Beginners Guide to Invest in an ICO
ICOs have become very common today. With the surge of cryptocurrencies in 2009, we have seen many applications of the same. ICOs are one aspect of it which has gained popularity owing to its inventiveness of promoting the business and helping the startups to raise funds for their business ideas. ICOs or Initial Coin Offering is a popular way of crowdfunding.
In simple words, ICO is a crowdfunding system wherein the companies receive digital currency instead of fiat currencies. The sale of the token is the main objective of an ICO.
What is an ICO?
ICO or Initial Coin Offering is defined as a period time that the investors who wish to invest in a cryptocurrency project. These investors buy tokens at a fixed price. The price is fixed to the Bitcoins but now there are other methods of payments that have emerged, payments through Ethereum and other cryptocurrencies have become an integral part of ICO. As mentioned above, ICO is a type of crowdfunding, the investors buy tokens and their investment is used by the companies to develop the project. In order to raise investment, the startups promoting cryptocurrency venture come up with whitepaper which has all the details about the project. Based on the whitepaper and the position by the startup companies, the investors make an investment in the project. In recent times, ICO has become a popular way of investment and raising fund for projects. In fact, it has become a great alternative to conventional VCs or Venture Capitalists.
The popularity of ICOs can be deciphered from the fact that in 2017, Initial Coin Offering raised around $6,073,707,934. A total of 884 Initial Coin Offering took place in 2017.
Guide to Invest in ICO
Participating in ICO
Make a thorough research on the upcoming ICOs – The first step to begun investment in ICO is to make a through reaches about the Initial Coin Offering project. Even if you know about ICO, it is always advisable to keep yourself updated about the latest development in the field. Here is how you can get complete insight about the Initial Coin Offering:
● Evaluation of the team - The team behind a particular project plays an integral role in identifying how sustainable a project is. You need to check the entire team and the advisory committee. Check their profiles on Google, LinkedIn and other professional platforms where you can get complete insight about the entire team. You will also get to know how strong the team is and how good the project is in the long run.
● Screen the stages of the project - Another key aspect of making an investment in Initial Coin Offering is to screen the stages of the project. You need to check the whitepaper, its beta version to get to know about the project and its effectiveness in the long run.
● Whitepaper Evaluation - You need to evaluate the various aspects of the whitepaper. It may sound like a tedious task but at the same time, proper evaluation of the whitepaper lets you analyze the project correctly.
● Try using Whitelist- Whitelist lets you know about the hallmark ICO projects. In order to be present in Whitelist, the ICO needs to register for participation. A Whitelist ICO is a mark that it’s a useful and sustainable project.
Which are the best websites which will give you a detailed overview of the ICO?
You can check out the following websites that will give you complete awareness and insight about the project:
● ICO Data
● ICO Rating
● CryptoSmile
● ICO Watchlist (The best one)
● Coin Schedule
● ICO Tracker
● ICO Bench
● Forums that feature ICO
● Reddit
● Slack
● Bitcoin Talk
● Twitter
Try reviewing the quality of the code- If you come from a technical background and know a little about programming then you can check the quality of the developer by looking at the code which is open source in most of the cases. By getting to know the consistency of the code you can get to know if the developer is experienced or not.
Process of Participation
Create an Exchange Account
After you have thoroughly researched about the project, you need to create an exchange account. There are many exchanges which allow users to participate. While creating an account you must be assured that it is fiat-accepting cryptocurrency exchange account. It helps in easy conversion of cryptocurrency into the currency of your choice.
Owning a Wallet for Participating In ICO
You need to have a crypto wallet where you can store cryptocurrencies. There are many crypto wallets available in the market. You need to choose the most secure one. All exchange accounts have their own wallet but it’s good not to go ahead with them as it may be a threat to the funds in your wallet since most of the exchange platforms are of the third party.
Follow the ICO Instruction
Once you have opened the wallet, you need to follow the instruction by the ICO organizers. It’s always good to join the official communication channels so that you get to know about the updates about the ICO.
Start Trading your Ethereum or Bitcoin for ICO Token
In an ICO, you can trade your Ethereum or Bitcoin for the token. You will get an equal amount of the token in exchange for your Bitcoin or Ethereum. The price of the token usually increases after the ICO.
Summary of the steps of investing in ICO:
● Do complete research about the ICO or Initial Coin Offering and shortlist the projects
● Analyze the ICO project and study its pros and cons so that you are aware of about the project.
● Create your exchange account
● Start trading with your Bitcoin or Ethereum
Conclusion
Cryptocurrencies are currently at the initial stage and it holds a huge market potential. ICOs have become very common today and at the same time, they present a great opportunity for the startups to get funds for their project. But it’s always advisable that you must invest in the right project, don’t fall prey to blandishments which the various ICOs has to offer. You must thoroughly run through the whitepaper of the cryptocurrency project is that you can reap the benefits out it.
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