5 key points for evaluating Initial Coin Offering (ICO) investments
ICOs (Initial Coin Offerings) have become enormously popular in the last 2 years, and gained mainstream awareness in mid-2017. What is ICO?
It’s like crowdfunding, but in the digital space, consisting in offering tokens from the project in exchange for cryptocurrency or national currencies. Today ICO has become a common thing in the Blockchain sphere, but it’s becoming more and more difficult to tell the difference between the good ones and “scam” projects, the SEC has even made a fake ICO site to educate investors about the risks of such enterprises — https://www.howeycoins.com/index.html
We’d like to remind you once again about the signs of a good ICO that you should be looking for if you want to invest and make real money.
- The concept, business model and whitepaper
The most important assessment criteria is the concept of the project. A lot of people are quick to invest without reading the white paper, guided by the hype of opinion influencers, the media e.t.c., but in our opinion this is irresponsible and may lead to loss of investment, with no one to blame. To better assess what a project really is, ask yourself the following questions:
What is the team behind the project building, is it a blockchain-enhanced copy of an existing product or something completely new? Is there demand for the product being built, if it’s an innovation — is there any proof that it will be adopted by the market? What share of the market will it cover? Do you think they have credible and viable business model that will actually make their token raise in value, or is the token simply there for the sake of itself?
This may take time, but we can’t stress enough — read the white paper carefully. You’re saving yourself time and money by doing this.
That’s why don’t hesitate to study the white paper or at least the most important parts of it. It’s often the only document that gives you a chance to analyse and get in-depth details about the product, which the company is going to develop, their long-term plan, distribution of tokens. Moreover, the whitepaper must be original and not look like a copy from the another project. It’s an official document and it must be written in the appropriate style, have no contradictions and blatant mistakes.
By reading the main document, you not only estimate the value of the project and ICO, but learn what you’re investing in. If after reading the white paper you aren’t convinced that you have a full understanding — try asking the project’s team directly. They must be more than happy to help you, because if they don’t communicate clearly with potential investors, they’re more than likely a scam.
2. Project team
This is an obvious, but nonetheless important point. Who is behind the project? Have these people conducted an ICO before? What is their previous job experience? Have they already been involved in other projects as team members of advisors? Do they have people in place in key positions — CTO, CEO, CMO e.t.c.?
Check their LinkedIn to find out if these people are real and are actively involved with the project and not just some impostors. A good sign is ateam with experienced members with a track record of successful projects in related industries.
3. Advisors and main partners
Advisors have become somewhat of a tradition for ICOs and it’s fairly easy to fill a project’s advisory board with just anyone, but the experts with good reputation will never be associated with a poorly managed or scam project. Therefore it’s also helpful to analyse the advisory board. Are these people well-known in the blockchain sphere or outside it? Is their business connected with the project’s agenda? Who are the main partners of the project? Who has already backed the project (funds , capital groups)?
Again, analysing these questions you can understand how serious the project is and how much progress it has already made in terms of business development.
In Bettium there are several advisors, who have expertise in E-sports (Ken Chung, Vice President at Asia-Pacific E-Sports Association; Gi Nam Lee from Korea E-sports Association; Thomasz Chojecki — Founder & CEO of Poland e-Sports Foundation), which makes a lot of sense since the project revolves around E-sports.
4. Legality
In 2016–17 ICOs have largely been conducted in the gray legal area, since there was no regulation whatsoever in place in under any legislation. Now, however, it’s an important thing to consider both for ICO investors and the project teams themselves.
The company must be registered and the business and it must be licensed(or work on getting the necessary licenses) to conduct its activity. What kind of token is being issued by the startup? Security tokens or utility tokens? Even if the idea behind the project is great, will it be legally allowed to function under most legislations globally? A lot (we’d go ahead and say — the majority ) of ICOs , especially last year, did not take this factor into consideration and fell victims of their shortcomings. For example — Wirex had their cards suspended by WaveCrest, the card issuer, because the whole operation wasn’t compliant with existing regulations.
In other words, if the project heavily depends on the government regulations being favorable towards it and there is no precedent — it’s a very risky situation both for the project and its backers.
5. Quality of the code
You are very lucky if you have a little bit of programming experience. Usually blockchain projects tend to have open-source code and provide an opportunity to study their work to everyone. You should definitely use it by analysing code on Github. Whether it’s the blockchain smart-contract or pieces of the actual product — everything counts and everything has to be scrupulously studied.
A lot of projects , the so called “white paper ICOs” have absolutely nothing to show before (and often a long time after) the token sale, and while this is not necessarily a red flag if there are valid reasons behind it, it’s definitely a risk factor which may result in the post-ICO development of the project being delayed by a significant amount of time.
To sum up, before investing in any ICO don’t hesitate to analyse as much as you personally can and as much as your expertise allows you to, read articles related to this ICO. Make sure you are investing in a good project with clear vision on how the team is going to develop their product both during the ICO and afterwards.
To learn more about our TokenSale, visit https://bettium.com/ and join our community via Telegram https://t.me/bettium
www.Bettium.com — Official Site
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