ICOs are fascinating new trend within the startup world. Therefore, deciding in which cryptocurrency invest in can be a little bit confusing as there are more than 1000 cryptocurrencies in circulation right now, with more being introduced every day. Additionally to that, ICOs are exceedingly speculative investments that are mainly unregulated, and some have turned out to be nothing more than poor quality ICOs resulting investors losing millions of dollars.
So, the main question that arises in one’s mind before investing is how to evaluate an ICO and understand whether it will be a success or it’s just a low reliability ICO. The answer simply lies in researching about the project thoroughly. Essentially, it is a matter of time when you will become good at this enough to profit from the emerging opportunities of ICO market. Here’s what you have to consider in the very beginning.
Read expert’s reviews and opinion towards ICO. When looking to invest in an ICO it may pay to take time to read what other people think of the ICO. Although you will find a lot of information from the ICOs own marketing strategies, these are often one-sided. Therefore, it is advisable to visit ICO listing websites which offer a possibility to read expert’s reviews about ICO.
Check the project’s MVP (minimum viable product) readiness and analyze if the product has features that solves any current problems that exist in the world. Teams, that didn’t build an MVP, is most likely that their ICO will be way less valuable for investors as there is no evidence of the real market need for their idea/product.
Analyse which social platforms project is using, how many and what kind of followers it has, who the followers are. But remember, small community of engaged developers and users will be way more relevant than a larger community of speculators. Also, evaluate how it’s active on social media and its engagement with the community.
How are the tokens related to the business model of the company? Remember that for most of these tokens, their purchase does not entitle you to any share or stake in the company itself. If the token is just an afterthought once the ICO is over, even if the company excels and establishes itself as a market leader, your token value may not increase at all
Check for the hard cap they have put on their tokens. Hard cap is the number of tokens that can be issued. Hard cap shouldn’t be either too low or too high as it loses the essence of the project.
Always read the whitepaper. This is the document that every ICO produces. It describes the technical underpinnings of the project, how the tokens will be distributed and how they will be used. It is the only way to understand the team’s vision and concrete plans to meet that vision.
Checking the project’s website is also an important task as it provides most of the information you need to understand about a project and it could help prevent a poor quality ICO as it usually doesn’t put a lot of effort in making a presentable website.
Evaluate if the project is realistic enough to have any real world applications. Whether or not the project is solving an actual problem. Most startups fail because they are not solving any real life problems.
Research about the owners and project team: their experience, social media accounts, achievements and their reputation. Make sure they have a strong technical team and reliable people to transform the technology into a business. Photos and detailed bios of team members must be provided.
It is important to understand how the ICO funds will get used. Projects should be clear about their intentions and keep their community well informed.
Analyze what the team is committed to and within what timeframe. Tracking if the team adheres to project deadlines will show you how seriously they take their project.
Taking all of these points in consideration will help you get a good overview of the project and help you decide whether it’s worth investing in or not. Not only that, but you can avoid most ICO scams by following these simple rules when you’re doing your own research.