What Is ICO Initial Coin Offering?
Like every other investment, ICOs Initial Coin Offering or ICoo cryptocurrency can either make you money or they can put a serious dent in your finances. The difference manifests in your level of crypto knowledge and your ability to identify the best ICOs. Once you have learned a few methods of researching and analyzing these exciting new startups, then you’re able to reduce your risk of falling victim to scam ICOs and hastily created projects. Let us see some Ways To Find Best ICO Initial Coin Offering
But that’s exactly where the challenge is. Not many people can tell a good ICO Initial Coin Offering from a bad one, just like few people can tell a good stock from a dud. We’ve created this guide for you to get you started on your ICO Initial Coin Offering research journey. By learning these seventeen ways to determine a scam from a legitimate ICO Initial Coin Offering, you can increase your crypto intelligence and be better informed to make smarter investment decisions.
Ways To Find Best ICO Initial Coin Offering
1. Investigate Core Functions of the ICO You Are Eyeing
The reason why many ICOs fail is that they offer nothing more than simple tweaks to the Bitcoin network. Instead, we want to go for an ICO that offers a unique and strategic value that increases its chances of going long term.
The decentralized marketplace is a flooded market and an ICO Initial Coin Offering that bases its value on doing what everybody else is doing with little innovation or value to users is unlikely to be a suitable investment. Examples of tangible value to look out for might include issues such as decentralizing big data to make it more efficient to manipulate by advertising companies.
In short, try to find an ICO Initial Coin Offering that has real usability in society. Core functions of each ICO Initial Coin Offering are often found in the executive summary of the startup’s white paper, and may also be prevalent on the company’s homepage of their website.
2. Inspect the ICO’s Escrow Systems
When you invest in an ICO, ideally your money is held in escrow until the company behind the ICO Initial Coin Offering is ready to appropriate it. The money is only released when the project is ready for implementation. The ICO escrow system can be illustrated as follows:
The credibility of the company or individuals holding those funds in escrow may be considered one pointer as to how good the ICO Initial Coin Offering is. If it’s a credible company or group of individuals, then the chances are the ICO has credibility. Conversely, a low reputation escrow, one that is unknown in the market, should warn you of a low-quality ICO, one where you could lose your investment to fraudsters.
Information about the escrow process for any given ICO Initial Coin Offering is most often found in the “ICO Details” part of their white paper, and many ICO’s also have it right on their website.
3. Check the ICO Team’s Developer Profiles.
The best ICOs have good quality developers who aren’t shy to display their names on the company’s web page. It shows that they are not only competent, but also committed to ensuring that the ICO Initial Coin Offering becomes a success.
If on the other hand, you find an ICO Initial Coin Offering whose developer team is anonymous, take it as a red flag. It could mean that the team is not competent enough, or that they are looking to collect investor money only to disappear by leveraging their anonymity.
It might also be a sign that the startup has only engaged a contractor and not someone with deep ties to the start up. Either way, it makes more sense to go with an ICO whose developer team is ready to display their names and skills on the company site.
Developer information can be found on an ICO’s website team page, where they usually will display links to the team members’ LinkedIn profile or GitHub accounts.
4. Read Online Community Sentiment about the ICO
One of the undeniable facts of life is that there is always someone out there who knows something you don’t know. This also holds true in ICOs. While you may have done your analysis and decided that a particular ICO is the right investment, someone out there may have additional information that may make you change your mind.
Reading the sentiments of others online can give a more comprehensive understanding of an ICO Initial Coin Offering. If there is an overall positive sentiment about it, and engagement shown by community members and team, that’s a positive sign. The reverse is also true. If there is a general negative sentiment surrounding a given ICO, then it may be wise to hold back or scale down your intended investment to reflect a higher risk level.
ICO’s often participate actively in Bitcointalk.org, Reddit, Telegram, Facebook and Twitter, etc. and usually prominently display the social media icons at the top of the homepage of their website, at other times near the bottom of the homepage.
5. Analyze the ICO’s Website Quality
Never discount the power of appearances in helping you make a decision. Low-quality appearances in most cases point to some inherent problem, and ICOs are no exception.
If you find an ICO Initial Coin Offeringwhose offering company has a badly made website, there is a chance that the ICO is being pushed by scammers who are just out to make a quick buck.
It could also mean that the team is genuine but they are not competent enough. If the competence or the integrity of the team behind an ICO Initial Coin Offering is in question, then the ICO they are pushing may be more likely to flop. Look for ICOs that have professionally made websites that clearly guide the visitor and inform about their product.
It’s easy find ICO websites on any cryptocurrency listing, including TruDex, or simply by Googling.
6. Find the Key Focus of the ICOs White Paper
All ICOs must have a solid business plan, including a breakdown of token uses. The project’s white paper that should include a detailed focus on the core functionality of the token.
The idea is to help investors understand the problem the token is aiming to solve, which then incentivizes investors to put in their money. If the ICO you are researching has a white paper that is focused on the token mining process, there is a good chance that the token is of little value. Furthermore, when an ICO chooses to elaborate on the mining
aspect of their coin, it may also be a sign that they are deflecting attention from coin’s low fundamental value.
7. Look at the ICO’s Market Capitalization
One reason why many people do not profit from ICOs is that they enter when the market capitalization is already too high so the upside potential is diminished. A better way might be to invest in those ICOs that have not yet attracted much hype in the market.
This mainly because ICOs such as these are undercapitalized, and if you invest, you may be more likely to benefit as hype helps drive value up later along. It’s a simple concept of demand and supply that applies to all other investments. The more undervalued an ICO Initial Coin Offering is, the better.
8. Check for User cases/Proof of Concept
One of the better indications of an ICO Initial Coin Offering that may potentially go long term is the presence of a proof-of-concept. This simply means that an ICO has been able to demonstrate that it is practical and workable. An ICO with a proof-of-concept has a beta version of the main ICO project. This gives you an idea of whether the ICO in question is viable or not.
The presence of a proof-of-concept also helps gauge the level of investment of the ICO founders and their attachment to the project. That’s because it takes an investment to come up with a working proof-of-concept. If the team is willing to go the extra mile and come up with one, it’s an indication that the team is serious and thus the ICO may have a higher potential to succeed over an ICO Initial Coin Offering with no tested user cases.
On top of that, an ICO Initial Coin Offering that has a proof-of-concept gives investors a chance to critique it and look out for vulnerabilities. This way, the developer team can seal such loopholes and increase the chances of success for the ICO before launch.
ICOs are well aware of the weight given by investors to projects with a proof-of-concept and will usually include a chapter about it in the white paper. Many will also display it prominently on their website and across their social media platforms.
9. How Does the White Paper Address Security?
Security is critical to the success of an ICO Initial Coin Offering. That’s because the more secure the system is, the more investors have confidence in it. To determine whether an ICO Initial Coin Offering has good security or not, check out its white paper.
An ICO’s white paper offers insights into what security measures the developer team has put in place to protect investors’ tokens. These measures should be addressed in the whitepaper in a clear and easy to understand manner. Without this, there could be a good chance that there is no security in the tokens, and you might lose your
hard-earned investment in an insecure ICO Initial Coin Offering investment.
Many ICOs in the current environment do not even touch on security in their white paper, which is a major red flag in light of the multiple ICO websites that have been hacked mid-ICO. Check for security protocol in the table of contents of the white paper.
Some more conscientious ICOs will have a tab for security on their homepage. Others are starting to include a statement like this in clear view on their ICO page.
Always check the URL and verify the contract address
before sending ETH to any ICO
10. Check for Legal Guidelines in Place
Before you invest in an ICO, make sure the legal aspect of it is intact. That’s because due to the rise of scams in the ICO space, governments have taken an interest in regulating them. One of the best ways to tell whether an ICO Initial Coin Offering follows all the necessary legal procedures is to check the composition of its legal team in the whitepaper.
It’s important thus for ICOs to have legal experts in their teams. To avoid legal complications in your ICO Initial Coin Offering investments, avoid those without a legal expert on both the founding team as well as on the advisory team.
Additionally, you can, check the white paper and make sure that the ICO Initial Coin Offering shows that they have followed all securities laws, including proof that it has passed the Howey test.
Since ICOs are now classified as securities, they must conform to all securities laws. If there is a discrepancy between the structure of the ICO you are looking to invest in and securities laws, then chances are that such an ICO may either be a scam or might end up dragged down by legal cases. You can check out the legal section of the whitepaper
for details on this.
11. Find Out About Funds Raised – Presale
One of the indicators to a promising ICO is the funds raised presale. This usually demonstrates two critical aspects of the ICO:
1. The first one is strong marketing. For an ICO to raise a significant sum prelaunch, it means that the team behind it has invested heavily in marketing, which is critical to the success of an ICO upon launch.
2. Secondly, being able to raise a significant amount presale means that the tokens
on offer have a good intrinsic value. That’s because it’s mostly techies and venture capital funds that invest in the early stages of an ICO Initial Coin Offering. For these well-informed people to pump in money presale, it means they see some strong
intrinsic value in the tokens on offer. This may mean such an ICO Initial Coin Offering a good potential investment if you are looking to make some money later down the road as the tokens appreciate in value.
While smart money from venture capitals may risk being wrong on their investments, they still have a higher leverage than ordinary investors when it comes to making investment decisions that have a good upside potential in the long run.
12. Conduct Overview of Competitors
ICOs are not exempt from the laws of economics. One of the economics aspects that you should look out for when choosing which ICO to invest in the number, and relative strength of competitors.
If the token you are looking to invest in has many other competing tokens in its space or “niche”, there is a good chance that it might not be able to grow much in value in the long run. Since it will be competing for clients with other tokens, it may hinder growth.
On the aspect of competitor strength, be sure to analyze how well the ICO you are looking to invest in stands out relative to others within its space. Maybe the competitor’s tokens might not be as strong as the one you are looking to invest in, hence eliminating the chances that it might fail to grow in the long run.
To give you context on this idea, look at Ethereum, whose platform is dominant in the smart contracts space. That doesn’t mean that it’s the only one doing smart contracts.
There are many other platforms out there, but Ethereum is dominant. As such, the price of Ethereum has grown astronomically over the last few years.
To increase your chances of success in picking a good ICO Initial Coin Offering , go for one that’s more visible in its space or one that clearly shows innovative aspects that set it apart.
One way to determine this is by the level of marketing and media buzz that goes into a particular ICO, which in turn causes it overshadow all the other ICOs looking to launch in its space.
The team behind an ICO can also be a determinant factor when looking to invest in an ICO Initial Coin Offering that has low competition. If the ICO you are looking to invest in has a well-known developer and advisory team, then chances are that it will attract more investors than others in its space whose founding team is unknown in the online community.
Finding competitor information is easy if the startup has addressed their competition and the needs of their industry in the white paper. If not, you may have to do a little digging. Some rating sites, including Trudex.io offer a way to sort ICOs by category so you can quickly find if competitors are evident.
13. See if Demand for Products is Established
Just like the aspect of competitor analysis, when looking to invest in an ICO, make sure that there is an established demand for the products the ICO is looking to offer.
You can easily make an informed decision on this based purely on the white paper. It should be clearly outlined how an ICO will solve an on-demand problem. If the aspect of demand is not defined in the whitepaper, there is a good chance that such an ICO has nothing much to offer, since they have not even researched a need for their product. If
this is the case, what’s to say they’re not just looking for a way to make the owners rich at the investor’s expense?
Determine demand for the product on offer by analyzing online review sentiment about the ICO you are looking to invest in.
Most people who comment about ICOs and other cryptocurrency related issues on online platforms like Reddit are techies who can easily tell whether an ICO is a good investment or not. If they are not enthusiastic about it, or present arguments that better products exist in the market, it would make sense to stay away from such an ICO.
When an ICO is developing a well needed product, the online community is usually abuzz with how radically this ICO is going to disrupt the industry they are targeting. This plays a part in attracting investors to the ICO, and in turn, leads to a high level of success upon launch.
If demand is not addressed in the Executive Summary (as it should be), try checking out the ICO’s social media hubs to get a feel for how much their project is needed.
14. Look for Industry Experts Involved
One of the ways to determine whether an ICO is a strong investment or not is by the number of industry experts involved in it. That’s because people who have vast experience in a given industry can easily tell when a new and profitable investment arises.
As such, if they are all abuzz about an ICO in their industry and are very willing to invest in it, then it’s a positive signal that an ICO may well be worth investing in.
One of the ways to tell the level of industry experts’ involvement in an ICO is by looking at the advisory team. If there are well-known industry experts involved in the ICO you are checking out, then that bodes well as far as chances of success.
On top of that, you are assured that someone who has taken years to build their name in a given industry would not be willing to risk their reputation by involving themselves in a scam ICO. Another way to tell whether industry experts are interested in an ICO is through their opinions in online platforms.
Great ICOs attract industry experts who talk about them either in print media, the internet or on television. The fact that they have taken the time to talk about the ICO you are interested in goes to show that there is something radically disruptive about it. And as you know, the more disruptive it is, the higher its demand as a consequence, and the higher its chances of value growth upon launch.
15. Find Out if a Code Audit Has Been Done
You can easily tell a good ICO from a scam by the quality of its code. If the code is riddled with problems, then chances are that the developer team behind it is not experienced or skilled enough, which then predisposes the ICO (and your investment) to hacking risks.
Check out the white paper and determine whether a code audit has been done on the ICO’s code. If this information is not available, engage the services of an experienced programmer, and they will tell you whether the code is good or not. The code is one of the best starting points in determining whether an ICO is worth your money or not.
16. Research the Founder(s)
When researching the team, pay special attention to the founder’s past performance. If they have launched ICO’s in the past, use this information to gauge their chances of success in this new project. Past success is a pointer to their understanding of the ICO market, as well as the process of bringing a coin to market.
These are some Ways To Find Best ICO Initial Coin Offering
Disclaimer: This content is copied from a book named “ICO Research Made Easy” by “A TruDex Publication with Nicholas Kithinji”
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