If you are reading this article is because you want to know which things are important when analyzing an Initial Coin Offering (ICO). It is very important to be careful and take the necessary time in order to distinguish whether it is worth or not to invest in an ICO.
Problem and Solution
In general, ICOs tend to mark a current problem of a certain industry and try to offer solutions to it. The first point you need to take into account is whether the problem is affecting several enterprises and individuals or lots of them. This will give you an idea about the magnitude of the problem. Is it a worldwide problem? Is this problem affecting several industries across different countries?
Once you have answered these questions, the next step is to see the solution proposed. The solution must be clear, simple to understand and put it in practise. If the solution proposed takes a really long period of time to be carried out, then it is for sure that the problem is to complex to solve or the solution too inefficient.
The team is a key factor for the Initial Coin Offering to be successful. The team is a good tool that will help you measure the possibilities of success of a given ICO.
You can start by checking if the team is real. Yes, you may find ICOs that have fake team members just to let you think that they have important support from recognised people.
If they have a proper LinkedIn profile (or similar), a clear presentation of themselves, and a good picture, then this is a good start.
Once you have taken a look at it, you should analyze the experience that the team has. If the team has more than 20 years of experience, then the team may be suitable for the task compared to one that has just 5 years of experience.
Check if the fields in which they have worked are helpful for the ICO. If the most important members have little or no experience in the matter, then this may be a warning signal. In general, good teams are conformed by experts in the fields necessary for the ICO to succeed.
But be careful, nothing is granted. These are investments that may not prosper in the future, even when the team is the best. The team may be great, but some projects just fail while others with individuals with no experience may success as well.
You are deciding to invest in an ICO and you have already checked the team and the problem and solutions proposed.
If the solution involves the creation of a platform, then you need to see whether the platform has been already created or not, if it is being developed or how long it will take to have shape.
Most of the ICOs in the market may have something built as a “demo.” The intention is to show that the team is working in a project that has real world applications and that it is possible to achieve.
If the platform has already been built and there are some other topics to be solved with the ICO, you can check if it had a good performance or not, if there were some complaints, etc.
If the ICO has not even started the platform, but it says that soon it may be available, it is a good opportunity to check the timing of the team. If the ICO is able to deliver on time a good demo or first impressions of the platform, then this is a plus for the ICO.
The roadmap is another important tool that the ICO gives to investors for them to decide whether the project can be a good investment or not. First of all, is there a clear roadmap? The roadmap must be easily shown and explained, in the website or in the white paper.
If there is a white paper in the website and another one in the white paper, I would recommend you to check if they have the same information. If they have different data, that means that the ICO does not have a clear road to follow, or they forgot to update it.
Besides that, the roadmap can give investors an idea of how long the project will take to be built. If the roadmap shows that the project may take 10 years, then, is it worth to wait ten years? Are you planning your investment for the next 10, 5 or 2 years? That will help you find the correct ICO for your own needs.
Have you ever seen ICOs with more than 20% of the tokens distributed among the team and advisors? Well, that’s not a good sign. Every $100 dollars that you are spending, $20 or more are going to the team and advisors. If you feel comfortable giving 20% of your investment to the team, then go ahead and invest in this ICO. But I do not think that’s the best idea.
Most of the successful ICOs tend to distribute between 12% and 17% of the tokens to the team and advisors. Some members of the team members may not be necessary interested in earning an excessive amount of money.
Additionally, it is important to analyse the number of tokens that will be available for the public. A good number should be between 60% and 70% of the total supply of tokens.
Price of the Token and Supply
“Buying in the pre-sale you pay $0.1 per coin!” That may sound interesting, but have you ever calculated the total market capitalization of the token?
If the token is being sold for $0.1 and there is a total supply of 2.000.000.000, that means that the token will have $200.000.000 market capitalization. That’s a lot of money. Do you think that this token has a lot of market to grow with such an initial market capitalization?
Tokens that have a smaller market capitalization, tend to grow more in the future, its price it is just simple undervalued and your tokens will be worth much more later. But if it has a high market capitalization, lots of investors may be thinking about selling their tokens and buy at a lower price later.
This is very important for individuals that want to place their investments in an ICO. The White paper is the backbone of the ICO. It is the way it presents itself to interested investors. The white paper must be clear, well written, not very long (400 pages), but neither too short (3 pages). It must have the roadmap, the explanation of the problem and how it plans to solve it, the technical aspects of the ICO, the main members of the team behind the project, the token distribution and allocation of funds, and all the important information that you are searching for.
Some ICOs tend to divide the technical white paper from the original white paper. And some of them present a short summary page in addition to the white paper, with the most important things of the ICO.
The different points mentioned here are for investors that are trying to invest in ICOs and do not know how to do it or which points take into account when comparing them. The article provides information about what to take into account when analysing ICOs. The most important things are the roadmap, the white paper, the token supply and the price of the tokens, the token distribution, the platform, the problem and the solution, and finally, the team.
Don’t forget to give us your thoughts, it is very important for us to improve our articles by reading your opinions. Do you think that the guide provides good information for investing in ICOs?
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