Every other day, we get to know about a new cryptocurrency. A cryptocurrency is basically a crypto coin which may or may not be based on the blockchain technology made to resolve a problem. Before becoming a cryptocoin, every coin hosts an ICO which is basically gathering people’s support so that they can go ahead with the implementation of their technology. It is pretty much like crowdfunding for an idea that the developers believe in.
Sadly, most of these ICOs are either fake or just copycats. They will either be pump and dump schemes or simply lie dead after a while. What allures crypto traders towards ICO (Initial coin offering) is the rewards and the bounty points. The development team often bestows rewards like 30% bonus and 70% bonus is various stages before the coin hits a listing. Investing is a risk and so it is always good to know where you decide to invest your money.
Below are a few things you should look when investing in an ICO.
1) Look who is on the team
A good team with a strong background is always better than a great idea with a poor team. You should do a thorough research on things like who took the initiative, the team of developers and also the board of advisors or directors. Dig everything you can about the team and only when you are satisfied, go ahead. Never go ahead with an ICO that has an inexperienced team or where the team is staying anonymous as they may be just another ponzi scheme.
2) Check out the roadmap of the project
Most serious teams behind launching a crypto always put their roadmap in public. It is a way to tell their investors that they are investing in something which is very useful.You get to know where they are headed with all the money that they gather. It is always a good habit to know for what purpose your money will be used. Normally you will find all such information on the first page of their website.
3) Look at the community and media
If there is a hype about an ICO then definitely some work has been done by the marketing team to reach out to the investors. You should always look for the various ways a team is reaching out like via social media, sponsored posts and listing on popular blogs and also sites like bitcoin.org. See for the kind of users which are active on an ICO’s social channel. Most companies these days have an open platform where investors can communicate with the developers directly and get to know in detail about the project. Always have a quest to find the most relevant information.
4) Checkout the ANN thread on Bitcointalk
Bitcointalk.org is one of the best places to know more about what’s happening in the crypto world. It is a community of some of the best people who know the cryptoworld inside out. It is a thriving community with more and more people adding up every day. Keep an eye on the ANN(announcement) thread so you are always updated about what’s new coming to the crypto world. When an announcement is done, you can post your queries regarding the project and so on. You can make out from the answers that the developers post whether the project looks promising to you or not
5) Dig inside the white paper
A whitepaper is like a documentation where the company presents all the plans regarding the targets it aims to achieve. It is a detailed description of the what is the real problem that they are going to solve and on what technology. Always look if their solution is better than what already exists. Closely look for the risks involved and the day their token will be listed on an exchange.
6) Token distribution
For most investors, this is all that matters. How are the tokens going to be distributed. How is the team behind the coin going to distribute the tokens among the members, the team and investors? What happens to the unsold tokens? Is there any buyback policy and also if they are going to be available for exchange on major platforms. All theses questions are necessary to understand the strength of the coin.
7) DYOR: Do Your Own Research
Apart from all the above things, you should always do your own research as the crypto world is so new and volatile that it is rare for anyone to guarantee you a sure shot for the investment. With the rise in internet penetration, you may have come across tons of fake news that promise doubling the money, or a get rich quick kind of scheme. Any type of investment is always a risk and it is upto you to be wise and take the calculated risk.