The Importance of Transparency With ICO’s

To date, ICO’s have raised a little over $5.4 billion dollars so far in 2018. With all of this money flowing into the ICO space, it is fair to inquire about the importance of transparency of ICO’s. With that said, today we will look at ICO’s from the perspective of transparency.

First, let’s look at fund allocation:

Fund Allocation: In today’s ICO marketplace, the importance of fund allocation couldn’t be greater. Investors want to know where their funds are being spent and want to have some level of tangible proof to support this. One of the major reasons why an ICO can fail is that funds get misused or worse, outright stolen. For investors, it’s important to keep in mind and be watchful of how transparent the said project is concerning the funds it receives and what they are spending them on.

Next, let’s go over the token that the project will be issuing:

Token Metrics: Another aspect to examine is the token economy itself. The distribution of the tokens, how many there is being created and other factors can greatly affect how a token will function on an open market. As such, it is important to have as much transparent information as possible. Some fair questions to ask include:

• Does the project have a hard cap?
• Is there a token burn for unsold tokens?
• How will the token be split between different sale periods?

These are some of the important questions among others to ask when evaluating an ICO. All of these factors and more play a vital role in understanding the level of transparency an ICO may or may not bring to the table.

Last but not least, it’s important to evaluate the product that the ICO itself is looking to build.

Product: In some cases, an ICO may already have a working MVP (Minimal Viable Product). In other cases, the product itself may be a significant amount of time away from being ready and will require funding to complete. When evaluating an ICO, it is important to bare in mind if there is any tangible signs of work or development being conducted for the project. Some important questions to consider are:

• Is there any public code available on Github or other resources about the product?
• What does the end product look like?
• Does the team have a previous history of being able to develop the product mentioned?

In all, there are many factors to evaluate when looking at an ICO from a transparency perspective that expand beyond what was mentioned previously. It is important to note that as the ICO space continues to grow and evolve, the need transparency will continue to grow as well.

*Please note that this article is meant for informational purposes and does not constitute financial advice.

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