By far, blockchain is the most disruptive technological innovation since the beginning of the internet era. We are now in the ‘blockchain era’.
It is disruptive in many respects. One is that it affects the way-of-thinking of many individuals and companies, start-ups (choosing to run ICOs instead of IPOs) and big-names as well. With ICOs, many early comers have already made millions. Another major difference is: Unlike in IPOs (Initial Public Offerings), you don’t have to be rich and/or accredited by the SEC and have to invest as much as $25,000-$5M in order to catch the pre-IPO opportunity when stocks are super cheap. That’s how billionaires are made literally overnight! -They make big moves early, as insiders, before the public even has any access to invest.
But how about us?
For the average investor, the IPO-goers are essentially late comers and get the stocks at already 10x-100x or more expensive prices. Companies typically want as few people to invest as possible to make everything easier to manage so they first contact he rich to invest first.
When it comes to ICOs, it’s a different story since anyone can invest prior to the launch of the actual currency. You don’t have to have that much money. You can typically come in with as low as 10-100 bucks! Everybody can play and have better chances at making their first million. This is the main reason why ICOs are disrupting IPOs.
The problem is:
Everyone wants a piece of the pie and many have become too greedy. The whole Industry is riddled with downright scams and half-baked ideas that never transpire into reality. If a company is just a bunch of papers in a folder, an ICO could be just a 30-100 page ebook (white paper) with some cool ideas, a website and a platform where people can pay for and get their tokens, and some online marketing hype.
I believe it’s not that easy (at least no longer easy) to make quick bucks and not as many people get that lucky nowadays, especially that the winter-market has been bearish and 2018 turned out to be “the year of regulations.” It’s the time when weak hands sell their digital currency and lose money. Still, marketing hype is a factor for the initial success of many ICOs. -And the loss of those who give in to the hype.
Going back our discussion on how to choose a project to invest in, let’s further discuss something about a good, reliable team.
If you have the opportunity to read a project’s white paper prior to the ICO launch, it’s a good sign. That means they really seek public opinion and they open up their plans for scrutiny. A reasonable plan must also include how to deal with regulatory pressure since on top of the SEC, there are Federal, regional and even global regulations to comply with. This is where a team’s experience is invaluable. It can be very hard to deal with regulators when you’re doing something new.
What if someone’s good at building but not distributing a technology? You want to understand how they are going to fill in what’s lacking in their skill set. This is why teams exist. -They have complementary skills. So, when evaluating a team, we want to assess their ability to develop and distribute technology as a team.
How Google can help you:
Google the CEO or the person leading the project. Have they had any IPOs? Have they had any exits or already sold a company to another company before? This is a great, easy start, though it isn’t everything. Even if somebody is just watching things like this get done, they’d understand it’s a tedious, brutal process to make and then sell technology. You also want to look at their specific skill set for their project. Do they have what it takes to do this independently? You know if the guy was a CEO from another organization, that is a fantastic start because it means they understand how to bring a team together and tell the story. That's really the CEO's job.
If you do not have the experience and skills to evaluate if a founder has experience and skills adequate for the specific project they’re involved in, you probably shouldn’t be investing in internet money.
You want to start spending time now in getting to know the founders of the project and each member of the team that you consider investing in.
Do some ‘sniff tests’.
It can be intimidating at first, but you can benefit from contacting the team members directly or even indirectly on their social media accounts and anywhere they are open for discussions on their project. You can also ask your friends who might be interested to do some sniff tests for you as well. It may take a few days but if you allot time to do this prior to investing, you may come up with some more important information than what you can read in their white paper.
Are there still missing team members?
Implementing a 'strict approach' means we don't want too many surprises, do we?
Beware of shills.
As I have said before, never rely on a single person when making a decision. -Not even me. This applies to any random person you might see on Youtube or here on Steemit. A piece of advice from a trusted friend certainly counts but recounting advice from multiple trusted parties is so much better. There are so many pump-and-dump groups and hype makers who are being paid to advertise online and they can literally help make millions for the project, then what? -If the founders are only after money and not really working for long-term results, everyone’s money is in jeopardy. We now live in a new era, a new era of fake news and fake people as well.
Never gamble.
If you’re still thinking about investing for the first (even the nth) time without doing thorough research on the founders, it’s like just rolling the dice and hoping to win again. Gambling is the fastest way to lose money, so to speak. If you think researching online is too hard to do or may take too much time, nothing could be easier than starting with a single project to evaluate and getting to know more about the top two people in the team. You really want to know who’s responsible for developing the technology behind the project and the one who’s responsible for distributing it. You want to invest in team members who have done these things before in a meaningful scale.
We will continue discussing more crypto-investment principles tomorrow so please stick around!