Initial coin offering (ICO ) has become very popular these days within the crypto community with many ICOs popping up in their numbers every day. Many seasoned investors and newbies alike are usually attracted to ICOs as a way of making huge quick profits. While it is true that when you choose the right investment, you will probably be on your way to hitting a jackpot, unfortunately, some of the bad players have capitalized on people’s enthusiasm about ICO to rip investors off. Many of the ICOs are simply a money grabbing schemes by companies who see ICO as a way to raise cheap funds as their service or product may not even be blockchain related. Some other ICOs are simply scams designed to steal from newbie investors. It behooves on you as an ICO investor to do proper due diligence before throwing your hard earned money into any project.
We have put together 10 of the most important things that will enhance your ability to evaluate any ICO project properly before jumping in.
1. The idea needs to be viable and solve a real problem. It has to be a proper use case for blockchain, not just some shitty idea that did not work in the past, and now all of a sudden looks good by adding ‘blockchain’ to it.
2. The team needs to be large and experienced enough to be able to execute on the vision stated in the project’s whitepaper. They need to be listed on LinkedIn profiles that prove their experience and link to the project. Less than 4 team members is a red flag, 8 is average, above is good.
3. Project advisors need to be senior enough to have a positive impact on the project. They need to be listed on LinkedIn profiles that prove their experience and connection to the project. Advisor profiles with less than ‘+500’ connections listed on LinkedIn are a red flag for me.
4. Market cap should be as low as possible, but large enough to make the product viable and not be a money grabbing scam. Huge market caps are a turnoff for me, as they provide little investment incentive.
5. Community support/Hype – Count Telegram users and specific sub-Reddit subscribers as well as comments on the bitcointalk.org about the project. Twitter & Facebook do not count, they’re usually a metric for bounties. 1k is low, 2k average, more than 3k project has hype, and it increases from there.
6. A working product is always a super big plus, but some ideas are just too new and novel, so an exceptionally detailed and easy to understand whitepaper can be just as good.
7. Road-map – is it realistic or too ambitious/drawn out? Super bonus points if a roadmap that has started several years ago.
8. Competition – what other products are there in this space already, how did they do investment-wise, and how is this one better?
9. Token sale – 50% of tokens sold is the norm, less is yellow/red flag, more is better
10. Marketing – hiring marketing professionals show that the project team is willing to spend money on this because they trust in their product, this is a big plus. At the opposite spectrum, bounty programs for all the ‘reserved’ guys on bitcointalk forums indicate a money grab.
Next time you invest in ICO, do well to evaluate them against these aforementioned metric and you will be happy you did.
Disclaimer: The contents of this article are the author’s opinion only. All examples, ideas, methods, stories, and images are for illustrative purposes only. Before trying any method or any idea, please make sure you check all the terms of service and make sure you are in compliance. Whilst the information provided comes from my personal case study of following the same information, I assume no responsibility for anything from anyone who decides to follow this.
This article does not guarantee earnings potential in any way shape or form. The sole purpose of this article is for educational and informational purpose only and not a financial advice.
Israel Martins is a cryptocurrency researcher and trader since 2016, passionate about blockchain and other emerging technologies.