Initial Coin Offering (ICO) or Initial Token Offering (ITO) is a way for an organisation to fund its work publicly. Such organisations create a token or a cryptocurrency needed for their business start-up, and they sell a portion of it to the public to begin a project.
In most cases, companies share their business model with people or investors through the whitepaper, which essentially lays out the details of the project like how the scheme will work, who is behind the project, etc.
For instance, if an investor puts money in a new project, the company offers a few bitcoins as tokens or any other offer.
As a result, people essentially purchase a cryptocurrency/ token that doesn’t necessarily do much by the time they buy it but comes backed by a team of a certain pedigree along with some detailed technical plans.
Once the marketing cycle has put the project out, and tokens have been generated, the sale can begin. These tokens are often exchanged for more established tokens like Ethereum or Modicoin.
And the developers can sell their portions of sales and fund their efforts. Using this blueprint, ICOs raised more than 20 billion USD in 2018 alone.
ICO may sound a great way for small business organisations to find funding from like-minded individuals looking for the next big thing. The problem lies when the crypto space keeps booming with new ICO companies every day, making it difficult for people to know how to invest in crypto ICOs. In this blog, we are discussing eight quality indicators to invest in Crypto ICO to avoid falling victims to any scams. Learn the basics of crypto trading to implement these tips better.
8 Tips To Invest in Crypto ICO
Check Company Whitepaper Carefully:
The first step is to purchase an ICO offering. Do a little research and track every potential ICO, including reading whitepapers.
As already discussed, ICO companies share their business models with people through whitepapers. These whitepapers are crucial for organisations as they document a business’s development plan intended for the interaction with users and current market data and company plans.
A good whitepaper should have the following:
- A problem
- A proposed solution
- List of investors, advisors, and project team members
- Product description, description of the token commercialisation
- Token issue
Once you have found a potential lead, sign up to participate.
Registration/ Sign Up for ICO:
The second step is to sign up with ICO through the official website. Signing up may require some preparation. You may also check ICO listings on sites like ICODrops, TopICOlist, ICOBech, CoinDesk, and CoinMarketCap.
Every project raising funds through an ICO has a working website. Check for project details, the money required for the project goal, and the funding duration. Different ICOs may require other registration procedures.
Additionally, be aware of the ICO campaigns that don’t require registration.
Get a Wallet:
Investors will require one or two significant cryptos in possession to participate in any ICO. The minimum amount investors can spend on a specific ICO is usually stated in the whitepaper.
How to Open Wallets?
- Official website: Go to the official website with secure SSL. This wallet will store all your tokens, information, public key information etc.
- Create a strong password: Choose a password and download the Keystore file. Save the private key.
- Unlock wallet: Choose the medium to access your wallet and unlock it. View the wallet info.
Move the Wallet You Control:
Investors need to set aside funds for payment. So when you are ready to put some money up, you will need to have either fiat currency like dollars or some other cryptocurrency for exchange. Typically, either Bitcoin or Ethereum are considered to be more established cryptos.
You might also need to have additional crypto in digital wallets. Consider moving tokens to a software wallet to protect passwords. You may also invest in a hardware wallet for extra security.
Buy ICO Token:
After registering and preparing funds, the trader needs to send crypto to the required address of the campaign.
Before joining ICO, make sure the address is correct.
For this purpose, sign up with the ICO company. Get the company’s address for payment. Copy the address, read the minimum rate as mentioned. Fill the address where tokens need to be sent, fill the token amount, fill Gas limit, and click generate a transaction.
The information then gets broadcast to the blockchain network.
Make the Exchange:
In simple words, execute the trade or send the coins. The details like minimum coins to be sent should be mentioned in the whitepaper or just below the spaces in the form of guidelines.
Participate in ICO by Emailing Crypto to the Address:
The fundamental goal of every ICO is to get money. For that reason, check the website address several times so that funds go to genuine companies. Also, make sure to check the wallet address of the project.
Get ICO Tokens to the Address:
Traders will get newly purchased tokens at the wallet address mentioned. Depending on the project, the token may take weeks to arrive.
Investing in ICOs is a profitable venture. However, the plethora of ICO companies emerging in the market makes it difficult for investors to differentiate fake companies from genuine companies. This brings more significant risks for all potential investors.
But the above tips mentioned above can prove helpful for investors in understanding how crypto ICO investment works.
If you are ready to start building your crypto portfolio with ICOs, using the above guidelines as a starting point.