Hello,
I decided to open this topic with regard to the increasing number of topics about choosing and investing in ICO's.
The topics of this article covers:
Why do people invest in ICO's?
How to research and choose the best ICO and minimize risks?
ICO's are very profitable. In most successful cases, they can have more than %3000 ROI(Return of Investment) rate, immediately when they are introduced to exchanges. That's a x30 return of your money.
However, anyone can create ICO's these days and one has to be extremely careful when choosing an ICO to invest in. According to some sources, the probability of an ICO being a fraud or simply failing is more than %70.
The things you can do to minimize the risks include:
Reading and deeply comprehending the white-paper of the project --> You have to completely love and believe in the project and its purpose before you put any money inside. It's very important that you understand their aims well, and you think that they are accomplishing an important thing that hasn't been done before and bringing solutions to a still unsolved real life problem. You shouldn't act according to the words of your Private Investment Group managers, popular youtubers or telegram consultants. Remember: You should invest in the ico because you like the idea, not because someone recommended and pledged high profit.
Check the market cap and token price, how many tokens you receive doesn't matter! --> Take a project that gives 100000 tokens in exchange for one ETH. A novice would likely look at the project and get really excited, dreaming about how rich he would get if the token price reaches 1 USD each. However, he would never bother to check the number of tokens to be issued, which is 100 billion!
A token with 100 billion market cap needs to have 100 billion dollar total volume to become 1 USD - (it would be very fortunate to exceed the price of 0.01$). On the other hand, a coin with 20 million market cap will only need a 20 million dollar volume to become 1 USD - the 20 m one is in fact likely to go upwards than 1 USD; more than 10$ is actually possible if it's a strong project.
Research about the background of the project, and the team behind it --> The team. Check their social media accounts. Check their LinkedIn. Are they well educated? Are they strong scholars in the field of their project? Do they have previous ICO's? If yes, were they fraud, success, failure? Do they have scam allegation background? (If information is limited on the team, be suspicious. If the team isn't disclosed at all, pass, that's a scam.
Check their affiliates --> Do they have partnerships?(i.e if they are a cryptobank project, did they secure partneership with a credit card issuer company? Have they acquired legal permit from government? Do they have agreements with major exchanges (i.e Binance, Bittrex)?
Check the community views on the ICO --> Is there a lot of hype? How many people know about it? Lots of hype is always a good sign. ICO review websites can also be checked but be careful, some of them are rumoured to be biased and advertising for bribe.
Lastly, are they in touch with the investors? Does the team communicate with the community efficiently? Do they have a thread on bitcointalk? Do they answer questions expressly? Do they have a telegram channel? A telegram channel with many members never hurts!
Always invest what you can give up. Invest at your own risk. There is always a chance of loss, no matter how cautious you are.
Please add below if you have further tips on choosing and investing in ICO's.
I decided to open this topic with regard to the increasing number of topics about choosing and investing in ICO's.
The topics of this article covers:
Why do people invest in ICO's?
How to research and choose the best ICO and minimize risks?
ICO's are very profitable. In most successful cases, they can have more than %3000 ROI(Return of Investment) rate, immediately when they are introduced to exchanges. That's a x30 return of your money.
However, anyone can create ICO's these days and one has to be extremely careful when choosing an ICO to invest in. According to some sources, the probability of an ICO being a fraud or simply failing is more than %70.
The things you can do to minimize the risks include:
Reading and deeply comprehending the white-paper of the project --> You have to completely love and believe in the project and its purpose before you put any money inside. It's very important that you understand their aims well, and you think that they are accomplishing an important thing that hasn't been done before and bringing solutions to a still unsolved real life problem. You shouldn't act according to the words of your Private Investment Group managers, popular youtubers or telegram consultants. Remember: You should invest in the ico because you like the idea, not because someone recommended and pledged high profit.
Check the market cap and token price, how many tokens you receive doesn't matter! --> Take a project that gives 100000 tokens in exchange for one ETH. A novice would likely look at the project and get really excited, dreaming about how rich he would get if the token price reaches 1 USD each. However, he would never bother to check the number of tokens to be issued, which is 100 billion!
A token with 100 billion market cap needs to have 100 billion dollar total volume to become 1 USD - (it would be very fortunate to exceed the price of 0.01$). On the other hand, a coin with 20 million market cap will only need a 20 million dollar volume to become 1 USD - the 20 m one is in fact likely to go upwards than 1 USD; more than 10$ is actually possible if it's a strong project.
Research about the background of the project, and the team behind it --> The team. Check their social media accounts. Check their LinkedIn. Are they well educated? Are they strong scholars in the field of their project? Do they have previous ICO's? If yes, were they fraud, success, failure? Do they have scam allegation background? (If information is limited on the team, be suspicious. If the team isn't disclosed at all, pass, that's a scam.
Check their affiliates --> Do they have partnerships?(i.e if they are a cryptobank project, did they secure partneership with a credit card issuer company? Have they acquired legal permit from government? Do they have agreements with major exchanges (i.e Binance, Bittrex)?
Check the community views on the ICO --> Is there a lot of hype? How many people know about it? Lots of hype is always a good sign. ICO review websites can also be checked but be careful, some of them are rumoured to be biased and advertising for bribe.
Lastly, are they in touch with the investors? Does the team communicate with the community efficiently? Do they have a thread on bitcointalk? Do they answer questions expressly? Do they have a telegram channel? A telegram channel with many members never hurts!
Always invest what you can give up. Invest at your own risk. There is always a chance of loss, no matter how cautious you are.
Please add below if you have further tips on choosing and investing in ICO's.
Thank-You very much for your time to write this important information regarding ICO. With the recent surge in projects its very hard to find a high quality project that is not a scam. And this is just the beginning - we should expect a rise of scam project.
Personally, I pay high attention to the team behind the project, the team must be capable and qualified to handle what they are promising.
Secondly, The delivery and roadmap of the project is important to me. With this information i will be able to gauge if the plan is just a dream or its achievable in regard to the roadmap.