Ankur Agarwal is a well-known name when it comes to ICO advisory. He is an email marketing and cryptocurrency expert. Here we discussed some facts to check about before you invest in any ICO’s.
The year 2017 achieved the greatest milestone in the world of digital currency. An incredibly massive amount of $6 billion was raised through crypto-financial trend called Initial Coin Offering ($8 million in 2015 and $225 million in 2016). ICOs are digital tokens that the investors purchase form their companies. When the company starts their ICO project, they become tradable for goods and services or else they can be turned into cash. They can rise much more than the initial payment, but it is always risky. A token may end up with nothing if the project fails and there’s lack of regulation.
Below are the most recommended cautious approaches for you to understand whether an ICO can be worth putting money in or not.
1. Study the team:
Creating an effective blockchain technology is something that is actually going to have real-world value. This sounds a lot of work and the company definitely need to have a team behind it that knows what they are doing. So if you find an ICO with the bunch of random people who don’t know much about the blockchain technology and they just want you to give them money, that’s something you mustn’t be investing in. Read their biographies (through social media, blogs or websites) and the firm’s whitepaper.
2. False bragging:
This company is 3 years old and has 20 to 25 ICO experts. A lot of ICOs have been doing this. These people don’t really care about cryptocurrency. They realise that an ICO is an easy way to make some bucks because if you ever approach them they’ll talk all the time about how you can make 10x or 20x of money. Know about technical underpinnings of their ICO project, how the tokens will be distributed and how they will be used.
3. ICO tokens not really required:
This is something that has also been happening quite a bit. There are plenty of coins that are trying to do something, that can easily be solved by Bitcoin or Ethereum. Their token doesn’t really need to exist. You definitely need to do the research that does the coin exist for a reason that Ethereum or Bitcoin can’t accomplish.
4. Excessive ICO marketing:
If you are on the internet and you just see tons and tons of advertisements for the new ICOs that is going to be the best ICO ever and you have to get involved, that’s something you need to be aware of. Why do they need to do this much marketing? There are few coins which actually did very little marketing for it. The cryptocurrency world is big enough now that a lot of people know about these ICOs. They don’t really need to do a ton of marketing for their promotions.
5. Bonus for every investor:
A lot of new ICOs will have a presale bonus where you’ll get 50% or 60% of extra coins than the people who buy normal ICO get. Here, the problem is that the people who get in the presale ICOs, they will receive 150% of the coins than the people on the ICO are and as soon as the ICO ends, they can dump the 50% extra coins for basically nothing because it’s basically free tokens compared to the people who got in during the normal sale. This can cause the price of the coin to crash. So if you see an ICO offering 50% or more pre ICO bonuses, know that this could potentially hurt the coin once it hits the market.
6. Nonsense community discussions:
A strong community creates a high value and productive discussions. If you go to a concerned community group and see the post like people talking about when this coin is going to hit 50x value and talk nonsense then that is something you must be aware of. They aren’t asking about the questions like how the coin is going to function when the beta is going to come out. Once they get in the beta, they would like to know how actual product is working.
7. Lengthy campaigns of token sale:
This is an issue that a lot of newcomer ICOs have. Some ICOs play tricks like they are going to last a month and they potentially don’t raise the amount they want. So then they very sneakily change their ICO to 60 days without actually telling anyone.
8. Issues in getting listed on major exchanges:
ICOs are not supposed to talk about what exchanges they’re going to get listed on. But if they have no plans to get on any exchanges, there’s no potential that this coin could go up on a value. They have to get on good exchanges. If they get listed on Cryptopia, the chances are, the price of that coin is not going to go up. People don’t want to use exchanges like Cryptopia, rather a good exchange like Binance. Once the coins get enlisted on exchanges like Binance, they tend to see big spikes in price.
9. Huge initial market capital :
If the coin already has an ICO, they’re saying that the coin is going to have $1 Billion market capital. Then there’s not really going to be much room for the growth once it hits the exchanges. You want a coin that already has about 50 to 100 million in ICO and that’s going to be their capital. Once it hits the exchanges if you buy at the price when it was 50 million, then you could see huge gains if it ever goes to $1 billion. But again if they have a $1 billion market capital as soon as it hits the exchange, there is very little room for the growth unless it becomes among the top 20 or top 10 coins.
In conclusion, all these early-stage investments or better say gamble is, just don’t bet more than you’re willing to lose. You must understand and know which red flags to look for and make sure to steer clear of ICO scams.