Hello dear crypto community!
Even if we go through a looong bear market since a few months … Crypto is still alive and a great type of investment!
Lead by our beloved Bitcoin, the market for cryptocurrencies has developed enormously in recent years. Especially new cryptocurrencies have been flooding the market recently. In the early stage of the investment, the so called Initial Coin Offering (short ICO) phase, huge amounts of money are invested in coins / tokens. With these ICOs or token sales plenty of developers get the chance to successfully implement their projects in a very short time.
The profit potential for investors investing in an ICO is very seductive, if the project is successfully put into action. However, many scammers also capitalize on investors’ hopes for huge profits by creating fake websites and promoting non-existent blockchain projects. You should be prepared for these scams before you decide to invest in an ICO.
Good ICOs and projects with investment potential are not easy to find. Within the next few lines I will try to explain to you, how a good ICO looks like and what details you need to pay attention to.
1. The Team / Board of Directors
First of all, I take a look at the team, especially the Board of Directors. Behind successful projects always stands a successful team, right? In my opinion, the Board of Directors should be a group of trustworthy individuals who have already successfully worked on blockchain projects, who know what they are talking about (a few programmers should be part of the team already), and who have a white vest in that area (that means NO involvement on previous scams or questionable marketing activities). Please take your time to get to know the team behind the ICO better.
2. The Whitepaper
Every trusted blockchain project MUST have a white paper, in which the tasks and objectives of the project are clearly defined. Read the white paper carefully and ask yourself, if this project is designed to add value by offering a new method or solving previous problems. If you are not enthusiastic about the idea of the project and its implementation is not realistic in your eyes – do not invest!
3. Legal Basis
How does the company legally secure itself? Does the company even have its own crypto lawyer? How does the company want protect itself against hacker attacks? How about the technical standards?
4. Network / Image
The image and marketing power of the company behind the ICO are very important! To what extent is the company represented on the social media channels? Does this mean that only the token sale itself has been promoted or is important informationabout the project been shared? Is there any customer service that provides advice to investors?
With a well-structured and organized website as well as an individual customer service, you can be sure, that the company is very into the project.
This section should be clear. If the company already has a product, you are more likely able to evaluate the future success of this product and whether you want to invest your money in it.
6. Token Sale
If all the previous points appeal to me, I take a look at the token sale itself. Please be aware of the amount of token, which are offered and to a certain amount. I would never invest in a project, that already sells more than half of its available tokens to major investors. In this case, you and me as small investors are too dependent on the buying/selling mood of the majorinvestors, which doesn’t give me any security.
Every blockchain company, which gives away his tokens for free or offers extraordinary bonuses does not take his project seriously!
Our last point deals with the financing aspect of the project. As for me, I have a better feeling when the companies set a financial fundraising limit for the project (a so-called hard-cap).
As an investor you get a better sense of what the money should be spent on. At the same time, this increases the transparency of the project. However, such hard-cap funded projects are already “sold out” in a short time.
If a blockchain project does not have a fundraising limit (soft-cap), there will be doubts about the way and purposes, the “extra” money will be spent on. In addition, an excess of investors and tokens could cause the price of tokens to decrease right after the stock market listing.
Please never invest in token sales or ICO too fast. Take your time to get a picture about the project. Don’t listen to any comments that hype or degrade the project without reason.
I think that you can escape all the scams if you follow above-mentioned points. Please be aware, that investing in ICOs is more of a short-term investment. A promising ICO can sinkafter a few months. After all, it’s like any other investment – no risk, no fun!