Initial coins offerings are being used by many investors to get capital. This eliminates the need for paying interest according to a particular schedule giving enough time for companies to concentrate on their developments.
Though they are beneficial, they involve high risks and must be handled with a lot of caution. Some companies that launch their own token sales and ICOs end up defrauding innocent investors. While countries such as the US consider securities regulations, others like China have banned ICOs.
Picking a good ICO can help you as an investor earn returns from trading cryptocurrency. This will help you get the right one.
1. Learn more about the team
Most new companies have experienced founders that have been in the industry for a while. Do some research on the company as you review profiles of the team. Check if there are any mentions or news on projects they have been part of before.
The members of the team should be experts in their fields. Having a track record is essential to determine the level of experience the team has in different crypto projects. Check their names on google and find out if the board contains any famous cryptocurrency traders.
Companies such as cryptopay have existed for a while holding ICOs with the aim of speeding up development for new services and products. You can, therefore, trust such a well-known company.
2. Choose disruptive concepts
A startup holding ICO should be valuable and unique. ICOs have become so easy to hold such that every start-up wants to venture in them with the aim of seeking cheaper versions of services.
Look for a startup that has something unique to provide so that it can innovate than compete with other services. Their services and products should use practical solutions to handle a pressing need.
3. Determine the practicability of the technology
An ICO should provide more than a vague idea which has high risks. As an investor, you should determine how a venture is viable using the concept proof. An available venture that is ready to be evaluated and tested is safe.
It also shows that the venture is confident about the ICO. Evaluate the technology to determine if it impresses the target customer. A functioning technology can progress better and help you gain returns with time.
4. Go through the white paper
Every company holding ICO has a white paper to attract potential investors. Go through the white paper to determine if it is written well not excluding essential details. It should contain substantial arguments outlining why you should trust the company with your investment.
The white paper should also display information regarding the need areas and solutions to use on them. It should contain high-quality information as a sign of the seriousness of the team. A good white paper includes citations and figures from academic sources and experts. This portrays that the company is accurate in its findings.
5. Determine how much you should invest
Though you may get rewards from using ICO, it is important to stay open-minded to the risk of losing money. That is why you should not invest a lot into ICOs to prevent these losses. Many startups that hold ICOs are new while some are not operational. This means that as an investor, you would be taking a 50-50 chance of gaining or losing from it.
6. Be keen on media coverage and community involvement
The support from the community is crucial for every investor. Check on the activities of the community as you assess the atmosphere. You can evaluate a project through online media sources such as Twitter and Facebook. Many ventures enhance their media coverage through the use of bounty posts.
They do this with the help of bounty threads where users who spread positive news regarding their project get rewards. Though bounty threads have a lot of hype, they may not be very useful. The intention of investors is different since some engage for tokens.
Any investor who needs to raise funds using ICO must be able to investigate and assess projects. Be ready to look at projects from different aspects as you note down all the merits and demerits to make a wise decision before investing.