This article was first published on my medium account here!. Now, I am sharing it with the steemit community to help someone here on their ICO contribution journey and I hope you find it helpful....
Disclaimer:
This article is NOT intended to be an expert financial advice. Do not make investment decisions based on it. It is set forth as guidelines, based on my experience, to help you as you do your own due diligence on an ICO. I am using COBINHOOD ICO as a real life example of an ongoing ICO to buttress and further explain my points...
Introduction
It is almost an undeniable fact that cryptocurrencies have come to stay, and no matter the number of regulations being proposed to either monitor or out-rightly ban the operations and trading of these cypto assets, there is actually no end in sight to their growing popularity and acceptance.
The growth of cryptocurrencies (mainly due to their decentralized nature without a central controlling body) has also opened up many opportunities, especially in the world of finance, technology and innovation. One of such opportunities is the rising trend of Initial Coin Offering, popular known as “ICO”.
Meaning of ICO
ICO is simply an unregulated (more or less a free-for-all) means of raising funds for a new cryptocurrency venture. It is a source of capital for startup companies. In an ICO, the company issues a percentage of a new cryptocurrency or tokens to contributors in exchange for fiat currencies or other established cryptocurrencies such as Ethereum or Bitcoin. Participants in an ICO do so with the hope that they will reap good profit when the product goes live and the tokens appreciate in value.
Well, since ICOs are unregulated, there is high possibility of fraud. Scammers can just put together a beautiful presentation of some idea, create some tokens, collect money and disappear without a trace. That is why we advocate for proper due diligence before putting money into any ICO.
Our advice is that contributors, in addition to any other investigative actions they want to take, should consider the top 3 factors outlined below before contributing into an ICO. In explaining these factors, we shall examine the ongoing COBINHOOD ICO as a real-life case study demonstration.
Let’s begin by introducing COBINHOOD
COBINHOOD ICO
In a nutshell, COBINHOOD, found at cobinhood.com, is a cryptocurrency service platform that is launching the world’s first high-frequency cryptocurrency trading exchange, which will provide spot trading and margin trading with ZERO trading fees to maximize traders’ profit and market liquidity. Also, COBINHOOD will provide ICO underwriting services to solve the problem of ICO token liquidity issues. Participation in COBINHOOD’s ICO is aimed at sponsoring the COBINHOOD exchange development.
More detail about COBINHOOD is contained within this article.
Now, our top 3 considerations for ICO participation are:
- The Team
- The Product
- The Token Price
1. The Team:
For starters, the team behind an ICO is the most important factor to consider. Remember, the success or otherwise of any venture depends on the expertise and dedication of the people behind that idea. Consider this scenario: if Bill Gates today decides to launch a new business, one can be sure that investors will be interested in that business because he has a known history of running a global multi-billion dollar business empire successfully. Similarly, fraudulent people, who are intended to scam investors, will be careful not to reveal their true identities; so team appraisal is a very important consideration (probably, the most important factor) before ICO participation.
In checking out an ICO team, we consider some key points such as:
- [x] Who and who is in the team? Begin by searching for them on Linkedin and other social media.
- [x] Are their identities real or forged?
- [x] Do they have a pedigree in the field of expertise required to create the product or run a company successfully?
COBINHOOD’s Team
In the case of COBINHOOD ICO, their team seems to answer satisfactorily to the above queries. The core team members, advisors and technology team have established profiles on Linkedin.com.
As stated by them: “The COBINHOOD Technology Team consists of former employees from Google, Microsoft, Lenovo, Cheetah Mobile, Mozilla, and 17 Media. Most of them are graduates from the world’s top universities, including Stanford University, MIT, Carnegie Mellon University, and UCLA”.
Well, we are not just taking their words for it. A careful look at their Linkedin profiles reveals their real identities including their levels of education, schools attended, qualifications earned and past experiences. If need be, these details are easily verifiable, both from the schools and former colleagues.
Here are profiles of 3 key members:
CEO Popo Chen Tai –Yuan — Linkedin: https://www.linkedin.com/in/popo-chen-1737761a/
A serial entrepreneur, co-founder of 17 live streaming, which raised $10M within 3 months, with investors getting 20x return on investment within a year.
CTO Mao Pu-Chen — Linkedin: https://www.linkedin.com/in/pu-chen-mao-a77b5539/
Has previous working experience in 17.Media, Ubiquiti Networks, and other notable companies.
Advisor Huang Wei-Ning — Linkedin: https://www.linkedin.com/in/weininghaung/
Has 3 years of working experience at Google.
Here’s also a YouTube link of the CEO’s video intro of COBINHOOD:
From the foregoing, it is clear that their identities are real and not forged. Also, from their experience (which includes running successful startups, working in great tech companies like Google etc.), it is evident that they have some serious level of expertise and motivation to create the exchange product and run the company successfully.
2. The Product:
When considering an ICO’s planned product and business model, we check for things like:
- [x] The viability of the product — you wouldn’t want to sponsor an idea that is not viable, sustainable and/or worthwhile
- [x] Will the product appeal to the masses? — Apart from being viable, the product has got to appeal to the mass of crypto enthusiasts and others. In other words, it’s got to be something people will want to solve their problems.
- [x] Value addition — what value is the product perceived to add to people’s lives?
- [x] Is there a prototype, a beta version or a working version of the product? If yes, great; if no, that’s ok if other factors are satisfied.
A positive correlation between the ICO’s product and above queries will definitely give the tokens some great value with high reward possibility for contributors.
COBINHOOD’s Product
In the case COBINHOOD ICO, their product is a “zero trading fee” cryptocurrency exchange and ICO underwriting service. This product does seem to have great value.
With more people migrating from fiat-based financial system towards blockchain-based financial system, cryptocurrency trading volume has risen astronomically, necessitating increased demands for cryptocurrency trading exchanges. However, existing cryptocurrency exchanges are not able to handle these huge trading demands and, with increasingly high volume strains on their systems, problems such as the following occur:
- High Trading Fees;
- Difficulties of Real-time trading due to rate-limited trading APIs and delayed order book updates;
- Asset Security Issues;
- Shutdown without Warning;
- Limited FIAT Currencies Supported;
- Lack of Multilingual Support; and
- Slow Customer Services and KYC Process.
And for ICOs, there’s the problem of Low Liquidity of ICO Tokens as ICO tokens cannot be immediately traded in exchanges after their ICO giving rise to large bid-ask spread, which further reduces their value.
Owing to above problems, the Innovative Cryptocurrency Exchange product being launched by COBINHOOD is sure to appeal to the masses and add great value to the crypto-economy by providing many ground-breaking features and solutions such as listed below:
- ZERO Trading Fees — this is perhaps the most interesting feature as it will maximize traders’ profit and market liquidity;
- 100% Reserve Guarantee — COBINHOOD guarantees 100% reserve and will also disclose all online and offline wallet addresses for public audit, ensuring no embezzlement of traders’ funds;
- Offline Multisig Wallet Security System that will require digital signatures of 5 out of 8 administrators located in different countries to unlock and proceed;
- Crypto Assets Backed by Insurance;
- Two-Factor Authentication Enforcement;
- Distributed Order Matching Engine — the platform is built on Google Cloud Platform and is programmed with Golang (an open source programming language created at Google in 2007) for high concurrency;
- Wide Range of FIAT Currencies Supported — USD/EUR/JPY/KRW/CNY/HKD/CAD/GBP/AUD/NTD
- The Most International Cryptocurrency Exchange supporting 10 main languages, covering 98 % of the world’s population’s native language, including Chinese, Japanese, Korean, English, Russian, French, German, Spanish, Portuguese, Arabic;
- Responsive 24/7 Online Customer Services;
- User-friendly KYC Process that will usually be completed within 24 hours of customer submission.
Added to these great features and benefits, COBINHOOD already has the prototype of the exchange to be launched (visit https://trade.cobinhood.com/trade), which as per their roadmap will be fully up and running from November 2017.
The exchange website design found at https://trade.cobinhood.com/trade:
3. The Token Price:
The third consideration we suggest for participating in any ICO is the token price.
Mostly, ICO tokens are issued by startups with virtually no real working product to warrant highly priced tokens. So, ideally, ICO tokens should be priced within a reasonably low price range.
Generally, we suggest good pricing to be from around $1 downwards — the lower, the better. Very low priced tokens have more possibility of future price growth and their profit projection is immensely high. It’s like buying at the very bottom price; all you expect is for the price to grow from there.
COBINHOOD’s Token Price
For COBINHOOD, their ICO tokens (COB) is currently priced at 5200 COBs for 1 ETH. That is approximately $0.056 at current ETH price of $290.87 (as at the time of writing).
The final ICO price is 4000 COBs for 1 ETH, which is around $0.073.
Final Thoughts
Investing in startups via ICOs can be really profitable in time if the product does well and the token price rises considerably. But at the same time, it is a highly risky venture and requires considerable due diligence. Based on this article, we are of the opinion that COBINHOOD ICO is, possibly, a good buy.
However, as with any investment or spending decision, before giving out your money, be sure you take the time to check every available information about the ICO. It is our hope that this piece has proffered some useful guidelines to help in you in your ICO participation.
To find out more information about COBINHOOD and their ICO, please visit the links below:
COBINHOOD Website: https://cobinhood.com/#