No matter where you are on the crypto spectrum – be it newbie or hardcore – figuring out which ICOs are good investments might seem like a magic trick. Without deep research, you really don’t know what you might pull out of the hat. And with almost 1000 ICOs going on as we speak, how do you know which ICO to pick?
How To Rate an ICO
To get a good grasp of any tech project raising money through an ICO, reading the whitepaper is the best tool available. There, you get a glimpse of the ideas behind the project, the technology supporting it, the business model, ICO process, etc., etc. Some ICO whitepapers are only 10 pages long, and in many instances, those are the exact projects to avoid. Others are 40, 50, maybe 70 pages long and require a high level of tech knowledge for understanding – something most people don’t have.
ICOs wanting to get their ideas out to potential crypto investors realize that everybody doesn’t have the time or comfort level to read these whitepapers. They now may offer litepapers and pitchdecks from their website to give readers a quick rundown with lots of graphics and glossing over all the main points. But is this enough to tell you about the benefits and risks? Do you have enough data to make your determination?
How to You Pick the Right ICOs?
You could go to YouTube and find a talking head recommending just about any ICO you can find. Are they shilling? Many times they are. But sometimes you can find a channel that carefully analyzes ICOs and gives you a nutshell. You can also check ICO rating sites who use crowdknowledge to score ICO projects, and still others that use verifiable scoring systems to rate ICOs.
But you are still depending on others to do the research. Using someone else’s summary may not necessarily serve you – do you have the same investment goals as that YouTuber? What are the important things to you when investing in an ICO?
- Team Strength?
- Solving a Real Problem?
- A Working Prototype?
- Blockchain Developers on the Founding Team?
- Multiple uses for the Token?
How Do You Know if Your ICO will Fail?
There are so many criteria that can make or break an ICO:
- If there is no legal advisor and the ICO is launching, there’s a problem.
- The ICO details are vague and don’t explain clearly where the ICO funds will go, that lack of transparency is a problem.
- If no one on the team has run a multi-million dollar company before, how will they handle the millions that flowed into their ICO project due to uneducated investors and zero regulations?
Dealing with ICO Risks
While the risks in the crypto wild west are abound, there are definitive similarities between ICO projects that have had staying power. Projects like indaHash, which took an already successful business and added a sensible crypto utility, are holding steady, even during this long drought of a bear market. Teams like those at Nauticus and The Abyss are rich in industry and start-up experience and are constantly educating the public about their projects at events across the globe.
Projects like PowerLedger (which contributes to green energy solutions by decentralizing the power grid) attract the many investors who are interested in using cryptocurrencies to make the the world a better place. Others, like XY Oracle are building systems that support the evolution and infrastructure of blockchain and move us all forward.
All these considerations can help guide investors into making informed investment decisions on the dex.
Finding a Quick Way to Weed Out the Worst ICOs
With so much to consider, it helps to have a quick checklist to determine in a relatively quick way, whether an ICO has a chance of seeing the next year. This list is a “best of” compilation from an exhaustive ICO Checklist available at TruDex.io. Use it to start applying ICOs and eliminating those that flunk. Those that pass can get your more serious attention, while you also focus on the projects that mean something to you.
5 Serious ICO Rating Questions to Ask Before Investing:
- Are all founding team members found on LinkedIn, complete with profiles pointing to their relevant experience? There are some ICOs out there with teams that are made up of people with absolutely no business experience. Still, others are simply made up altogether. Study the team – what have they accomplished in the past?
- Is everything about the ICO crystal clear? If you read the ICO website Token Sale section and you still have questions, like what is the price of the tokens, or why they are asking for a certain amount to raise in their ICO, contact them to find out. If it’s difficult to understand the answer or you never get an answer, they are off your list!
- Are the founders vested? This information is usually in the ICO details of the website, where it describes how soon the team can cash in their tokens. For those of you that don’t know, when you mint a new coin, you essentially become your own federal reserve for that cryptocurrency. Teams that have delayed liquidity, meaning they can’t cash in their tokens until, for example, a year after the ICO ends, ensure that they are there long term. We’ve seen it over and over how a team cashes in their tokens during or directly after the ICO, when all the hype they created for the ICO drives the demand and value up. Most ICOs a few months later are dead in the water. Long term members have an incentive to keep the value up over an extended period of time – until they are vested – producing more long-term possibilities.
- Do they have any product at all? The easy peasy, no rules ICO fundraising process dominant during the last year has sparked hundreds, if not thousands, of tech startups that bypass having any technological prototype. Instead, they are waiting for the big money and THEN they will get down to business. Does that make good business sense?
- Is there any organic buzz about the project? Now many times buzz is really armies of social media posting freelancers backlinking, retweeting and otherwise sharing news and blips about ICO projects that are paying them (hopefully not in their shit coin!). But if you scroll through the team’s Telegram channel, Bitcointalk or Twitter, you can get a feel for whether people are ‘invested’ in the project. Are people creating conversations about this project? Are team members engaging with the public in fun and informative ways? Scroll through a few pages of a project’s biggest social media outlet, located on their website homepage. What is the feeling you get? Does it sound like an enthused community? Or is it more like paid drones pumping and pumping?
Learning to rate your own ICOs for investment purposes is not the easiest thing to do. But as you go along, you’ll build up your knowledge and the research process will get quicker. You’ll start to notice certain things about ICOs that are “a must” or you might find yourself looking at all the best problem-solving ICOs and picking the project that has the most potential.
Whatever you do, take a nice close look at each ICO you consider. When you do find a project you love, a solution that makes perfect sense, or a product you cannot wait to use, you’ll know you want to go in deep and find out more. Now you’ll know exactly how.
Guest post by Mary Thibodeau
Operations Manager at Trudex.io