10 Tips For Choosing the Best ICOs to Invest In
If you’re new to ICOs (Initial Coin Offerings), you might be wondering what’s all the hype about. Well let me give you the simple breakdown. ICOs are events where creators of a cryptocurrency offer a partial supply to investors of their coin in order to further the development of this particular coin. In turn, this will give the ICO team enough money to fund more future developments and increase the value of the new coin exponentially, thus increasing more interest with future investors and increasing the coins value. Got it? Good!
By investing in a coin within its early stages of development, you can get a much better investment price (think early bird special), which will lead to a much better return on investment if the coin eventually increases in value through further development. ICO companies have been doing a great job in getting people to participate in these newer cryptocurrencies through solid marketing, a great whitepaper layout (layout of future plans for the crypto coin), as well as a reputable development team.
Now that you have a better understanding of ICO’s and how lucrative they can potentially be, you might be tempted to invest in the next one that crosses your path. At first this might seem like a great investment, however it has been proven time and time again that investing in less reputable ICO’s can be very dangerous to your bank roll. In fact, there are many ICO’s that are flat out scams.
For example, the Mycelium ICO failed because the creators were using the development funds primarily for travel. Another example would be CoinDash, in which the entire network was hacked right before one of their events. This only proved that CoinDash’s security was not good enough for such a large event. Potential investors in that ICO would have had their money stolen by hackers. So now you might be asking yourself, how exactly do I know which ICO to invest in?
Well fortunately for you, I’ve created a nice list for when you start shopping for these potentially lucrative investments. Print this out and have it handy when shopping.
10 Tips to Investigate Before Investing in ICOs
To help you secure your investments, we’ve created a list of effective tips to help you evaluate the best ICOs to invest in.
1. The Team Behind the Cryptocurrency
Behind every successful ICO is a team of highly dedicated developers creating and managing the coin. Without a great team, the ICO is just another random coin to add to the already 100s of useless shitcoins out there. So if you want to invest in a new coin, you first need to know who are the people behind the it.
Are some of the developers well known in the tech world? Have they had contributions in other cryptocurrencies before? The key here is to know who the developers are so that you’ll know whether a coin is worth investing in or not. Acquire a list of developers and Google them. It’s pretty easy to do, simply run a few background checks on high profile individuals. This will allow you to check how credible or trustworthy your potential investment is. Obviously, if the team of developers are made of noteworthy people, then the coin has a higher chance of success.
2. Feedback on Bitcointalk.org
What is Bitcointalk.org, you ask? Why, it is only the largest cryptocurrency forum on the internet. If you want to get feedback on a particular ICO, then this is the place to go. You can see what other investors have to say about a particular ICO. You may also leave some of your own feedback for them to view. It’s basically a huge discussion board for people who are interested in talking about any type of cryptocurrency. It is also one of the best places for you to do your initial research on an ICO.
3. Progress of the Development
Other than reading feedback on what other investors have to say about an ICO, it’s also good to do your own homework on the ICO’s development stages (AKA Whitepaper). The first thing you have to ask yourself is what information is already available to the public. The whitepaper is a must as it contains all the key information about the new crypto.
However, you have to look beyond the whitepaper and see what else they have to offer. Do they have prototypes for testing? Do they have other information that is essential to investors? How far have they gone in developing the coin? Obviously, the more information that they release to the public, the more credible they are. This also means that there’s a high chance of profit for investors like you.
4. The ICO Community
You can tell how much confidence is placed in a coin by looking at the size of the community. You see, the price action of a coin is dependent mostly on the supply and demand. Every cryptocurrency has a certain supply of coins that will slowly be released to the public for mining.
While the supply is maintained by the developers, the demand has to come from the community. If the size of the crypto’s community is really large, then you can tell that there is a high demand for it as well. It also helps if there are more prominent or reputable names investing in the coin. IF you see that the demand is high for both regular investors and high profile names, then you know that the coin is worth putting your own money into.
5. The Purpose of the ICO
When you invest in a security or investment medium, you want to put your money into something that has some value. With regard to cryptocurrencies, the value lies in the purpose of the coin or what it is used for (you can find this in the whitepaper). For example, the purpose of Bitcoin is for people to transfer money without any involvement of third-party entities such as payment facilities. Ethereum, on the other hand, was used for smart contract functionality.
As you can see, each coin has its own purpose. You have to find out whether the purpose of the coin you want to invest in actually makes sense or not. If you think it’s something that people can really use, then it’s a good investment. However, if you deem the coin useless, then it most likely isn’t a great investment. Pretty simple right?
6. Distribution of the Coin
||Another thing to take note of is the distribution volume of the coin. If it happens to be more than 50% during the ICO, then you may want to think twice about your investment. A credible ICO will only have a certain volume of distribution as to not spoil the market. The key here is to find a cryptocurrency that doesn’t release all of its coins at one go instead of initially releasing most of the the coins right away.
7. The Cap of the ICO
The cap refers to how many funds are allowed to be accumulated by the developers. If an ICO allows a lot of these funds to be stored, then a lot more coins will be supplied to its investors. This, in turn, may lessen the demand because demand goes up whenever the supply is down. You have to take note of the cap of the ICO to get an idea of the supply and demand figures.
8. ICO Code Quality
This step is more applicable to those who have more knowledge of computer programming. In order to know whether a certain cryptocurrency is good or not, a lot of tech specialists actually examine the code that powers it. If the code is messy, then it might not be a very safe investment. Remember that the code is the core of the token, so if the core itself is a mess, then you know it’s not a wise choice to invest in it.
Just to give you an idea, a cryptocurrency that has function codes of more than 50 lines is already a red flag for most programmers. If you’re truly interested in an ICO, you may want to hire a developer to take a look at the code for you.
9. The Number of Commits
Each cryptocurrency is powered by an open source code, which means that the public can view the improvements or the progress of the token. Due to this, there will be logs that are also known as commit logs in the coding. Just to give you an idea of what a commit is, it’s a word that developers use to promote a code to the Github coding sector.
The number of commits in the log can tell you the progress and improvements of your cryptocurrency. It’s great to invest in a coin that has a high number of commits because it shows that the coin is developing quickly.
10. The General Activity of Developers
Aside from viewing the commits of the developers, another way to check the general progress of a coin is to look into the Insights tab on the ICOs website. By clicking on the Insights tab, you’ll see a chart of the daily commits of the cryptocurrency. Moreover, you can view the specific activity that each developer has completed for the token on a daily basis. Thus, you can check whether the developers of the coin are actually doing their job as well as making progress.
With the rising popularity of cryptocurrencies, undoubtedly more and more ICOs will start popping up. In fact, ICOs will become one of the main methods of raising money for the development of new cryptocurrencies. As time passes, it will become even easier for people to have access to ICOs because of the popularity. Of course, this also means that people will have a harder time knowing which ICOs are worthy of funding and which ones are scams.
The key here is to do your homework on a particular ICO before investing in it. Homework doesn’t only mean reading the whitepaper and seeing what people have to say about it. It means knowing everything there is to know about the cryptocurrency. That’s why the coins that don’t have much public information aren’t recommended for investors.
||To put it simply, do not invest in a token unless you have full knowledge about the coin that you’re planning to invest in. If you take the time to work on your due diligence, and have investigated every facet of the ICO, then regardless of what happens to the ICO, you’ll know you did everything in your power to prevent from losing your investment…..and that my friend is something to be proud of.