All the ICOs over the past 4 years in 1 chart
Here is a closer look at the end charts
What are Initial Coin Offerings ( ICO ) ?
Let me try to place its in a very layman term. When a crypto startup wants to raise money, they will create a plan and write it down on a Whitepaper which includes mostly
- Details of the projects
- Who the team members are
- How much is intended to be raised
- How is the distribution of the coins raised
- What are the timelines which also includes how long the ICO campaign would run
It has similarities of a IPO ( Initial Public Offering ) however due to crypto being decentralized, there is no securities commision which would audit the ICO and the Team behind it however its more of individuals doing their own research and decide how much they believe in that project or team.
What are the difference of COINs and TOKENs
COINS
In a simple explanation , COINS are different species of animals. Example Chicken, Cows, Fish and Cats.
Every animal has its own distinct DNA which determine what class it belongs to. So COINs are just like that. The photo to the right show the TOP 18 COINS where STEEM is one of those coins.
TOKENS
Now TOKENS on the other hand are like templates. For example you are using Powerpoint and want a specific design in your presentation. You just load up a Template and use it. It may look different however the backend still runs on Powerpoint.
So why people invest in ICOs ?
Here are just 3 reasons why some people invest in ICOs
Make 100x - 500x upon launch
Now previously if you invested in almost any ICOs you stand to make instant profit when the ICOs launches. If you look at the top of the post, you can see how many ICOs has appeared in just over these past few months. It literally exploded.I believe in the project
It could be some really great initiative which you strongly believe in, for example an ICO which can cure world hunger !I believe in the team
Sometimes, its because of the very strong team with extremely good track record which makes it almost a sure bet to invest in their ICOs.
I am sure you would not want to see that in an ICO which you have invested your precious BTC / ETH into.
How to avoid being caught in a ICO Scam ?
Its all about the TEAM !
Make sure you do a background check on the TEAM behind it. Every genuine ICOs will list out all their TEAM members and also in most cases the Social Media Profile Link . This is to proof that they really exist and also having a reference helps.
To further validate that its a real ICO, there normally is a video with their faces on it. I've come across ICO's which has their TEAM Members conveniently taken from ShutterStock !Does the Project Makes Sense ?
Some WhitePaper just pulls in a lot of jargon to further confuse you in what the real objectives are. So make sure that the project makes sense, else why bother wasting your BTC on something you don't understand. Remember , these WHITEPAPERs are mostly just outsourced to write and not written by the TEAM . Here is Proof !
Affiliate Fee ???
The ICOs which I've successfully participated in were those which never gave out any Affiliate Fees. If you see an ICO which gives out Affiliate Fees .... please ... run away from it. A true Team / Startup requires the fundings to actually get the project started. By Paying any affiliate fees, they are just shooting themselves in the foot.BITCOIN TALK !
Register yourself an account on http://bitcointalk.org , you will get all the information about the ICO there. You will see expert opinions and also you are able to judge how knowledgeable the stakeholders are . If the coin can't be found on BitcoinTalk .. then run away from it.Research , Research , Research
Depending on how much you want to invest would determine how much you should research the ICO. If its a merely few dollars of BTC, by all means go ahead and invest. However if its a double digit percentage of your total crypto assets ... I do believe you should take priority in researching and ensuring you know the ICO well.
Summary
- Do not invest in ICOs
Just wait for it to launch ... do the price spike then fall all the way down then you buy in the dip - Invest what you can afford to loose
I never suggest placing your fiat to invest in an ICO. The risk is just too high as its decentralized and the company could easily just transfer the raised amount to another account and you will not see it ever again. Invest only if you have spare crypto which is currently not doing anything
Hope these tips helps you understand ICOs better and why you be very diligent with your investments.
