What Stock Market Investors Should Look For Before Investing in an ICO
Investing in the stock market has been a pastime of many for quite some time. It is seen as a way to get positive returns which can prove very beneficial on the road to retirement. Many have chosen to invest in stocks as a way of getting rich, whether that be through day trading and studying the market or by buying and holding for huge dividends later on when the stock price rises tremendously in value.
Another route would be that of venture capitalism, investing in early-stage startups which show some promise and then exiting for huge returns when the company is sold or has an initial public offering (IPO). While these methods of investing are still very prevalent, the rise of cryptocurrencies and the initial coin offering (ICO) is drawing huge interest from potential investors. Bitcoin rose to a value of over $4000 in 2017, and the likes of Ethereum (3000%) and Litecoin (2000%) have seen tremendous increases in value in the last year as well. The year has also seen a big rise in the amount of ICOs occurring. LiveEdu is one such company contributing to the increase in cryptocurrency activity by launching our own ICO.
Seasoned stock investors and traders know what to look for before investing in a certain stock. There are also certain things which someone investing in the cryptocurrency market should make note of before participating in an ICO. Our previous article on “How to Become an ICO Investor” outlines how you can start investing in ICOs. This one will outline some of the things you should look for in an ICO to severely decrease the chances of falling victim to an ICO scam.
The Basics
At the very least, an ICO should have a website, a whitepaper and social media accounts. We’ll first go over what you should be looking for in each of these things.
Website
The website for an ICO should have some information about the company launching the ICO and what they do. The website should also include details about the token sale, specifically start and end dates, the smart contracts being used and terms of the token sale. These terms will include details such as the total supply of the particular token and how these tokens will be allocated for the project. An overview of the team involved in the project, any advisors and technical partners should also be noted.
Whitepaper
The whitepaper is the main technical document for an ICO. It should include all of the key facts about the ICO in detail. A company overview, the problem they’re solving, the team involved, how tokens will be implemented into a product, how the tokens and funds from the ICO will be used and other key details should be mentioned.
Social Media & Community Engagement
The company launching the ICO should have social media accounts where they post updates about the crowdsale and their product. This is a place for persons interested in participating in the crowdsale or those who already contributed to ask questions about certain things. You should also be able to find information about the company launching the ICO in various media channels.
Going Deeper
While the basics are important, most ICOs nowadays will have these things. To truly know what you are investing in you will need to dig a little deeper to make sure that the ICO is right for you to invest into. These questions should be answered in the whitepaper. However, the team launching the ICO should be able to answer these questions in their social media channels as well.
Problem & Solution
The problem which the project is solving should be very clear. If it isn’t then that’s a cause for concern. Investors should know exactly what the issue is at hand and what the proposed method for solving it is.
Need for Blockchain & Token Implementation
The blockchain will likely be a game changing piece of human history and technology as time progresses and it becomes more widely adopted. However, not every company needs to incorporate it into their business model. The whitepaper should outline the reasons why the company is turning to the blockchain to solve this problem and the benefits it will receive from launching a product on the blockchain.
The way that tokens will be implemented into the product, how token holders can use these tokens and the benefits they provide within the ecosystem should also be clearly stated.
Team
The team that will be undertaking this project together should be something that is visible for anyone wanting to participate in an ICO. Their backgrounds, experience working together and experience working with blockchain and cryptocurrency should be verifiable via LinkedIn or through some other methods. Essentially, an investor should know if this group of people is the right group to be undertaking the particular project. If they have technical partners involved, these partners should have a good reputation within the cryptocurrency industry as well.
When investing in an ICO it is important to be aware of many things so that one doesn’t fall victim to a scam. We have outlined some of the key things which investors should be wary of, and things they should look for when vetting a particular ICO.
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