ICOs, 5 Things you need to know before joining that will impact your life
With the value of digital currency being at an all-time high, it is important for the world to know what it is, and what it does, before getting involved.
Shadi Paterson, the founder of The 8760, a company with a portfolio of ICOs over $600M, and arguably one of the fastest growing agency’s specializing in ICOs, saw a gap in the market for the ability to focus on the marketing aspect of ICOs — creating the buzz, PPC and Content campaigns necessary to funnel traffic for Blockchain Based Services.
Through his work and collaboration with clients, Shadi has realized that consumers and clients need to know these 5 things about ICO’s, before deciding on investing.
1) Token structure
What does ICO even mean? “ICO stands for ‘Initial Coin Offering’” Shadi explains. “This is, however, a poor abbreviation since most are actually TGEs (Token Generation Events) or ITOs (Initial Token Offerings)”.
One of the most important aspects of judging an ICO, is by the Token or Coin they’re offering. As of now, there are many different types of Tokens floating around, as well as many more constantly being innovated and tested on the market.
A potential investor to an ICO must understand the mechanics of the Token, how it works, how it plays into the business (how they plan to incorporate it), as well as what it actually represents.
For example, https://crypto20.com ‘s token operates almost like an autonomous ETF. Whereas Bancor is a ‘Utility’ token. In this case, the value is linked to how much said token is utilized.
2) The Team
The nature of ICOs, and potentially one of the biggest benefits of ICOs is the fact that anyone, anywhere, can create one. So, if considering investing or joining an ICO, you should begin by researching everything you can about each core member and their advisors, while making sure the advisors on board were not simply been planted there.
“This is some of the core due diligence you’ll have to do, and arguably, you shouldn’t rely on ICO lists or rating agencies to tell you the truth. It can be done in an hour and when you’re investing what could potentially be large quantities of money, it should be completely worth it” Shadi states. “Dive into the team’s LinkedINs, reverse image check their pictures, look at their backgrounds, look through their social history, etc”.
3) What are they even doing?
In this world, you’ll quickly discover that some ICOs aren’t really doing anything. Their page is littered with buzzwords and nice videos, but no real mission.
Even if they do have a clear mission, it could be on a roadmap that it won’t even be achieved for years. Would you be willing to wait years for an appreciation in value?
As Shadi elaborates, “A company going to ICO that already has a product being made, perhaps already being demonstrated — that is a huge indicator that yes, they have a clear direction, they’ve been focusing on building a product already, and are potentially a stronger ICO than the rest”.
4) Who are they partnering with?
“As an agency, before we start working with an ICO, one of the first questions we’ll ask is ‘So who is your Legal team’. If they don’t have one, or worse yet, if it’s on the back-burner and they plan to tackle it after the ICO, this is a huge red flag. Consider the value of a token you just bought, when the SEC takes them to trial from XYZ reason. It may not be 0, but well, it probably is” Shadi explains.
Who is auditing their smartContracts? Who is auditing their security? What reputation do these partners have?
These are all red flags to how seriously they are taking the ICO, but could also be an indicator of how well they’ll do post-ICO.
5) How to actually invest
Investing shouldn’t be the first thought or consideration you have before joining an ICO. Each and every ICO is different, but most will follow a similar pattern.
“First, the majority of ICOs occurring today are built upon the Ethereum platform. Ethereum tokens follow a standard (At the time of writing) called ERC20. Many crypto wallets abide by this standard” Shadi describes.
“So, if you’ve done your due diligence and decided on an ICO, you’ll need to understand what kind of Token they’re offering is and on what Blockchain that token is built. As stated above, if it’s ETH (Ethereum), then you can loosely follow the steps below:
● Create a platform agnostic wallet, with a site such as My Ether Wallet.
● Buy Bitcoin or Ethereum, with a provider such as coinbase, local bitcoins, or a friend.
● Note what CryptoCurrency the ICO accepts.
● Change your CryptoCurrency into the acceptable one using a tool such as ShapeShift, if you need it.
The next step would be to actually ‘invest’. This is the final hurdle. Crypto is the wild west and with the anonymity of payments, if you send to the wrong address or SmartContract, no one (Literally, no one) will be able to help you recover that money.