The media has finally caught up with the crypto-world and now cryptocurrencies and ICO’s are getting attention.
But what is an ICO? And what can you believe about the marketing hype?
First of all, an ICO is to the crypto-world what an IPO is to the traditional stock markets. They offer an opportunity for a business to raise money, but instead of shares, investors purchase tokens.
As described in Nasdaq.com:
An Initial Coin Offering, also commonly referred to as an ICO, is a fundraising mechanism in which new projects sell their underlying crypto tokens in exchange for bitcoin and ether. It’s somewhat similar to an Initial Public Offering ( IPO ) in which investors purchase shares of a company. Aug 10, 2017
And, just like the traditional stock market, there are shady operators who are looking for an opportunity for a ‘pump and dump’, so it’s extremely important that investors and potential investors do their due diligence. When looking at ICO options, take the following points into consideration:
1. Does the company/start-up have a viable product?
Without a product, what will sustain the business? It’s not enough to have an idea; do they have something that will actually bring value to the investors and provides a solution to an existing problem.
2. Check out their website.
What is the business’s website like? Is it aesthetically pleasing? Does it have all the pertinent details relating to the business easily accessible – things like the business, the team, a roadmap? Can you download their whitepaper for review? Or is their website all about shilling for their upcoming token sale?
3. Are they communicating with the community through social channels?
Facebook, Twitter, LinkedIn – the old standard social channels – are important to build communications and trust in the community. But the crypto world should also be engaging through channels like Redditt, Bitcointalk, Discord, and Telegram. A successful ICO is about more than hype, but it still needs to be widely seen to launch successfully.
4. What do the token metrics look like?
How many tokens will be created? How many will be circulating? How are they allocated? Is there a vesting requirement for employees? What will the coin price be at the ICO? If you are looking to get a good return on your investment, make sure the numbers work.
5. Check the ICO ratings on third-party sites.
There are many sites in existence that will provide their rating on various ICO”s. Sites like ICObench, and Cryptobriefing provide reviews by a panel of unbiased experts. See if the ICO you are reviewing rates favorably, and if not, why not.
6. Don’t fall in love with the company.
Now, I’m not saying that you shouldn’t like what the company represents, but, like with any investment, make sure that you are looking at it with your head and not your heart. Know when to hodl them and know when to fodl them.
Bottom line is that there is a lot of interest and attention on ICO’s these days. And all of them are doing their best through their marketing efforts to get you to put your BTC or ETH with them. Cut through the marketing hype and look closely at your options. There are tons of ICO’s to choose from, so don’t be afraid that you’ll miss out.
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