The world of cryptocurrency is expanding at an undying rate, with newer options emerging on to the realm of crypto-sphere with each passing day. New crypto-tokens are revealed each month, which brings a series of Initial Coin Offerings (ICOs) alongside their launch.
The year 2017 saw one of the biggest crypto bull-runs of all time, with a ridiculous amount of investments being thrown into the crypto-universe. With huge stakes involved in this field, it lays down the basis for enticing scammers. Where investors have been seen to put their money into lesser known cryptocurrencies, they are equally likely to invest in some fraudulent technology as well.
Initial Coin Offerings (ICOs) are basically a new normal in the cryptocurrency industry. New ambitious projects organize their ICOs as a means of fundraising their whole project. Investors are given the tokens at a discounted price in return of hopes of high returns.
When a new project reveals their technology and the ground-breaking purpose they intend to serve, they create a hype in the crypto-market around their project. More and more investors are attracted towards the project as they think that this project will be worth way more in the future and will allow them to earn decent return on profit.
There are tons of different cryptocurrencies out there, many of which are currently offering ICOs. Every single one of them promises huge returns on investment. But before you get carried away by all the too-good-to-be-true claims, you should bear in mind that many of these ICOs will inevitably fail or turn out to be a scam.
Therefore, it is of utmost importance that you should carry out your own research before putting your money in some ICO.
So, how to know which ICOs to invest in?
1. What are their websites like? Do they have whitepapers?
The first and the foremost thing to check about the project behind an ICO is to look at their technical aspects. What does their website say about them? Do they have a proper whitepaper to support their claims? There are many projects out there who do have a whitepaper describing their technology, but their whitepaper is scientifically very weak.
Just to have some tech-savvy jargons in your whitepaper is not enough, the idea and the technology should make some sense as well.
2. Who are the people behind the ICOs?
Secondly, the team behind the project is a good indicator of the legitimacy of the project. A solid team which has experienced members of their individual domains looks like good fit for the project. Many cryptocurrency projects were able to capitalize on their ICOs just because they had an industry expert in their development team or board of advisors.
Renowned individuals endorsing a project mean that the project is there to stay; it might get in to a technical roadblock, but it is not a scam altogether at least.
3. What does the market think of the ICOs?
The next step in the evaluation is to look for the market views. Social media forums and cryptocurrency influencers are a good source of some hidden information. At times, people get hold of some piece of important information that might shape the future of the cryptocurrency.
A potential partnership under the covers or a sense of scam by an ICO, analysts are generally good at busting the facts out. Therefore, it is a good practice to search the market, and judge for yourself what is in the crypto-news.
4. What problems are they trying to solve?
Lastly, another impactful feature, yet not very decisive one is to investigate about the core business problem. What problem are they here to solve for the community, which aspect of the cryptocurrency world are they about to disrupt and what is the business model they are based on? These are some of the questions which will tell you more about the readiness and sincerity of a project.
Investing in ICOs can be very risky; but as the old saying goes: with higher risks comes higher returns! Therefore, it is important to be absolutely certain about the step you are going to take. If a cryptocurrency project is in its ICO stage, it means that it is a very young technology.
There are high chances that the technology might not be able to do big and fail very soon. So a word of advice, only invest the money which you can afford to lose.