ICO INVESTING AND HOW TO PARTICIPATE IN ICOs
What is an ICO?
An initial coin offering (ICO) is a means of crowdfunding, through the release of a new cryptocurrency or token to fund project development.
There are currently more than 1000 coins available on different exchanges, with hundreds more in the process of being listed on exchanges. It’s important to understand that not all cryptocurrencies have their own blockchain, as most are issued on top of another Blockchain. A good example is ERC-20 Tokens, which represents a standard of interoperability within the Ethereum Blockchain. Ethereum is a general purpose blockchain where different tokens can be issued on top of its blockchain without creating their own infrastructure.
Advantages of ICO
Allow projects to circumvent the traditional method of asking Banks/Venture Capitalists that may take a lot of time and resources. Anyone can invest and can earn the possibly huge returns just like how the big boys are accustomed to. Of course, investing in ICO’s is a high-risk venture.
Immense Profit Potential:
Many in the space want to invest in the “next Bitcoin”, potentially riding the wave of buying coins at pennies on the dollar and selling them later at an astronomical valuation. Most ICOs have only a conceptual white paper with little to no proof of concept, thereby validating a high payoff potential due to the extremely high-risk investors are taking.
At this website ( https://icostats.com/roi-since-ico ) you can find out interesting statistics about ICOs of some coins and the price at the moment.Some of the coins have really big profit.
The absence of Regulatory Oversight:
Regulations are good in that it protects people/investors/YOU. Currently, the ICO market is unregulated and can attract bad actors that are fraudulent/manipulative/scammers. It’s easy to raise money through ICO; just write a white paper and you’re good to go. Conclusion:
Be very careful, have due diligence before investing!
No Track Record:
The majority of ICOs don’t even have a working product, just a conceptual white paper that outlines how the coin will work. Not only that, ICOs have been asking for an incredibly large amount of funding.
How Can I Participate?
I will give you the most important steps I take before I decide to participate in any upcoming ICO:
Step 1: Research on Upcoming ICOs
Look at resources or outlets that features the latest ICOs. Knowing which ICOs are coming up will enable you to plan ahead, especially for ICOs that has a whitelist. A whitelist ICO means that you have to register in advance to participate in the
ICOs, which are usually hallmarks of popular ICOs that have a limited number of coins to offer. Here’s a list of various resources for ICOs:
Websites that Lists Upcoming and Ongoing ICOs:
ICO Watchlist,ICO Alert,ICO Rating,ICO Tracker,ICO Bench,ICO List.
Community Sources/Forums that feature ICO discussions:
Reddit, Bitcoin Talk, Twitter.
Step 2: Perform Your Due Diligence
You should perform your own research to ascertain that the ICO is a good project. You can also look at reviews and analysis done by others to verify the potential of the ICO. Good ICO review resources in my opinion are:
1. Crush Crypto: A website dedicated to analyzing ICOs through detailed fundamental analysis
2. Reddit: Certain channels feature ICO reviews done by community members, such as Cryptocurrency, icocrypto, ethtrader.
Step 3: ICO Participation Process Opening an Exchange Account
Assuming that you’re confident after performing your research and want to proceed with participating in the ICO, then you should open a fiat-accepting cryptocurrency exchange account to convert your domestic fiat currency into popular cryptocurrency of Bitcoin (BTC) or Ether (ETH).
Opening Your Own Wallets to Participate in ICO
It is absolutely essential that you have your own wallets. Your exchange account (e.g. Poloniex/Bittrex/Kraken) DOES NOT COUNT as your own wallets, as you do not control their private keys. Participating in an ICO requires you to send BTC or ETH from your personal, private wallets. If you send it from an exchange, you WILL NOT get the ICO tokens since the transfer originates from the wallet of the exchange and technically you do not own any wallets in an exchange.
I would recommend using Etherium as the base cryptocurrency because many ICO coins are compliant with the Ethereum standard called ERC 20, and the most convenient wallet is MyEtherWallet (MEW).
If you prefer to use Bitcoin as the base cryptocurrency the best wallets are the hardware ones(Trezor and Ledger Nano).Good software wallet for ICO investing, in my opinion, is Exodus.
Follow the ICO Instructions
More often than not, ICOs will provide a step-by-step guide to participating in their ICOs. You should join their official communication channels such as Slack or Telegram to receive the latest updates and ask questions directly to the developing team.
Step 4: Exchanges to Trade ICO Coins
If you believe in the tech, then hold the coins for the medium to long-term, or until your price target is hit (e.g. 2x, 3x, 10x of capital). If you just want to flip it, then sell it once it reaches an exchange that usually lists an ICO. Alternatively, if you’ve missed out on the ICO, you can buy it at an exchange. Here is the list of common exchanges that have a tendency to list ICO coins:
Ether Delta: A decentralized exchange that is usually the first exchange to list newly issued ICO coins. It can be extremely complicated for beginners to trade here, and it is not recommended to do so.
Liqui.io: An exchange that often lists new ICO coins. There are close to 200 coins listed in Liqui.
Bittrex: The biggest cryptocurrency exchange by volume that only accepts coin deposits (Does not accept fiat money). This is the “big league” that every ICO wants to be listed on.
Poloniex: The second biggest cryptocurrency exchange by volume that only accepts coin deposits. This is also one of the exchanges that all ICOs want to be listed on, but the criteria to be listed on Poloniex can be extremely tough as only a few coins are recently added.
Binance: A China-based exchange that has gained tremendous traction, being the 10th largest exchange by volume in just a span of 4 months! It also lists new coins based on consumer demands.
Conclusion: Investing in ICOs
ICO scams are only increasing and the nature of these scams is also evolving.It is highly recommended that one should not invest until one is sure. Not just that, one should also not invest more than what they are ready to lose.Moreover, if you find anything unsatisfactory while analyzing an ICO based on the 5 pointers, I would recommend you stay away from it.
Some of you may brush it all away terming me too safe. But trust me when I say that things may go wrong despite following the aforementioned tips. See the story of Tezos ICO– it raised approximately $232 million but the investors and stakeholders are in deep waters because it failed terribly despite a highly successful ICO and a good team.