10 Keys For Initial Coin Offering (ICO)

A first coin offering (ICO) is an approach to raise funds that allows you to trade future crypto coins in exchange for cryptocurrency that are of immediate liquid value. The majority of the tokens are offered to ICO participants, and the remaining percentage is reserved for the needs of the company (private investors, for example). Terms vary between ICO to the next). An ICO can allow both big as well as small-scale investors the chance to invest in the projects they are interested in. In the past year, there were thousands of positive ICO stories. The motive behind the project is evident. The reason investors are involved in the in this ICO will be that value of the token will be greater (or significantly greater) than the value of the token in the ICO.

These ICOs are extremely popular for cryptocurrency investors. In the last few months, Hdac and Filecoin collected in the range of staggering sums of $258 million and $275 million. A successful ICO is affected by numerous factors. Investors need to keep in mind these key points mentioned in the article.

It is right to discuss lesser-profitable stories such as those of the Mycelium ICO. The team members disappeared after they raised the funds after which it was discovered that they had used the funds to fund their own holiday. The absence of regulations could be the reason that it occurred. In the last few days $7 million have been stolen when CoinDash’s ICO began. Just before the beginning in the sale their website was compromised and the ICO account was changed to that of the hacker’s address.

This article will outline the key elements to attention to when you are evaluating any ICO investment.

* Important note before we get started: ICOs can be an extremely risky method of raising funds. Don’t invest money you cannot fully be able to afford losing. Be aware that because of a lack of regulations, you could find it difficult to recover the money you have lost in the event of failure.

1 – Team Composition

Learn all there is to know about this team including the development team and advisory board. Find out who is on the team to find relevant experiences. Google for their name. Check out the LinkedIn profiles. See if there are famous names on the advisory panel members of this project. Determine if this group has any experience with crypto, and, most importantly, the projects, or ICOs they were involved in and what impact they had.

2 – Bitcointalk.org Thread

An excellent place to start would be to look at the announcement (ANN) thread on BitcoinTalk.org because Bitcointalk is the largest platform for Bitcoin and related crypto concerns. It is highly advised to be sure to read the posts carefully. Questions from investors will be addressed (or could be left unanswered) on this forum. It’s a sign of a problem that developers aren’t responding to certain questions or do not cooperate. Sending developers a private message to determine the extent to which they respond is an excellent idea.

Every message on Bitcointalk is a record of the rank and the activity degree (number of messages in the past) of the person who sent it. Beware of rookies as well as writers who are not ranked. Reputation is now very significant and important.

Be wary of experienced writers’ comments. You should also be looking for negative comments, often it’s an indication of danger. Use Select [All] to display all the comments on the thread. You can also use CTRL + F (Windows) to search for red flags such as’scam”, “con” or and ‘MLM’. Check the relationship between result of the search and total responses as seen in the following live demonstration:

3. Phase of the project and VC investment

Examine the progress and the stage of your project. Is it just an outline? It is a beta version? Do you have a product that has been launched that is not fully functional? We prefer projects with “some lines” of working code, but numerous ICOs have demonstrated that they are able to become successful without writing any code.

Venture capitalists (venture capital) are a type of investment that tends to help projects in the early stages. Find this information typically on the homepage of the site of the project. It’s likely to be significant in the event that there is a well-known cryptocurrency VC will be involved for instance, Blockchain Capital or Fenbushi (belongs to Vitalik Buterin, the founder of Ethereum).

4 – Community and Media

It is vital to have a large and open supportive community such as Slack, a community that is open to all investors. The openness of the community is as important in getting our trust as is it is in the Github code. Be aware of the spirit in the Github community. Take a look at the dimensions of the community as well as the activities it is involved in.

Source Slack community QRL – #trading channel

Other sources such as Reddit, Twitter or Facebook are also useful in looking at the project. Be aware of the bounty posts. It is typical to start the bounty thread in order to give users a reward for spreading positive news about the project in order to boost the coverage of the project in the media, or to assist with translating. The bounty threads may increase the excitement surrounding the project, however they’re not always objective. However, there are investors who only take part to earn tokens.

5. What are they require the token to do? Do they need the blockchain?

ICOs refer to the creation of an entirely new token that is dedicated to the project. One of the main questions that every project must determine is what exactly is the purpose of the token? What is the reason why Bitcoin or Ethereum sufficient enough to be an appropriate token for the project? Sure, a lot of projects create a fake tale. It’s true that an ICO isn’t an ICO without a specific token. This same question should be asked in relation to the use of blockchain technology that is behind the project.

6 – Unlimited / Hard cap

In the beginning of cryptocurrency ICOs the difference between hard and open cap wasn’t as significant like today’s ICOs. A cap that is open allows investors to transfer unlimited funds into the company’s ICO wallet. The more coins circulated and the more unique they become to be traded later on – due to lesser demand.

Since ICOs have become a commonplace in the crypto world, huge amounts of money are raised. Check out Bancor which was able to raise an astounding $150 million within three hours. It did not result in a increase in the percentage of investors. Remember this when taking part in ICOs that have no limitation.

However it isn’t a good idea to be the sole investor into the venture. Exchanges tend to be less interested in projects that have raised just a few dollars, which makes it difficult to sell the tokens once they are released.

7 – Distribution of tokens – what time and when

Greed can be measured by an excessive distribution of tokens among the team members. Let’s say that over 50% tokens are suspicious. A great project should link its distribution of tokens to the plan of action. Because each phase of the project needs the funding of a certain amount.

Keep an eye out for the stage of distribution of tokens. Certain projects will make their tokens available hours after the ICO is over. Certain projects must develop an initial version prior to giving out tokens. When you examine the Etherium percentage gains (one calendar year from ICO and distribution of tokens, approximately 500% increase) and Augur (1+ years 1500 percent) as well as Decent (8 month 350 percent) This break sometimes can create a positive buzz about the project.

8 – Evaluating the Whitepaper

The majority of investors don’t look over the whitepaper even though it has all the information needed about the project’s upcoming launch and ICO.

Do not be afraid to go through it or at the very least all of it. Take note of the positive and weak aspects and include certain aspects of your studies. The whitepaper serves as a silver platter to investors who are interested in investing. After reading it , you’ll be capable of answering a basic question : What kind of impact does this venture provide to the world? It will also reveal what you’re investing into.

9 – – Quality of the code 9. Quality of code Github

If you’ve got a knowledge of programming it is recommended to use it in this. The level of expertise of a developer is evident by studying their code. Even if you’re not a techie can still be able to assess their proficiency by examining the consistency of their code. Another reliable indicator is the use of appropriate commenting. Avoid messy developers. A code that reflects the mindset of an individual developer.

The length of a program is an additional indicator. If a function has greater than 50 lines must be an alarm. Modularity is crucial and makes the code more understandable and manageable.

The majority of crypto projects contain open-source code. This builds trust within the community of the project, allowing developers from the community to offer suggestions or suggest improvements. An open source project gives an opportunity to review the logs of commits. A commit is basically a the term used by developers to describe the process of transferring code onto Github. Github source repository.

You can view each commit by clicking the text that reads “366 commits”. This lets you look into every modification. Its “Insights” tab gives you the general overview of the developer’s activity. The tab shows an image of the number of commits each day. Below this graph you will look at the work of each developer separately. This is crucial to analyze your development group.

You can even find out how popular the show is by examining the number of stars it gets.

Bonus: Consider what the reason behind why the project decided to run on the particular blockchain. The Bitcoin blockchain or Ethereum’s (smart contract), Waves, and other. Recent months have demonstrated the increasing popularity among ERC-20 Ethereum smart contract’s ICOs. The tokens can be saved conveniently on wallets that are based on Ether (like MEW – Myetherwallet) and sometimes, they don’t require exchanges for trading and typically are highly liquid.

10 – The Bottom Line

The ICO model will become increasingly popular as a way to raise funds. There will be a lot of projects to pick from, so it will become more difficult to judge these ventures.

It is essential to research and study as much as you can, and then write down all important factors both positive and negative prior to making a decision on an investment.