Initial Coin Offering (ICO) is a crowdfunding method for startups to raise capital. In the ICO, the crypto tokens are traded that could offer a great value to the investors. The tokens turn out to embellish much higher prices in the future than the actual price of the token bought for. Usually, a percentage of tokens are sold to ICO participants and investors. By launching the ICO, companies will also be able to introduce the product or service to the target market.
The success of the ICO’s depends upon various factors. The firm, the idea, and the purpose behind the project, the aims, and goals to be achieved, and especially, the team. As an investor, it is important to consider and understand the cryptocurrency market before you get into the token investment. Alongside, you should also consider and check a few elements that help you to be on the ball. Probably you should focus and do some smart analysis before you initiate your investment.
We understand it takes so much effort to participate in the ICO. It is not so easy to find out the best token that could benefit you in multiple ways. So here are a few factors that you should consider to evaluate and participate in any ICO.
Initially, before you get onto the ICO launch, you should consider checking about the development and the advisory board. You should try to understand the teams’ background and relevant experience. In this smart world, we’ve LinkedIn to check the teams’ professional backgrounds. So check out their crypto relevant experience, ICO initiatives, and participation, etc. This could help you read their business minds better.
Usually, companies make the project announcement on BitcoinTalk. It is the biggest forum for Bitcoin and crypto-related topics. So, you should probably visit the Bitcointalk platform to read the investors’ concerns. Most of your questions can get answered on Bitcointalk.org. You can directly talk to the developers and get to know their response. If they avoid answering your questions, certainly you should think of considering the investment.
Well, Bitcointalk ranks each and every message. So you can check the reputation and ranking of each writer and their comments. Also, you can check for the red-flag words like scam, con, MLM, and make your decision based on the total number of results and conversations.
Project Phase and Venture Capital Investments
It is always important to evaluate the project stage. Is it only in the whitepaper phase or a beta version? Is the product launched? If yes, how is it progressing? The functionality and coding stage? – As a potential investor, you should consider all these to make your investment well worth it. VC’s prefer to invest and support firms from the early stages. So while you invest, ensure that you have well-known investors invested in the same project.
Community and Media Outreach
During the ICO launch, most of the ICO’s are always open on social platforms like Reddit, Twitter, and Facebook. You can find out all the details, and relevant information to evaluate the ICO. Usually, these ICO’s launch a bounty thread to reward users and spread awareness about the project. So, the ICOs take place to do both, to find potential investors and promote the project. However, a few investors participate only to buy tokens.
Unlimited or Hard Cap
Remember, the way the firms launch ICO’s could easily convey the uniqueness of the tokens. An Open cap option allows investors to send unlimited funding to the project’s ICO wallet. But, the more the tokens – the less unique and less demand they gain afterwards – for trading.
Alongside, if the ICO’s raise too little, it might become harder for you to sell the tokens after the release. This takes place due to the less demand for the token in the crypto market.
Evaluate the Whitepaper
Whitepapers contain the whole information about the project and the ICO. It is good to thoroughly read the whitepaper before taking any decision. You can find out the pros and cons, and add these points to your research, and plan to invest accordingly. Truly, a whitepaper is an answer to all of your questions – Is it worth investing in, what kind of benefits does it bring to the table, how is the project unique and etc. So just read it!
It’s important to keep an eye on the token distribution. All the phases or milestones of any project require funding. So, a good project will always plan the token distribution based on the roadmap.
A few projects release their tokens in hours after the ICO has ended. But a few will need to develop a beta version before sending out the tokens. So based on the token distribution, the project could gain popularity and positive hype in no time.
Quality of the Code
A small piece of code could convey the quality of the code. Before you start buying the tokens, invest some of your time in understanding the code. Analyzing the code and its consistency will help you understand the developer’s attitude. You don’t need to have a strong programming background to understand the code.
Although you are a non-techie, you can still focus on the length and complexity of the code to analyze the developer’s attitude. So, if you notice a lengthy code that is more than 50 lines, raise a red flag. Remember that the code should be readable.
Crypto projects usually have an open-source code. This will encourage the devs to analyze, understand, and make suggestions or improvements. Github code repository consists of the commit logs that are pushed by the developer. So, an open-source project offers an opportunity to look at the commit logs. You can go through each and every commit and check out the summary of the developers’ activity. This will help you read and get to know the development team closely. Also, the popularity of the project can be reviewed by looking at the number of stars received by the project.
ICOs are already gaining a lot of popularity. They have become the primary source of funding for any project. Hence, make a wise decision before you participate in an ICO launch.