How to Choose the Correct ICO
Cryptocurrencies brought several new concepts and ways to earn money and to raise capital. One of these methods is one we know today as Initial Coin Offerings. That is a concept that is very similar to Initial Public Offerings. In an ICO, a newly forming company or project in the field of cryptocurrencies offer their tokens in an initial sale at a low price in exchange for another cryptocurrency or fiat money.The objective of ICOs is to raise funds for the completion of a project while, at the same time, giving potential customers a chance to acquire for a low price an asset that may be worth more after the release of the firm.ICOs have been a trend this year. The creation of the Ethereum platform and their ERC-20 type of tokens have allowed for the birth of this fundraising method by giving companies a foundation on which to build their campaign and their cryptocurrencies.However, ICOs have faced the wrath of a lot of people lately, from bad reviews and warnings to countries like China banning them entirely.That is because of the unregulated nature of the crypto industry and how ICOs are especially hard to verify and police, something that has resulted in several scams and attacks, losing massive amounts of investors’ money.Nevertheless, ICOs, when successful, can be a perfect place to dedicate your money to both fund a new project that might benefit the market or earn some coins for a low price that could prove to be very valuable and give you a higher return on investment.So, to help you avoid all of the dangers presented by this fundraising scene and to help you know how to choose an ICO that will be successful, we have compiled this list of tips and hints to look out for whenever selecting:Analyze the Scope of the Project.First of all, for a project to be successful, it needs to have a good vision.A project that doesn’t look to change anything and upon its hypothetical completion will leave everything just as it is but with a new brand that offers the same everyone else is contributing is a project that is doomed to mediocrity, and that will hardly yield any profit, let alone a noticeable one.However, an ambitious project with long-term goals and with a plan to alter a specific market be it by offering a new product, implementing new technologies, or offering something no one else has suggested before, could sound more far-fetched than the rest, but its rewards will be much higher.Of course, the answer lies in-between: look for projects that seek to offer something new and innovative, but not as far as trying to reinvent the wheel, but to create an alternative.That is because while any project needs to be ambitious to find success, the goals still need to be realistic and achievable.So, look for projects that offer an alternative to mainstream options in any market or one that provides some new concept that could benefit everyone. These are the ones most likely to succeed.Check the Source Material Provided by the Company.After you’ve determined if the project’s objective is a profitable one that you can get on-board with, you need to know if the company behind it is legitimate or if it is just another scam.You need to start your evaluation from the source itself and create your own opinions and judge by yourself before checking out any review or advice from external sources.That is to make your statements and learn how to identify potential scams on your own and use other reviews and critiques to verify whether or not your view is shared or correct.One of the best ways to determine whether or not an upcoming project is just a scam is to go straight to the information they are already offering.Whitepapers follow trends and unspoken steps when being made, and the websites themselves often show strange sings that can help you determine the legitimacy of the project.Some of the signs you can look for are:
- Inconsistencies in Their Whitepaper.
A whitepaper is a fundamental document for any upcoming ICO. It describes the scope of the project, the problems it aims to solve, the target audience, the benefits, how it works, what are the coins for, the team behind its development, and, finally, a roadmap of its development and the details of the upcoming ICO. Also, the price of tokens, changes in this rate, the date, and how many tokens are destined for selling in the event.That is a great place to find inconsistencies which often indicate the time spent on writing the document: a lousy whitepaper means a faulty project.Additionally, whitepapers need continuity, so if prices or numbers change within the document itself, you should look out for a scam.Clearly, if an ICO offers no whitepaper, that’s an ICO that should be immediately discarded.
- Web Design.
Any project with a dedicated team will look to create a website for its company that will look nice and offer an intuitive and organised layout of the information.If the website is inconsistent, messy, and repeats the same information a lot, then the company behind the project didn’t put a lot of effort into its design and maybe made it for the sake of making it.That is another bad sign.There are also many websites with an easy-to-comprehend layout, but with limited information or one that is repeated throughout many sections. That is a red sign.
- Redaction and Grammar.
While investigating ICOs, I’ve come across many websites with translating errors, wrongly written sentences, misused words, and many more mistakes of this type.Coincidentally, these were also projects I’ve never heard from again.These are also present in both websites and whitepapers, so stay on the lookout.
- Information Available.
Any upcoming project looking to attract investors should provide all of the information necessary for people to know what’s going on and who’s behind it.Any website that is hesitant to share information is one that hides something.Among the info that should be available on the website or whitepaper itself we have:
- Token price.
- Development team.
- The date for the ICO.
- Whitepaper.
- Social media accounts.
These are the core components that should be available on any website. If only one of them is missing, then you should proceed with caution or maybe even opt out of investing.
- Look for Regulators and Backers.
While, yes, regulations are something cryptocurrencies as a concept are trying to leave behind and prove obsolete, we are still some years away from that future.So, if the website does have the information necessary to pass the sketchiness test, you need to confirm your trust or suspicions.There are many “regulating” offices that, while they are not entitled to give or take permissions for ICOs, they do investigate the projects to determine whether or not they are legitimate. And, if they are, regulators proceed to endorse the ICO.You can look for these marks to determine if an ICO is worth investing.Additionally, there are many well-established brands in the crypto universe that companies reach out to in hopes to get them endorsing their project.Usual brands that are seen endorsing legitimate companies are CoinDesk, Kraken, Bitstamp, CoinTelegraph, and many other exchanges and mining equipment-selling firms.Out of these endorsements, the most important ones are crypto exchanges.That is because exchanges will hardly accept a currency that won’t earn them any profit, so an exchange endorsing an ICO is a good indicator that it is one with future.Besides, even if the project behind the ICO turns out to be a scam or not successful, exchanges that accept that currency from its launch can give you an opportunity to ditch your coins for a minimum profit before everything crashes.
- Reviews and External Information.
Last but not least, we have other people’s views and opinions.There are many websites dedicated to tracking upcoming ICOs and doing research on its background.Websites like ICOradar or Medium provide information on upcoming ICOs like prices, coin supply, dates, and even reviews.That is important since it both gives you opinions on the probability of an ICO being a scam and helps you confirm if your hypotheses and beliefs were correct, which goes a long way into making you great at studying ICOs for investment opportunities.Additional, information given by developers to external websites through interviews are also a great way to determine the commitment the developers have to the project.