What Is An ICO? How To Evaluate ICO Investments?


All these days, there has been one word on the lips of every people, and that is “cryptocurrency.” If you are interested in kicking yourself into this field and wants to set up your floor in the cryptocurrency, then you might be aware of the facts that are related to it such as the ICOs.

However, if you are searching for the greatest opportunity in this sector, they would probably consider the Initial Coin Offering, which might be a big start for you. The idea of tokens of the Blockchain projects or the presale of the coins has been considered as a crazy and successful instrument, which has the capacity of raising funds for the introduction and development of new applications.

In more precise words, the ICOs or initial coin offerings are the type of the crowd investing tools or crowdfunding that is entirely conducted on the Blockchain. The idea was originally found by the developers to fund this in the new projects by pre-selling the tokens or coins. Previously, entrepreneurs were using the whitepaper to describe the model of the business as well as other technical specifications of various projects before the introduction of the ICO.

They used to draw the outline of the projects and set a fixed target for describing the future funds amount in the sections like R&D, marketing and much more, and the coin distribution strategy explains that how many coins are needed, how many coins they are going to store for themselves, and etc. but, during the campaign of the crowdfunding, the investors are purchasing the tokens, which are already established the cryptocurrencies such as the Ethereum and Bitcoins.

As per the views of the traditional crowdfunding, the investments are regarded as the donation or some pre-buy specifications of the products. The ICOs, therefore, gives the possibilities of the return on the investment when selling the coin at a higher price, and this depends on the market condition later.

This has lead to increase the satisfaction level of the supporters, and ICOs are thus considered as the effective ways, which are quite similar to that of the IPOs only if the tokens which you have selected represent a major part of the project. The trends of ICOs were relatively new, but soon they become the talk of the town and hold a major portion of the society’s value and demands within the discussion of the community which is related to the Blockchain.

As per the sources are concerned, many of the marketing heads are considering this as an illegal trade as it is using the unethical ways to raise funds, whereas, on the other hands, the other heads of the business are accepting this an efficient method or traditional approach which are linked with innovation and helps in increasing the funds legally.

Also Read: Ethereum, Bitcoin Cash, Ripple, and Litecoin

It is therefore considered as a traditional venture funding model, but the US Securities and Exchange Commission has reached to a certain decision regarding the status of the coin or tokens that has forced many of the investors to re-examine the funding of the model of various ICOs. Need more convincing? Well, the sections described below will contain some of the vital concepts regarding the ICOs.

Crowd Investing Or Crowdfunding?

The tokens are always used for different purposes. ICOS is often compared to the crowd investing or crowdfunding, which helps the supporters of having the return of the investment when selling the token at a higher price at later days. In case of crowdfunding, the investment to this is considered as a donation, and most of the time, ICOs could be seen as the mixture between the risk capital, investment, and donation.

Also Read: Crypto Trading Tips And Common Mistakes

The idea of these coins are best for the startup plans, and if the idea gets the success, then these tokens will be more valuable and worth in the future days, but it is not harmed in the systems. It is vital to remember that depending on the whitepaper; the tokens can have various properties as well as the propositions of the value along with the legal status may also change.

Key Factors To Evaluate An ICO Investment

Team Composition

You need to find out everything about the team that mainly includes the development team as well as the advisory team. Try to look up to the team members for finding out relevant experiences, and if you are unable to get the desired results, then Google the names. You can also see the LinkedIn profile for reputed names, or find for the crypto experience and most importantly for the projects or the ICOs that are involved in or has some impact.

Bitcointalk. Org Thread

Before starting the announcement of the project, the best option to go through will be the Bitcointalk.org, as the Bitcointalk is considered as the biggest forum for the issues that are related with the bitcoin as well as crypto. It is highly recommended that you need to read the messages carefully and the investors concerned will be answered in this particular thread only. Most of the time, it creates bad impact on the developers who try to avoid answering a certain question or fails to collaborate.

Each of the messages is having some activity degree and rank on contains the Bitcointalk of the sender such as on the number of past messages. You always need to be aware of the low ranking writer and newbies. Reputation is one of the most powerful and valuable tools in such conditions. Always look after the negative comments and be aware of the skilled writers as it sometimes works as a warning sign.

Community And Media

Openness is always the critical factor in gaining trust, value as well as Github code. You need to have the wide open support of the community such as the public slack for various investors. And within this, you can grasp the atmosphere and look at the size and activity of its. Apart from these open sources, the Reddit, Facebook, and Twitter could be reliable options for evaluating the project, and you always need to be aware of the bounty posts as well.

It is a very common practice to launch the bounty threads to reward the users that will spread the positive data regarding the project as well as will increase the media coverage, or can also help you out in the translation. But, sometimes these bounty threads can also stimulate the hype all around the projects which are not related to the objective. Many of the investors are using the token.

VC Investments And Check The Stages Of Projects

Venture capital helps to invest as well as to support the projects from the early stages. You need to examine each stage of the project and have to find out where you have a whitepaper? Any beta version? Or is there any launched with some limited functionalities? Try to prefer those projects which have some codes of line.

However, most of the ICOs have already proven that they got the success on stories without any written codes, isn’t interesting? Always look for the data on the main page of the project’s website to know whether any well-known crypto VC is involved or not such as the Funabashi or Blockchain.

What Is The Necessity Of The Blockchain?

The importance of the ICOs is to create the newly dedicated token for the concerned project. Out of many vital questions, one of the common questions is that what us the token is used for? Why the Ethereum or the Bitcoins are not enough to serve as the token of the project? Well, it’s true that there are many scammy stories that ICO cannot stand without a dedicated token. The similar question goes for the use of the Blockchain technology, and people need to understand the importance of it far behind the projects as well.

Distribution Of The Token

A relevant project will always link the token distribution to the roadmap as each of the phases of the specific project will need a certain amount of the funding. Watch all the token distribution stage and release the token after the ICO is ended.

Hard Cap

In the present scenario, there is a difference in the crypto ICOs and the impact of the hard and open cap didn’t have the intensity and influence on today’s ICOs. The open caps help the investors to send unlimited funds to the wallet of the ICO’s project. More the coins are circulating; your token will become less unique.

Examine The Whitepaper

Don’t try to hesitate to read the information in the whitepaper, even though it contains all the crucial data regarding the upcoming ICO and project. Note all the weak and strong points and try to add your research. The whitepaper is important and contains valuable information.

Bottom Line

ICOs have become the approach for the raising funds as well as have become more and more famous in the “mainstream.” It is the key factor to read and to investigate the information, to distinguish the positive and negative aspects and helps in investment decisions.

Meet The Githhub

Try to analyze your code here if you are having a little bit of knowledge or experience. And if you are non-techie, it is possible to evaluate the quality and consistency of the codes.



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