How To Identify An Initial Coin Offering (ICO) Before It 10X’s!
A quick outline for anyone thats new to the space, an initial coin offering (ICO) in simple terms is a way for new cryptocurrencies entering the space to raise funds. Similar to an Initial public offering (IPO).
With 913 new ICO’s and a staggering $5.6 billion raised through initial coin offerings (ICO) in 2017 there has been a lot of attention driving towards this new funding stream.
The truth that gets hidden away — 46% of ICO’s created last year have already failed, with a further 113 currently a going concern. To put that in perspective $US233 million raised through these ICO’s is now in the abyss. Thats a lot of lost investors money.
I often get people asking me my thoughts on different ICO’s. And when I ask them why they are considering investing into them the response is something along the line of, the guys in my crypto Facebook group said its a great project or the white paper looks cool. I’ve found this to be one of the main reasons people are losing their hard earned money in cryptocurrency. Its really worth taking the time to do some detailed research into a new project as it may make you change your decision or even better really set you to capitalise.
Here are 5 key things to identify in an ICO before it 10X’s:
- Does it have a real world user case and a market?
This is where I like to start because if it can’t be applied to the real world and its doesn’t have at the very least potential customers then I’d be questioning its purpose. There have been some amazing concepts launched that have the potential to have a huge positive global impact…….in 2030. We have transitioned away from the speculative phase and are in the utilisation era. What is the benefit that the ICO brings here and now? - Who is part of the team?
I read a great book once by Jim Collins — Good To Great, where he talks about the foundation of any great business succeeding is the team, this is no different with ICO’s. I take time to look into the team, including advisors and investors, what is their background and do they have a track record of success. This will outline a number of things, a big one being their ability to deliver on the awesome roadmap that they have created. Receiving the funding is one thing, actually implementing is a whole other ball game. - Does the business exist without a coin?
Is it really necessary for the ICO to be creating another coin and does it actually need to be run on a blockchain? If the company can exist without then it may be worth questioning what they are trying to achieve and are they providing something of relevance or just unnecessarily trying to be part of the cryptocurrency revolution. - Are they an already established business?
One way to identify how quickly an ICO will be successful is if there is already an established company behind the project. One that has a customer base right now where they can integrate their coin. Of the previous coins that I have invested in at ICO stage, I’ve found these generally to provide the greatest consistent long term returns. - What is their community and media channels like?
I always like to see how active and engaging an ICO is on various channels from Reddit, Telegram to Slack ect. Scanning over the content they are posting on other channels like Youtube or Facebook to see if it ties into the relevancy of the project. Its also a quick way to identify any scams!
As an overview, if you were to go and invest in a new car I’m sure you would do your own research and make an assessment on whether its right for you or not. Its kind of the same when it comes to ICO investing. Undertaking the necessary due diligence will best set you up to minimise your risk an improve the likelihood of exponential returns.
Thanks,
Joe
Founder & CEO — Crypto Consulting Institute
To learn more, check out cryptoconsultinginstitute.com.au
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