For many years technological protocols were defined in technical committees and technological initiatives where historically large governments defined standards or hand in hand with large technology companies. The processes to define technological protocols suffered, in many cases, from an excessive bureaucracy, they were slow (we talked about years) and frequently they derived in a nest of conflicts where different economic-business interests were demonstrating and opposing. All this dynamic changed with the arrival of the Bitcoin protocol that democratized the financing and the development of open protocols.
An event that has inspired many other entrepreneurs to develop applications on this new base and create new protocols suitable to operate in a decentralized world.The initial currency offers (ICO) of today are like initial public offerings that are lucrative but speculative. It is likely that you have heard a couple of success stories in which the tokens were bought for pennies, in just one year and with a low investment that is true but we must take into account that they are investments to future. But investing in an ICO is not as simple as a couple of years ago, at this time, ICOs are like a dime in a dozen and everyone wants your money.Unfortunately, there is a small percentage of them that are feasible and have a future.The rest are mainly marketing gimmicks that will leave them tokens bag that is worthless. In the last year only more than $ 1,500 million were obtained in offers of coins and some of the chips have gone from simple cents to more than $ 50.What should we analyze in an ICO before investing?The analysis is easy only that demands to have your eyes wide open and to be analytical in the information presented to us.
Among the points we analyze we have the following:1.- The name of the currency.The same one that will identify this currency and the company and team that is behind it should be easy to remember and commercial. example:Eos, Ethereum, Neo, Decred, Litecoin, Zcash, Digibit among others.They are names that, because they are particularly well done, attract the attention of people, causing mystery and cause the sensation of investigating what is involved.2.
– The basic idea of the project presented clearly (what is it and what does it do?).-The information should be as clear and precise as the currency problem solves.-If the use of blockchain is integral to the project or forced for the good of it.-Is there a market for the product / service? Who are the existing competitors?-The proof that the concept works or, at least, the technical description of how it will be executed.
-The utility of the token or currency that is distributed.-The amount of money that will be raised and what should be done with it.-The roadmap for future developments.-Particularities of ICO such as the hardcover, the number of tokens and the distribution timeline, etc.
Read the Whitepaper.Each ICO has to publish a technical document, which is a detailed account of the project, from the idea to the technical execution. Most of these are long and full of information.
Each ICO has to publish a technical document, which is a detailed account of the project, from the idea to the technical execution.Often, these are long and full of exaggeration, which may seem impressive to newbies in this medium, but these are warning signs for you when you exaggerate too much trying to get a bad product through your eyes.If the technical document presents the project as a summary of what can be done with cryptocurrencies that says it is a token “based on revolutionary blockchain that allows fluid flows of information that facilitate meaningful communication and generate transactional records without confidence that are irreversible and anonymous “, can convince several users,3.
– Know everything about the team that makes up the project.This is where you already know if the ICO is worth it or not.We will review the website, write down the names of all developers, executives and advisors. to know in which projects it has been intruders. Any campaign of ICO serious is going to have a good quantity of information on the endorsement of the team.
Here we can get the names, images and even links to social profiles like Facebook, LinkedIn and Twitter. But this is not enough. You have to be more meticulous. We are going to go to the profiles, look at the projects they did before the ICO and what kind of success they achieved. and If we notice that something is wrong, let’s not go ahead without clearing up all doubts. Or if we find an ICO with an anonymous team or with very little information, we have to get away at all costs. People ‘create’ projects, not ideas or marketing.
No matter how well assembled everything looks, if the people behind it are not able to get the project afloat, we will not get anywhere as we would end up losing our money.4.- Quantity limit of the currency.
This is very important since the less coins there are that are mineable or not. Here the price will be higher based on the demand that exists for the limited amount of coins that existOn the other hand, if a currency that emits a greater number of currencies, the demand will be lower since there are many and it is easy to obtain.5.-The amount obtained in the pre-sale.Here is the number of people who invested the amounts and in what currencies. Here you can also know how much is going to devote in the development of the project and how much to develop in the case of crowdfunding.
In the case that you already have a token here you will get an exchange of our money for your product in this case your tokens, we will see if the amount paid for the tokens was the most reasonable.6.- The exchanges in which the currency is quoted.This is something that speaks of a token because to be in big exchanges you have to pay a greater amount to give support because in this case you would speak of good exchanges kraken, Bittrex, Poloniex, Coinbase and Bitso.
The vast majority of currencies found in bad exchanges only seek capital and offer a cryptocurrency with no future among the bad exchanges we have yobit, novaexchage, cryptopia, coinexchage, ce-ex among others.7.- Whether it is minable or not.Here depends on taste depending on the users; since if there are users who have the equipment to mine, a minable currency will be convenient in the case of people who want to simplify it, they can buy directly.8.- The community and social networks.Community support is key, not only for a successful ICO, but also for subsequent growth. Most ICOs today have community centers on popular platforms such as Reddit, Slack, Telegram, Youtube, Facebook, among others.
You have to visit all these communities and watch the conversations.The Bitcointalk.org forum is the resource center for all ICOs. We have to scan the ICO publications that interest us and look for real comments instead of advertising puppet puppet accounts.Reviewing the Bitcointalk thread of the ICO will give us a good description and possibly some useful discussions or descriptions to help us better understand the project.Even in the forum, there is a lot of false information, so it is better to review the comments of older and respectable members. We will look for example questions and how the development team has answered them.
Also, be aware of red flags: terms like “scam”, “pre-mine”, “mlm”, etc.A productive and active development team will periodically share updates and keep us abreast of progress in terms of the defined roadmap. This is also the time to ask any questions and clarify any questions we may have about the project. Once again, be cautious with the puppet accounts that generate false advertising.9.
– Do not risk everything and do not sell at the first opportunity.The cryptocurrency market is highly volatile, we can not afford to risk everything. If we really want to succeed by investing in ICO, if things go well and we start to see that the prices of the tokens go up, we do not sell them at the first opportunity.If we have already assumed the risk, we must give it more time. There are people who sold Ethereum and Antshares (now NEO) as soon as they went up for a few dollars. Ethereum went from less than $ 20 to almost $ 400 in a year. 10.
How to detect if it is a ponzi scheme?While many Startups are legitimately funded, some scammers take advantage of the system to set up Ponzi schemes for the sole purpose of cheating.Here are some tips to alert a possible scam:The project has nothing to offer.The system is based only on finding affiliates that recruit people.They offer profits in an insured manner.
If this is the case, it flees directly from that ICO, since every investment has a risk, without exception.Finally, do not put all the money in a single ICO, because although the project is solid and promising, it may not end up being successful. At least you should diversify between 3 to 5 ICOs.11.-Finally, the golden rule.Let’s not invest more what we can not afford to lose.Note: The content of this post is obtained from various sources in addition to ideas and experiences of cryptocurrency investment since a long time.