Investment Risk Assessment

ZODIAQ
ZODIAQ
Mar 4, 2018 · 3 min read
Image for post
Image for post

In a highly volatile market the ability to accurately assess investment risks becomes one of the life-skills. Therefore, today in the rubric #Cryptoeducation we will discuss the main methods and models of risk assessment in the ICO market.

To examine the ICO project you are interested in, you need to evaluate four T-components:

— Team. Evaluate the qualifications of team members, the reality of their linkages, the previous experience in a particular field, and successful entrepreneurial experience in general.

— Tech. The project should have a clear and well-developed Roadmap, or even better — a working prototype or a finished product. If you are technically skilled, it is also worthwhile to have a look at the project’s source code, which is generally available on Github, and the technical description in White Paper.

— Theme. The project should be a real pain killer and not just a “tribute to fashion.” Here you need to analyse the main competitors of the project, the size of its target audience, scalability and how challenging the goals are. And, of course, you need to answer the main question: is the blockchain really needed here? Or is it used just ’cause of the name?

— Token. Does the project have an asset allocation agreement? How are the tokens called in the basic documents and what legal nature do they have? What is the total number of tokens to be issued? Answers to these questions should at least not raise even more questions.

In addition to 4-T analysis, there is also an interesting concept of Alex Kontegna, a well-known business consultant in the field of blockchain. To assess the start-up, he suggested using the so-called ICO quality matrix, divided into 9 segments, depending on whether there is a finished product and internal currencies within the ecosystem.

Image for post
Image for post

Projects that fall into the orange zone become even less stable when attracting more funds and the investment risk increases proportionally. And vice versa, investments in blue zone projects become even more profitable with the funding growth. Those projects that fall into the negative zone on both axes are not worth investing in.

The ICO market with its huge potential and profits is very attractive both for beginners and experienced investors. Still, you should always remember that even the most thorough and detailed analysis can not guarantee a hundred percent success of the project. Therefore, you should always follow the golden rule of investing and risk only those sums that you are ready to lose — especially if you are just starting your dive into the crypto-world.

You may also find some other useful materials about ICOs, investing and fintech at our Facebook page!

Zodiaq

EXISTING CRYPTOFIAT BANK ∙ FUND ∙ EXCHANGE ∙ PAYMENT SYSTEM

Medium is an open platform where 170 million readers come to find insightful and dynamic thinking. Here, expert and undiscovered voices alike dive into the heart of any topic and bring new ideas to the surface. Learn more

Follow the writers, publications, and topics that matter to you, and you’ll see them on your homepage and in your inbox. Explore

If you have a story to tell, knowledge to share, or a perspective to offer — welcome home. It’s easy and free to post your thinking on any topic. Write on Medium

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store