7 things to look for in an ICO
Initial Coin Offerings, or ICOs are growing in popularity as a means for startups to raise capital by issuing digital tokens (a form of cryptocurrency) in exchange for funds. Traditional methods of raising capital include selling shares of equity, issuing debt or pre-selling goods and services. ICOs on the other hand, possess some of the characteristics of these traditional methods, but do not have the same level of regulatory safeguards. It should be noted that ICOs are not any form of debt instrument or bonds or securities, and one should exercise their due diligence before choosing to participate in an ICO. Here are some things you should look out for before diving into a crowdsale for an ICO:
- Look at the Development Team
Check out the team behind the project, the developers and the advisors. Google their names, ensure that the profile pictures are not phony, look up their relevant experience. Find out if they have any experience in the crypto-sphere, and any projects that they were involved in. You should always avoid participating in an ICO that is backed by an anonymous development team.
2. Check out the stage of the project and investments
What stage is the project at? Only a whitepaper? Proof of concept? Any products launched so far? Who are the investors? Such information should be readily available on the main website page of the project.
3. Look at the community and media
What channels are the project using to reach out to investors? How active are they on the websites? It is also important to have an open community available such as Slack or Telegram, where the potential participants can communicate easily with the developers. Check out their social media channels and the content that they are posting. How relevant is the information regarding the project?
4. Look at the ANN thread on Bitcointalk
Check out the project on the Announcement (ANN) thread on Bitcontalk.org, a forum where the crypto-community share their insights on Bitcoin, Ether and other cryptocurrencies. The project should usually have a new announcement on the Altcoin ANN thread, disclosing all the relevant and necessary information that you would require. Ask questions, observe the questions of the other users on the forum, and examine the answers provided by the project developers. Determine if these answers are legitimate or dodgy.
5. READ the Whitepaper
The project aiming to raise funds through an ICO will enclose its plans and necessary information in the document known as the Whitepaper. Take note of the analysis and descriptions provided, cross check them to ensure that the evidence provided is legitimate. Examine the opportunities and risks that are involved, analyse the problem, solution and product that is presented. Make sense of how the digital token will implemented with the product and when will the token be listed on an exchange. Scrutinize the plans and perform your due diligence.
6. Token Distribution
How will the tokens be distributed? What percentage of it goes to the crowdsale, team, advisors, etc. How will the tokens be used thereafter? When will tokens be distributed after the crowdsale? Where will unsold tokens go? Will there be token buybacks? These are just some of the questions that are important for understanding
7. DO your own research
These are some of things you should look out for before deciding to participate in an ICO, but the list is not exhaustive. You should always gather as much as information as possible from various sources (that are credible of course). Be careful of fake news and misinformation that may be spread around. Ultimately, be meticulous in your research, instead of charging in recklessly, hoping to make a quick buck.
Check out our project, Nitro, the first ICO to be backed by a mainstream publicly listed company, iCandy Interactive Limited, an Australian- listed game studio group with a presence across the Asia Pacific Region.
Our ICO launches on 25th Oct 2017 at www.nitro.live.