Courtesy of: commons.wikimedia.org/wiki/File:What_is_an_ico.png
Not only am I relatively new to ICOs, but I'm not an expert in blockchain technology. The sheer number of ICOs out there is daunting enough in and of itself, and beyond that the majority of them are pretty obscure to me, dealing in areas that I know even less about.
And while I wholeheartedly believe that blockchain and ICOs are here to stay, I also wholeheartedly believe that blockchain is currently in a bubble. My goal is to survive the bubble by investing in only the highest quality projects, with the hope that the services they provide will be too essential for them to be allowed to fail.
As a result of all this, I've come up with these rules that I hope will consistently guide me to high quality ICOs with bright futures beyond the initial pump and dump.
As a prerequisite, I have to understand the project and clearly see that it solves a real problem-as well as see that the problem is best solved by blockchain technology.
Just because I don't understand the project doesn't mean it's a bad idea (obviously), but I think it's a major mistake to invest in anything I can't wrap my mind around, even if seemingly trustworthy people are assuring me that it's a solid project. I have to think, "Wow, this is a really exciting idea." Do I miss out on good opportunities because I'm not techy enough to see their value? Absolutely, but it's better than blindly throwing my money into the wind.
Also, blockchain is like the dot coms of the 1990's in that startups will try to find any excuse to put blockchain in their title because it's easy money. Unfortunately, though, blockchain technology isn't always the best solution to every problem. Not only do I have to understand the basic concept, but I have to understand how blockchain is necessary to the project. When the bubble bursts, companies needlessly using blockchain will be the first to go, as the unnecessary blockchain component will make them slower and more expensive than their non-blockchain competitors.
I like to see industries using blockchain that have an inherent lack of trust or a high potential for censorship. To me, those are the purest applications for blockchain technology.
I have to see a history of past accomplishments from the team members, as well as experience in their particular industry.
Primarily, I want to see value outside of the blockchain industry, unless the applications are 100% confined to blockchain technology (which generally makes me nervous). I want to see team leaders who are experts in something unrelated to blockchain, along with support from blockchain experts. In a nutshell, I get most excited when I see experts in a non-blockchain related industry who implement blockchain industry experts to make their vision come to life, as opposed to random blockchain experts looking for an idea to apply blockchain to. In other words, I want blockchain to be the answer, as opposed to the question.
I have to see a consistent pattern of competency throughout the project.
I want to see high quality websites, well-written whitepapers, responsive support, and flawless execution of KYC and token sales. However, it is also my experience that high quality ICOs can be a bit glitchy at times, especially when it comes to whitelisting and KYC, as full compliance in these areas is bound to open up cans of worms at every turn. This will of course get better in the future, but for right now this space is the wild west, so a few bumps here and there can be forgiven I think.
Also noteworthy, it's seemingly become acceptable for ICOs to have grammatical and spelling errors on their websites and in their whitepapers. While this can give the impression of a scam or two bit operation, ICOs are a truly international prospect, and in my opinion the lack of perfect English skills doesn't necessarily mean they don't know what they're doing.
I have to see good reviews.
It's my experience that not all highly rated ICOs are big successes, at least in the long run, but it does seem like most of the big successes were highly rated. So the presence of good ratings alone isn't a good enough reason for me to invest, but the lack of good ratings is a good enough reason for me to seriously consider leaving it alone.
If the ICO allows Americans and Canadians, I want to see a fully compliant KYC process, especially if the ICO is North American based, or includes team members who are citizens of those countries.
While I despise the tyranny of American SEC regulations, I also see that taking Americans and Canadians as investors without being fully compliant is a recipe for disaster. Nothing will unmoon an ICO faster than an SEC investigation, and I think there's very real potential for many of the non-compliant, or partially compliant, ICOs to land themselves in serious legal trouble down the road. The worst part is that there's no going back; if they weren't compliant in their ICO phase then they could be a ticking time bomb just waiting for an SEC crackdown on ICOs. I'm also no expert in international law, so I can't discount the possibility of non-North American based ICOs getting spanked for allowing unaccredited Americans to participate, especially if they solicited American investors in any way. Another thing that past bubbles have taught us is that when the bubble bursts everyone starts playing the blame game, which could very easily be the catalyst for a massive SEC crackdown on ICOs, including investigations into past ICOs that weren't fully compliant, even if they made everyone money.
So there you have it! Note that this isn't advice; I want to open up a discussion and hear about how others out there vet their ICO investments. Tell me about your system for finding high quality ICOs. Do you use any of the same criteria? Do you have any tips or tricks I've overlooked? What sources do you trust the most when it comes to ICO ratings and reviews?