There is a tonne of ICO service providers available, and each one of them promises enormous returns and beneficial benefits for potential investors. But before you start giving your hard-earned money to every project you see online, keep in mind that many, if not most, of them, will ultimately fail or turn out to be a fraud.
Remember that the Ethereum platform in general and all cryptocurrencies are essentially experimental technologies. The great majority of ICO service providers depend on Ethereum, and they are a fairly experimental mechanism in and of itself. Overtop of an experiment, it’s an experiment.
A typical ICO project will have a website as well as a white paper with as much information as possible about the project as well as its objectives. These will give information about the team and their relevant experience, the concept and the execution plan, the rough objectives and methods for achieving them, and so on.
It’s crucial to note, though, that sometimes taking a risk pays off. For instance, EOS managed to generate approximately $185 million within only five days during an ICO campaign despite not having a single operational product or even a platform. Additionally, their coin began trading at $0.925 and traded at roughly $5 for a short period of time after an ICO. If you were an early investor & decided to sell your tokens now, your gains would have been almost ten times greater because EOS is currently selling at $8.3. Let’s take a deep dive into how to find the ICO to better understand and identify the finest service provider. However, blockchain is showing signs of being a very disruptive technology. There will undoubtedly be a blockchain startup ICO with the potential to generate enormous profits. So, how do investors recognize and find the ICO? Here are six ideas for you to begin.
Find out everything you can about the development team
Verify that the devs are not anonymous before anything else. If they are, that should raise as big a red signal as possible. If there are individuals listed, thoroughly Google them, paying close attention to the advisory board and development team in particular. Make careful to always double-check that information because many fraudulent ICOs will indicate that a notable person—often Vitalik Buterin—is involved.
Verify the team members’ educational background, including their courses of study and previous projects they have worked on. Pay attention to their prior participation in ICOs, relevant cryptocurrency experience, and effects on the project. Whether their prior experience will be sufficient for the accomplishment of this specific project is what you are searching for here.
If the team members have linked to their GitHub, LinkedIn, or Twitter accounts on the ICO’s website, this is very encouraging. Even so, take caution to verify the validity of the linked accounts by finding out when they were created and also how frequently the team members used them. Making a phony social media account is actually rather simple.
Check Community and Media
A vast and, most importantly, open supporting community is a must for every ICO service provider. Generally speaking, a public Slack / Telegram discussion for all investors is a positive sign. When assessing an ICO, additional sources like Facebook, Twitter, or Reddit can be quite helpful.
Be on the lookout for “bounty” postings and threads. To draw more media and public attention to the initiatives, it is a very frequent practice to offer awards in exchange for people spreading favorable information about them.
Instead, check to see if they are conducting interviews, generating publicity for the initiative, and sending out press releases. Another very positive sign is the team’s social media activity and ongoing interactions with investors.
Check the Stage of the project and VC investments
There is no set standard for what degree of development a project needs to be in order to host an ICO. There will occasionally only be a white paper as well as a hazy roadmap. There may occasionally be a beta version or even a released product with a few functionalities.
Investing in initiatives that are as close to the release of a finished product as feasible is, of course, always safer. Investors typically give initiatives with at least a few lines of functional code a higher priority. Despite this, there have been numerous instances of successful ICOs service providers that involved no written code at all.
Venture capital investments are yet another positive sign. Since well-known VCs are typically powerful and seasoned players, they won’t trust or invest in companies that they believe have even the remotest possibility of failing. But mistakes happen to everyone. The presence of VCs in the project will almost certainly be mentioned on the landing page of an ICO, especially if one of the VCs is a well-known participant in the cryptocurrency industry. However, it wouldn’t hurt to confirm this.
Read the ANN thread on BitcoinTalk
The largest forum devoted to Bitcoin and all things crypto-related is BitcoinTalk.org. This website will be quite helpful when it comes to ICOs because that’s where the announcements (denoted [ANN]) are issued. If the ICO you’re thinking about investing in is missing, forget about it.
If you don’t have the skills required to comprehend a project’s technical features, be sure to carefully study the thread devoted to find the ICO. In essence, those threads represent a group effort to assess the reliability of an ICO.
The reputation of a person is crucial in the Bitcoin world, and in this forum in particular. The user’s current rank as well as the total number of previous messages are included in each post in a thread. In general, a user’s trustworthiness increases with rank.
Also, a fantastic location to see how responsive the developers are to those announcement posts. It’s a warning sign if they aren’t responding to specific inquiries or are otherwise not participating in the post. Additionally, you may always try contacting the devs directly to see how responsive they are.
Read the white paper
Knowing exactly what you’re investing in is the key message of this entire course. And reading the project’s white paper is the best method to understand as much as you can about it.
An ICO is a crowdsale, which means it involves raising money from unaffiliated investors. Therefore, developers should be able to clearly and simply describe the project’s objectives and the methods for attaining them.
A good white paper also will define the legal structure that will govern the relationship between investors and developers. This should, first and foremost, incorporate the ICO’s terms and conditions. Additionally, a thorough explanation of how and when the tokens will be distributed to investors should be included. Given that a specific amount of cash is needed for each stage of the project, it is a good sign whenever the token distribution is connected to the roadmap.
Why exactly the project requires its own dedicated token is a fundamental point that the white paper has to address. Why specifically can’t Bitcoin or Ethereum, two well-known crypto giants, be used? The application of blockchain technology raises the same query.
As was previously noted, a reputable project will give potential investors at least a rough plan. The fact that the roadmap includes a thorough breakdown of the pricing strategy, the value being placed on the company, and the precise way the funds raised will be used is quite encouraging.
The last and possibly most crucial step is to confirm that the money is being kept in an escrow wallet. The ideal situation, in this case, would be for Ethereum smart contracts to be used to automatically perform the escrow service rather than an individual or business providing it.
Evaluate the quality of the code
A key warning sign is when a project has no working code at all prior to an ICO or even if it has but it isn’t open source. You should definitely read the source code while analyzing an ICO if you possess even a little knowledge of programming. Simply examining a project’s source code might reveal a lot about its creators.
Bonus tip: Determine your level of risk-taking
It’s crucial for investors to assess their risk tolerance before pursuing any investment opportunity. Many of these firms are in their very early phases and aren’t yet operational, unlike initial public offerings where businesses have often been established for several years, which implies a lot of risk for investors. Investors could potentially lose money if a project doesn’t work out.
Additionally, ICO stats aren’t a reliable predictor of the venture’s success. Some businesses that have collected substantial sums of money are currently being examined for their development—or lack of development since their ICOs. ICO investments carry a high level of risk and profit. Before taking part in one, it’s critical to understand how much you’re willing to risk and maybe lose.
One can always follow the SEC’s lead and find the ICOs similar to any other investment opportunity. An ICO service provider is still a good option for businesses, so long as they are registered in a jurisdiction that permits them and all rules are followed. An ICO allows investors to participate as early stakeholders in interesting projects. Even while not all cryptocurrencies will appreciate to the same level as the leading coins like bitcoin and ether, making the proper investment in one can yield enormous gains.
Read also: What are Some of the Benefits of an ICO?
To determine whether a company has the ability to prosper and generate a healthy return for its investors, it is important to conduct due diligence and comprehend the market, the firms, and their solutions.