Two Things to Remember when Choosing an ICO

Two Things to Remember when Choosing an ICO

As you are most likely aware, ICO is a method of procuring funds for the blockchain projects to develop new services.

① Investors purchase virtual currency such as Bitcoin and Ethereum, then use these cryptocurrencies to purchase project-specific tokens in an ICO.
* The cryptocurrency of choice is decided by the project.

② Investors receive their tokens from the project according to the investment amount.

③ Project tokens can then be sold on an exchange and be traded for BTC, ETH, legal tender, or other altcoins.

ICO have been garnering attention due to the potential extreme market gains.
Ethereum, for example, started an ICO on July 22, 2014 with a public offering price of 0.311 USD/1 ETH. By June 13, 2017, that price had skyrocketed 1250 times to to about 390.00 USD/1 ETH.

However, since ICO is not legally regulated, there have been numerous examples of fraudulent ICO. Investors should keep their wits about them, lest they be manipulated into funding in shady projects.

1)Know the Goals of the ICO and Educate Yourself


Laws concerning ICOs in each country are not well regulated. A committee from the People’s Bank of China (PBoC), released a statement warning that ICOs are “financial fraud and pyramid schemes.”

Original text: http: //www.pbc.gov.cn/goutongjiaoliu/113456/113469/3374222/index.html

There should be a clear roadmap of the project’s’ goals and it is the responsibility of prospective buyers to sufficiently research each enterprise. When investors consider investing in ICO, they should know the purpose and business outline, rather than focusing too heavily on potential profits.

2)Read the White Paper


Every ICO releases a white paper outlining the goals of the project. These can usually be downloaded from the official website of the project or from GitHub. By reading the white paper, future holders (investors) know how tokens can be used, what the developers plan on doing with funds, and the goal of the project.

It is absolutely necessary for investors to research the project before investing blindly. Not doing so could have severe financial repercussions.

Investments should only proceed after confirming and examining the vital information such as white papers and development plans.

Summary

In August 2017, Chinese authorities have completely banned ICO. ICO are unique in that projects are able to raise ludicrous amounts of money, and investors may see a large return on investments, but the vision of the business side is also important, regarding what the project behind the ICO wants to accomplish. Participating in the ICO without understanding this information is little more than throwing money as a mere speculation.
There are ICO cases where you one can expect a big return, but in many cases are high risk/high return. Understanding the core info for each ICO is indispensable,. Investors need to weigh the pros and cons of purchasing in an ICO before making any rash decisions.