Beginners Guide to Investing in an ICO
This guide talks about the right conditions of investing in ICO. Before we dive into the pool of learning, let’s just check some of the things related to ICO.
What Are ICO?
ICO abbreviated for Initial Coin Offering is a period of time for early investors in a cryptocurrency venture, to buy coins or tokens at a fixed price. Prices are usually fixed to the bitcoins but in recent times, ICOs have accepted alternative methods of payments like ethereum and other prominent coins. This is a kind of crowdfunding. The funds invested by the investors are collected by the developer to launch the project. The project is supported by white paper and important people of the cryptocurrency community. It is mostly an unregulated way to bypass the capital-raising ability in comparison to the banks or venture capitalists.
Statistics
The total funds raised in 2017 in Initial Coin Offerings (ICO) is a whopping amount equivalent to $6,073,707,934. The total number of ICOs which took place was 884.
Raising over 6 billion dollars in a year is a significant amount. This has attracted a lot of investors and traders for making some quick money. But the year 2018 has passed the funding of 2017.
Trending Cryptocurrency Hub Articles:
1. The Bitcoin Bubble Post Mortem
Why Are ICOs Needed?
The birth of ethereum network is the best gift to all the cryptocoin coders who aspire to have their own venture but couldn’t get the financial thrust for their project. There are over 1400 cryptocurrencies in the market. Hundreds of ICOs projects are yet to be launched. It is not possible for everyone to create their own network. The blockchain network of ethereum allows anyone to generate the tokens on its platform.
These tokens are sold in ICO to raise the fund. Now, there are possibilities that there is no operational code of the project and you can be cheated due to the unregulated process. That depends on your market reading and rational conviction. The key point is, ICOs are needed to propel the companies who set their sights on improving the existing cryptocurrency system. ECO and OmiseGO are some of the ethereum based tokens.
How To Participate In ICO?
Step 1: Make A Thorough Research on Upcoming ICOs
Here is how you can make a thorough research on ICO:
● Evaluate The Team Composition: Evaluate the team composition properly, especially the advisory board and development team. Google up their profiles, check their LinkedIn profiles, list out all the positives and negatives. Skim if the company has crypto experience, especially in the field of cryptocurrencies.
● Trust On Bitcointalk.org Thread: This thread is one of the most useful platforms for discussing the issues related to the cryptocurrencies. Amidst, all the issues, ICOs are discussed actively. You can question the developers. If they avoid you or fail to answer you, you know what should you do.
● Go Through The Stage Of The Project: Go through the detailed stages of the project. Check if it has a whitepaper, operational code, or beta version. See if the project has few lines of working code.
● Analyze The Investment Of VC: Venture capitalists usually invest in useful projects from early stages. Assess the project’s website and drill out all the details of the VC.
● Evaluating the Whitepaper: The whitepaper contains all the details f the project. Many investors don’t roll their eyes through these details. Don’t invest without reading the majority of the paper. Reading the white paper will help you to unveil whether the project does justice to the value you are looking for or not.
● Using Whitelist ICO As A Filter: A whitelist ICO demands advanced registration for the participation in the ICOs. Customarily, it is the hallmark of the huge or popular projects that have limited number of coins.
● Look at the outlets or websites: Make external websites and outlets as your measuring gauge. They give the detailed insight of all the ICOs including the latest one. Don’t fear missing out an ICO because on an average 2.5 ICOs are conducted every day. Take your time to have an erudite assessment of the ICOs. Keeping a close look at coming ICOs would help you have better plans.
Website That Gives Detailed Awareness
1. ICO Watchlist (Highly recommended!)
2. ICO Data
3. ICO Alert
4. ICO Rating
5. Coin Schedule
6. ICO Tracker
7. ICO Bench
8. Crypto Smile
9. ICO List
10. Community Sources/Forums that feature ICO discussions
11. Reddit
12. Bitcoin Talk
13. Slack
14. Twitter
● Review The Quality of the code: If you happen to know a programmer or have a little programming knowledge, you can check the quality of the developer. By analyzing their code. By looking at the consistency of the code, you can see if the developer is experienced. The tip is to avoid messy developers.
● Logical Discernment: Social media is a good way to have a logical discernment about the projects. But be aware of the bounty posts. Bounty posts aim at rewarding the users for spreading positive information about the project. But there is no guarantee of how hollow the project is. Not lose the word discretion out of your dictionary. These bounty posts could be the bounty baits.
Step 2: Process Of ICO Participation
● Creating an Exchange Account: Once you are done with all the necessary research and are willing to participate in the ICO, then you should open an exchange account. Again, there are thousands of exchanges which allow users to trade. Be certain that whatever account you use, it should be fiat-accepting cryptocurrency exchange account where you can convert the fiat currency into your favorite cryptocurrency and vice-versa. It is also advised to trade in multiple accounts because most of the exchanges are third-party exchanges and are operated by humans.
● Owning A Wallet For Participating In ICO
Owning a wallet needs a separate guide. A wallet is a place where you’d keep your currencies. The cryptic world offers plenty of wallet types to the users. It is absolutely essential for you to choose the most secure wallet for stashing your valuables.
All the exchange accounts have their own wallets but it is sternly recommended not to use them because they have a potential threat to your funds. Reason? Humans. Humans handle them. Repercussions? The vulnerability to theft. ICO accepts BTC or ethereum from your private wallet. If you send coins from the third-party wallets, there are chances that you won’t get a token because exchange’s wallet is NOT YOURS.
● Follow The ICO Instructions
You should be a part of ICOs discussion. Most ICOs generate a proper guide to participating in their offerings. Join the official communication channel to receive the regular updates of the ICO.
Factors Which You Should Before Making Your Decision
1. Assured About The Project: It will be too harsh if I ask you to be certain about the success of the project because even IPO projects crash despite showing the promising launch. But just to state safety, you should buy ICO tokens only if you believe it will not trade lower in the open market after the project is launched. If you can wait and buy an ICO at a cheaper rate, DON’T BUY IT.
2. Proper Attention Given: Again, there is no guarantee of the success of any idea but the intention and the execution of the idea can be analyzed. Buy the ICOs only when you believe that some attention will be given to the project after the trade goes live and higher prices seem are foreseen.
3. Position Sizing: Go for the ICO if you are not risking a huge amount. If you want to spend a small portfolio of your entire resources, go for it. Position sizing asks you to invest 1% of the total funds in your account (doesn’t matter if it is $1000 or $100000).
4. Reputation Is Not Everything: If you are not going for the idea of the project but for the internet reputation of a person, even a small portion of your portfolio is not worth a spend. Unless you are highly certain of both the things, i.e., idea and reputation, don’t go for it.
5. Absorbing Skills: I shouldn’t be in such negative connotation of ICOs but there are a lot of things which could go wrong with ICOs. Be prepared for absorbing the loss, especially if you haven’t positioned your size of the investment.
6. Observing The Graph: In order for a project chart to spike in the market, something’s got to be done by the project handler. Now, if you feel that project is doing good as the chart is surging, everything comes down to your conviction. Why? Because generally, the project developers do nothing at the initial stages and one day chart rises all of a sudden. It is this time when you have to assess whether the project is worth an investment because a rise is followed by a downfall. In the case of sudden skyrocketing at the initial phase of ICO, it is advisable to sell the tokens because you are already sitting at a fair height without any operation code written or implemented.
The Final Call
The operation of cryptocurrencies is at the initial stage. It has a tremendous market. But don’t fall for illogical projects which lacks the idea of development and methods of execution. The market has huge potential, take your time analyzing all the minute details and then nod a yes for it.
