
Thoroughly read the whitepaper. Too much jargon? Reconsider investing in it. This official document should totally resonate with you. The roadmap should be well orchestrated monthwise or quarter wise. Everything should make sense.
Cue #2 Verify the Founders/Advisors
A genuine whitepaper will definitely be having a page on founder and the financial advisors. Have a look and Google for their names and social media profiles. If they are well known names in the market, ICO can be trusted for sure. If the whitepaper doesn’t has any entry regarding founders, cross verify over website. Nothing found? Reconsider your decision.
Cue #3 Anticipations in the online crypto-communities
You can feel the excitement over online communities such as Github and Reddit when some high profile ICO is getting launched. Make sure to explore over these websites to get a better know how over investing in your favorite ICO.
Cue #4 Minimum Viable Product (MVP)
Have a look at the MVP of the project which should be able to satisfy you. MVP is just like a prototype of the project which the companies launching ICO’s have for demo usage. It may not be available with everyone, but if it is, then it is definitely a plus point in favor of the company. MVP boosts the token sale as well as investor’s trust for the project.
Cue #5 Social Media Marketing
The success for every ICO lies at the marketing strategies followed. Make sure that they have pages over the popular social media platforms such as Facebook, Medium, Twitter etc. Also do check their presence over the online communities as stated in #3.
Cue #6 Fund Usages and Contribution
Make sure that the company is not totally dependent over funds via ICO for its total project. Any company offering more than 70% ICO tokens should be reconsidered. Deeply analyze the fund usage as well and the project idea. Is it completely new or is moving an already existing system over Blockchain. The latter is considered to be more trustworthy as the product already exists.
Cue #7 market Expert opinions
This may be last but definitely not the least thing to be considered. Consult your lawyer or a market expert before making any final decision into investing. They have their own way of looking at the projects. A company having a good background increases the reliability and trust in the project.
The ICO industry is high on speculations as it is unregulated. Different protocols govern in different jurisdictions. Do consult your lawyer or a financial tax advisor before investing.