Criteria: How To Judge A Good Initial Coin Offering
As rudimentary and simple as you might think it would be, many investors continue to overlook key points that they ought to be watching out for prior to placing bets on the increasing amount of projects provided by the crypto scene. An investor ought to use a set of distinct parameters to watch out for before he or she considers investing resources into a risky proposition like this, regardless of the size or scale of that investment.
The following paragraphs cover a number of the essential factors with which you should assess an ICO, or initial coin offering. Neglecting any of them might mean you suffer substantial financial losses. This new crypto based and crypto centralized world has become one of the top ways to raise funds for visionary business plans, its also best to stay informed on how to not get burned.
# 1-The Team
Credibility is something that matters more than you think with an ICO. Who is behind the project? What sort of profiles do they have? Their track records, and those of any organizations or individuals associated with the project, will speak volumes as to the caliber of the undertaking.
Ever heard of Warren Buffett? Sure you have. The billionaire investor says that what he invests in are managers and leaders, not the actual businesses or companies for which they work. A highly intelligent team might make you into a millionaire, but a poor team is one that will take you to the cleaners.
#2 – The Whitepaper
The whitepaper says a lot, from specific crucial points and how they are articulated all the way down to the design of the logo. It should all add up to being simple enough for the layman to understand it, so that anyone can have some inkling to the team’s actual commitment to their project from the very get-go.
# 3 – Their Coin Supply
How large is their total available coin supply? How much will get diluted by the senior investors and the founders? What’s the inflation rate looking like? Look at the founders’ tokens: do they vest immediately or is after a set time period? All these are crucial questions since they can impact a currency success quite substantially. Good answers will boost investor confidence. One of the many reasons that could be behind Ethereum’s success is that the founders are vested for three years.
Many investors also use such information in order to compute the scale of return they’ll get on their investment.
#4 – What’s Their Roadmap?
How specifically does the team plan on implementing their project? They need a realistic timeline that’s consistent with their whitepapers and presented plans. After they hit their starting goals, what’s next for them?
Do they offer a vision for the future? Are they anticipating future problems or possibilities enough? In some cases, investors like to overlook particular facets of startup operations and just get fixated on what’s going on with cryptocurrency exchanges. That’s likely to change as more people ask questions about ICOs and the newer projects bring better ideas to the table.
#5 – The Use Case of Their Token
This one should be a no-brainer and more important than anything else. Investors need to know just what the product is supposed to do and what the potential is for its popularity.
Tokens have zero value if no one wants them, regardless of how great a team behind it might be or how exquisite the design is. So, investors need to have clarity about what a project is really all about. It’s rather sad that some investors ask such basic questions in various group chats, after the ICO already happened.
In a lot of cases, how the particular project decides to communicate, both externally and internally, when it is finally fully operational is going to be indicated by its communications prior to its ICO. Some investors make complaints of less communicating after an ICO in terms of both marketing or team updates, but the clues were usually there for a while already.
Some teams are actually starting to use celebrities to give their marketing campaigns an edge, but investors need to figure out if it’s just an act or if the team is actually getting needed attention from it.
Many other distinct factors are out there for you to consider, contingent upon your own investing style and personal priorities. The factors and questions posted here aren’t an exhaustive list, but they’re a great starting point. All investors need to do their due diligence prior to investing actual money into anything.
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