As we have touched upon in previous blog posts, Initial Coin Offerings (ICOs) can be great investments. However with so many out there, what are the things to look for when choosing one to make an investment in?
Let’s start with a brief rundown of what an ICO is. It is basically a form of crowdfunding using cryptocurrency for businesses which are using blockchain technology. The way the companies do this is by selling their new coins in exchange for cryptocurrency. These coins are referred to as tokens and are similar to shares of a company sold to investors in an Initial Public Offering (IPO) transaction. What makes ICOs different from IPOs however, is that ICOs deal with supporters who want to invest, much like a crowdfunding event. This is why ICOs are referred to as crowdsales.
So you’ve decided to want to invest some of your crypto in an ICO, how do you go about choosing the right one(s)?
There are many different websites where you can check out information about current and future ICOs. We recommend checking out ICO bench, as this site gives you a decent rundown about each ICO, has an easy to use search feature, and you can also read the views of their in house experts on what they think about particular projects. Each project is also rated by users out of five in three categories – team, vision, and product.
Perhaps one of the most obvious things to check out is the idea itself. On ICO bench you can watch a video about each project, as well as read information about what the project is trying to achieve. Things to look out for here are how the project is utilising blockchain, is the idea unique, and perhaps most importantly is it realistic.
Once you have seen an idea you like it’s time to check it out in more detail. The best way to do this is to study the white paper for the project. Any ICO worth its salt will ensure that their white paper is extremely detailed and can answer most of the questions any potential investors may have. They should also provide a lot of evidence here, so it is important to check the legitimacy of this as well.
One of the most vital things in an ICO is the team which is leading it. On ICO bench the team is listed, with a link to their LinkedIn profile as well, so this is a good way to check out their expertise and experience. The team is also split into two; team and advisors, with the advisors being ICO experts who are there to guide the project along, so they are a vital piece of the jigsaw and it’s important to have the best and most experiences ones onboard.
The community is another vital aspect to look at when choosing an ICO. A good ICO will have an open community via a medium such as telegram or slack, so this makes communication between investors and developers easy and transparent. Also check out the more obvious things such as social media to check out the content they are posting, and also the interaction they have here with others.
Checking out the stage that the product is at is also another thing which should be on your checklist. Whilst there is no golden rule about which stage to invest in, it is important to check exactly where the team are with the product. For example do they just have a white paper and rough roadmap? Or perhaps the product is in the Beta stage, or they may even have a working product already. Of course, it will always be safer to invest in a product which is as close to the final launch stage as possible.
When investing in anything it is important to check out what the public are saying about it, which is why it is always worth checking out the ANN thread on Bitcointalk. On this forum there will be a dedicated thread for the ICO you are thinking of investing in, so head over there and take a look at what people are saying. Also on this forum each user is ranked, so the higher their rank the more trustworthy they tend to be.
As well as the information on the ANN thread, it’s worth checking out the reviews on the aforementioned ICO bench. Here experts will give a rating as well as a review, so it is a good place to see if any ICOs have been flagged up as potential scams.
Of course, like with any type of investment it will always be a gamble, but if you do some detailed research and use the steps above to help guide you then you stand a greater chance of getting a return on your investment.