The Capital
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The Capital

An Amateur Investor’s Guide to ICOs

So, to start I will briefly mention some of the things I did right:

  • Diversifying into 20–25 different tokens
    Not at once, but over the course of 4 months.
  • Using the momentum of one token to invest in others
    i.e. when a coin would go up 10 or even 100x I often took half and put into a few other projects. One example is POLL which went from 10 cents to 10 dollars. I had only put in $30, but at its height this $30 investmnt became $3,000 which allowed me to put $1,000 into two different ICOs while still holding 1/3 of my POLL tokens.
  • Hodling instead of daytrading
    Yes, it’s possible to spend 8 hours a day every day trading AND making money, but that’s not the kind of life I want. Instead I’ve spent that time learning about and researching this space to make better, more scalable investment decisions.

…and some of the things I did wrong:

  • FOMO
    Most of my bad decisions were to invest when an ICO was sold out and then was listed on an exchange. In 90% of cases the token would double or triple in price on the first day (and I was stupid enough to buy), only to drizzle down to below the orignal ICO price.
  • Not researching the team enough
    For every ICO I spent perhaps 10–20 minutes looking into the team. I should have spent at least 2 hours tracking every key team member’s past activities. Now that I actually work for a company doing an ICO, I realize that big investors (the successful ones) don’t necessarily invest in ideas or tech — they invest in people.
  • Investing in application layers instead of protocol layers
    Watch this video to learn the difference.

Here we go!

I’m aware that 13% x 8 is 104% but canva.com thinks otherwise ;0

Team

A “good team” can be hard to define and it often comes down to your personal knowledge of the given industry. Having a sense of how many people and what kind of skills it will take to pull off a certain vision is a major benefit when assessing the quality of a team.

Product

Most of the ICOs I’ve invested in have had some kind of alpha or early beta version to show off, and some of them have even had working products with a smaller userbase already. I tend to not invest in an ICO if the company can’t at least show some “real” use case for what they are trying to do, but there are probably a lot of seemingly successful ICOs out there with absolutely no product but a lot of hype around it — and they might seem trustworthy and profitable when the token first gets listed on exchanges, but later fall apart for different reasons.
Yep, that totally happened in 2018.

Market(ing)

“Look! We’ve created the world’s most advanced something-algorithm-something ever!”Yes, but.. how big is the market?

History

Reading up on a company’s history is a great opportunity to perhaps get an insight into what to expect for the future. This point alone could potentially be 80–90% of the information people need before deciding, in my opinion. Don’t believe me? Well, think about this: if Apple or Microsoft launched an ICO, would you invest? Or Facebook or Telegram? Most would say yes without looking into anything else about the project.

Problem/Solution

This ties into the market somewhat but I would still put the company’s vision as a point on its own; what real-life problem are they tackling and what kind of solution are they offering?

Roadmap

Having a good looking and detailed roadmap goes a long way to compel investors but isn’t that necessary. Most of the time there are delays or additions as a company progresses anyway, so I wouldn’t put too much of an emphasis on the roadmap. If it looks like they’ve thought ahead and also have a nice history of development, that is perfectly fine.

Token Economy

The token economy or token architecture is the way in which the economy of the token is built.

Following

One word: Telegram.
The vast majority of (legit) ICOs are active on Telegram and you’ll notice that I’ve referred to the platform several times in the article.
I use Telegram as a kind of backdoor into a company’s support system.

Extra tips!

Github & Clearify

  1. Github is a great platform where you can look up a company’s code depositories. This allows you to check the code that’s being developed or just see if there is any activity at all if you’re not a programmer. Some companies choose not to upload their progress here, though, so don’t shrug it off as a scam just because you can’t find them on Github.
    https://github.com/
  2. Clearify is a service that launched in January 2018 where companies can register their ICO contribution address to help prevent scams. In the case of many popular ICOs, scammers will create lookalike websites with a fake contribution address, or they can even hack into the real website’s backend and replace the official address with a fake one — potentially running away with hundreds of thousands if not millions of dollars worth of crypto.

And that’s pretty much it!

Remember to take responsibility for your own actions and never take anyone’s word for the truth when investing — no matter how excited they may seem.
Always do your own research.

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