You've probably been wondering what ICO's are and can you really make a profit by investing in ICO's.The thing is that that's completely up to you. There are many ICO's but finding the right one which will not turn into a scam is the hard part so hopefully this article is going to help you make a decision whether to invest in a certain ICO or not.
What is an ICO ?
An unregulated means by which funds are raised for a new cryptocurrency venture. An Initial Coin Offering (ICO) is used by startups to bypass the rigorous and regulated capital-raising process required by venture capitalists or banks. In an ICO campaign, a percentage of the cryptocurrency is sold to early backers of the project in exchange for legal tender or other cryptocurrencies.
The problem with ICO's
One big problem with ICO's is that they are not regulated.Many entrepreneurs are trying to abuse the system and get the biggest profit they can get.Many good ICO's are losing the potential to be something big because of the fact that too many cryptocurrencies are issued nowadays and people are losing interest in ICO's because of other ICO's which ended up as SCAMS.Another problem is that even though ICOs are happening on a decentralized platform, the ICOs themselves are hardly centralized; they inherently involve many people trusting a single development team with potentially over $200 mln of funding.
Ways to know whether an ICO has the potential to end up as a SCAM
1.Do your homework and research about the company and the people behind it.
2.Look for a product roadmap and technical details
3.Look for a good and active community
4.Read the whitepaper
5.Social proof of user validation
#1 Do your homework and research about the company and the people behind it
What everyone needs to do before investing in an ICO is doing a research about the team behind the project.Its really important to notice whether the team is sharing info about themselves.Pay attention to the investors and advisors and whenever you find an ICO that is trying to hide something from you then you that ICO is most likely a scam.
#2 Look for a product roadmap and technical details
Having a designer making a landing page can be easy but finding someone who can create a good product roadmap on a technological way is hard.ICO's that have such product roadmaps are worth checking while those who don't should be given a minus in that category.
#3 Look for good and active community
Good ICO's have great community which understands their customers.Look how active their forums are.If there is good activity on the forums then that tells that the ICO has potential and people are actually interested.See if you could talk to some other investors about the project - the ICO that you are investing in.
#4 Read the white paper
It's always a good idea to read the white paper.Pay attention to how well it is written.It should be on a good professional way since it really gives a good impression to the viewer and if its not then that means that you should be really careful with that certain ICO.Another thing to look at is the words written.They must be with a meaning without claims that make no sense.
#5 Social proof of user validation
It is always the right choice to see when companies have some sort of social proof of user validation.Companies like Cointal, a leading peer-to-peer cryptocurrency marketplace, who have thousands of active users, will publish reviews and press pieces that demonstrate the quality of their product.In the last two months, over $15 million in trading volume has been processed by Cointal, providing more social proof. This is a positive signal that the team has been able to gain support from the broader blockchain community.
Conclusion
ICO's can be a really good investment but only if you have chosen the proper one.I personally tried one ICO called Authorship which ended up as half SCAM and why "half" and not complete? It's because they did pay some of the members that were involved but the rest were ignored in a way and they were given a book which they didn't really ask for.
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Sources:
Cryptocompare
Cointelegraph
Entrepreneur
