The problem with the rise of cryptocurrencies is that there never seems to be a day that goes by without a new ICO appearing on the market. Of course, that does mean that there are a whole host of options and possibilities for you, but how do you choose the correct ICO?
This is a question that any potential investor should be asking themselves because there is no doubt that there are some options out there that you might want to avoid for a whole host of reasons. Being caught up in something whereby you are going to lose money, or just get nowhere, is something you do not want to be embroiled in.
However, there are several methods that you should seek to explore when looking at choosing your ICO, and the best part is that it is not even that complex.
Point 1: What are They Doing?
The first part in your search has to be understanding why they have produced a cryptocurrency in the first place. Are they selling a product? Is it a service? Is there even a market for whatever it is that they are doing?
You wouldn’t go and invest in anything if you were unaware of what it was that you were putting your money into, and just because we are dealing in a digital currency does not mean that this has to then change. Take your time in studying what they are doing, and then make sure that you understand it all.
Point 2: Who is Behind it?
Another important point when you’re looking to select the best ICO is checking up on the team that is behind the project. Do they have experience in the technology that lies behind the blockchain? You want to choose an ICO where there is the knowledge that can deal with any issues or technical problems as well as how to go ahead and expand on what they are doing.
Once again, you would find it crazy to go and invest in a company where the team that is running it have no previous experience in running a business or the industry that they are in. By doing this, you would only be increasing the chances of losing your money, so the same approach has to be applied when it comes to choosing an ICO as well.
The good thing is that companies will have a tendency to state on their website who is indeed behind it making it easier for you to carry out your due diligence. Make sure that you follow through on this as it will undoubtedly give you confidence in your investment.
Point 3: How Will They Use the Funds?
A reason for the token sale is to generally build funds that will help for further development of the platform and service that they will offer. So, in that respect, you need to be able to see how the money is going to be spent with the ICO as that will at least let you know what it is that you are investing in.
Once again, this information will appear in their whitepaper, so you need to study it and check out the distribution aspect as that will prove to be all important. In an ideal world, it should include both business development as well as marketing, and the percentage will vary depending on each ICO.
Point 4: Payment Methods.
You will also need to be aware of the payment methods for the ICO as you want to know that you do have a certain sense of security around your investment. Most will accept either Bitcoin or Ethereum, or both, and that will be an acceptable form of payment for you. If you fail to see either of those options, then the common thing to do is to simply ignore the ICO and move onto something else.
Point 5: Limits and Bonuses.
An ICO will have a number of bonuses as well as limits for the investors, and you clearly need to know what they are before you go any further. Some will set a minimum investment limit with this either being in a digital currency or a fiat currency, and while most set a minimum limit in the region of $10, there are others that set it higher than that.
At the same time, there will be bonuses for investing in the cryptocurrency during the ICO. This bonus will decrease as the ICO progresses since they use it to draw in as many people as possible at the beginning. Also, the bonuses do vary in size depending on the cryptocurrency as well as the investment. Being aware of what you are going to be given as a bonus in return for your investment is also key.
You will also discover that there will be a hard cap and soft cap on the ICO. Even though this figure may not mean much to you, it does indicate that they have an upper limit making the ICO a finite thing. You should also check to see if they then plan on burning the tokens that are unsold after the ICO.
Point 6: Doing Your Research.
The final point is simply to do your research first and read reviews from various sources before you go ahead and invest. Getting a feel for the ICO makes perfect sense, and we can fall back to an investment outside of the digital world as the example. You are hardly going to invest without doing your due diligence, so treating this any differently would be insane.
There will always be more than enough information out there on an ICO for you to check out, with various websites writing their own ICO Reviews and dedicating the time to doing this research is essential. Just going ahead and taking a shot in the dark is madness on your part, and that is how your fingers will end up being burnt.
Just remember that there is more than just one ICO out there, so there is no need to rush into one without taking all of these points into consideration first. Failing to think carefully about it all will result in only one person being to blame should things go wrong, and that person is you.