Initial Coin Offerings, or ICOs, are about creating crypto coins for new cryptocurrencies, and they have become a popular method for startups to raise funds and for investors to become part of ventures that seem likely to give them a return.
In an ICO, the company running the offering keeps a certain percentage for its needs, like paying private investors and capital costs, while the remaining percentage is sold to participants in the ICO. Participants may invest because they like the application of the coin, or the concept behind it, or the community around it; they may have read the launch whitepaper, or simply be looking for the next big investment in cryptocurrency.
Of course, any economic venture comes with risks. It is important to be well-informed before you make any investment, and to remember that investments can go down as well as up; if you’re unsure, seek professional investing advice. However, there are a few things to think about as you think about investing in an ICO, and data can be a solid and reliable guide to the things you need to know. Here are a few tips for using data to make a decision about whether to invest in an ICO.
Check for Verifiable Success Stories
Projects that have succeeded in the past are a good indicator of future success. The only problem is that ICO is relatively new, which means you need to do some digging. The good thing is that the projects do not have to be related to cryptocurrency for you to determine future success. Look at the members of the core ICO team and their background, to see their experience and skills, and whether they have a history of verifiable successes that can motivate your decision to invest.
Know the Partners of the Company
Check the company’s leaders and core team: how much you trust the company should be directly proportional to how much trust you have in those behind the project. You can easily find this information when you visit the website of the company, by using LinkedIn, and by searching for online presence in forums and on social media. You need to know this data before investing in an ICO. If you can’t find any of this information anywhere, then you may be better off not investing.
Test the Technology for Yourself
If you invest in an ICO that is offering you nothing but an idea, you may be opening yourself up to a significant amount of risk. By looking at the proof of concept behind the coin, and testing the technology to see if it functions as intended, you can get a good idea of whether the fundamentals are sound.
Give the white paper a thorough read
A white paper contains all the information you need about the ICO and future projects. You need to read it thoroughly. This is invaluable information served to you on a silver platter, allowing you to know what you are investing in and what value it brings to the world.
Purchase a Couple of Tokens for Inspection
This one is very important when it comes to what data to look for before investing in an ICO. It will make sure you are protected in case the company’s ICO site has been hacked. Hackers can easily switch your wallet number with theirs, so you have to make at least two transactions and make sure the wallet numbers match every time.