Initial Coin Offerings are the new IPOs. However, unlike IPOs, ICOs are not regulated by the government. This has created the ideal environment for scammers seeking to profit from the ongoing crypto craze. Because of this, investors are advised to be cautious about the ICOs and coins they invest in.
Generally, it’s not that easy to actually find a good ICO: there are over 2,000 cryptocurrencies on the market today and each claims to have something unique to offer. So, what do you look for in an ICO or a coin to determine whether it is worth investing in?
First, you find interesting ICOs
ICOs are launched every other day. In fact, it is not uncommon to find dozens of ICOs running simultaneously. Nevertheless, although it is easy to find some at any point in time, sorting through them can be difficult.
Responding to this problem, there are numerous sites that have both the search and the sort functions. Some are biased, but some are definitely professional. Here are three reputable recommendations:
ICO Alert: ICO Alert is a comprehensive ICO directory. It lists all active ICOs and ranks them according to their performance – it also offers links to all ICOs’ whitepapers. Additionally, here you can find the logs of previous ICOs’ performance statistics.
ICO Tracker: ICO Tracker is another website where you can look up which ICOs are ongoing at the moment. It organizes the listed ICOs in a neat manner and provides access to comprehensive information, including each ICO’s strengths and weaknesses, goals, visions, and milestones, among others. A great feature that ICO Tracker has, are the insights into the teams behind each of the listed ICO.
ICO Rating: ICO Rating goes a step further than just listing all the ICOs taking place at the moment by helping visitors with the analysis. Each ICO has a description and an evaluation conducted by cryptocurrency and financial experts. It helps to make decisions easier.
Find a good ICO through research
Do not take ICO ranking sites at face value – some of them are biased and may promote unworthy ICOs. As such, always be sure to conduct thorough research into the ICOs or coins which interest you to confirm that they are indeed good enough to bet money on. There are several factors to consider before choosing a really good ICO. Below you can see the main points, but if you want to go in depth, read our article about how to recognize scam ICOs.
There are human faces behind each ICO. These are the people behind the business’ idea and it is their responsibility to ensure that their idea succeeds. People are the most important component of any ICO and the team’s credibility reflects the ICO’s credibility.
Because of this, make sure to invest time into reviewing each person on the team. In short, ensure that each team member is competent to get the job done. Consider each team member’s role and crosscheck to see that they have the necessary skills to match. Education backgrounds are also important. You can even go a step further and look into the developers’ personal backgrounds to ensure that their profiles are legitimate and these are real people.
Most people equate whitepapers to the “terms & conditions” sections of websites. However, whitepapers are of significant importance in ICOs. In fact, they explain everything there is to know about an ICO. They function like constitutions – ICOs have to do everything that is specified in their whitepapers. As such, you are guaranteed to find all the information you need to make an informed decision before risking your money.
As such, if you are really interested in an ICO, take some time to read its whitepaper. Be patient and attentive so as not to miss any detail. Pay attention to what you are reading and make sure you understand it: sometimes questionable whitepapers are written in a difficult language with the intent to puzzle. You should also consider reading other documents associated with the ICO.
Viability of a crypto coin
As mentioned, most ICOs are designed to generate funding for new businesses. Most of these businesses claim to have solutions to existing problems by leveraging the strengths of Blockchain technology. In cases where this is true, the outcome is almost always rewarding. However, it is not easy to tell at first sight which ICOs are lying and which ones are legitimate.
As such, take your research a step further and evaluate your chosen ICO’s industry. Consider what it is worth, the underlying strengths, weaknesses, opportunities, threats, and most importantly, whether there are companies similar to the upcoming startup. Finally, get a second opinion on whether the startup can actually do what it promises to – you should consider consulting an expert for this especially if you are considering a large-scale investment.
Numbers help find a good ICO
Numbers do not lie. In the case of ICOs, they are important factors in future performance analysis. For instance, the hard cap is important in decision-making – the right hard cap, as is the case with Bitcoin, creates the ideal environment for the coin to gain value. Obviously, you will also want to check the price of the coin and determine whether it is correctly valued. Consider all the figures and get a second opinion if necessary.
Finally, it would also help to know how many people have bought into the ICO if it is already ongoing. But be careful: market movements are not always a reliable indicator. Because of this, make sure to back up all your decisions using comprehensive analysis.
Is there an ideal coin?
Don’t worry if you are late to buy into an ICO. After all, you can always buy the coin. Coins are just as profitable but this also depends on how well you pick them. The two most important factors to consider when investing in existing coins are volume and volatility. A high trading volume for both sales and purchases is a good sign, but you should be careful with volatility levels. Additionally, study the coin’s past performance – it can offer accurate insights into its future outlook.
Apart from trading volume and volatility, it’s always a good idea to take a look at the other factors such as the type of coin, its usage, circulation, and every important detail no matter how small.