In the last few months, in case you have been focusing on the Fintech sector, it is possible that you have come across the term ‘ICO’ which is sometimes used. Today, blockchains start-ups have collected more than $3.5 billion through this upcoming fundraising method. But, what do they entail? And why do we need to focus on them? In precise terms, an ICO or Initial Coin Offering is a mode of fundraising where new projects trade their first crypto tokens to get advance capital. It is many times compared to the Initial Public Offering or IPO which is more conventional, and ICOs democratize the procedure of fundraising, working as a crowd-funding tool that can be levered at the degree. This trend is relatively new, but these token sales are increasing fast, enabling a worldwide pool of investors to sponsor the upcoming generation of firms. ICOs’ major issue as they get the attention of the public is that they are not regulated. Some limitations to entry exist for any person who wants to form a white paper, create a plain landing page and begin raising funds through a digital wallet.
Fake Initial Coin Offering Phenomenon
Some fake ‘entrepreneurs’ are there, who are misusing the system. Due to this, it can be tough as an investor to single them out from the many. But, there are a lot of prospects for ICOs to support ambitious ventures which will fundamentally alter our growing economy.
Below are five signs to check before you invest in any ICO
1. Assess the team and their history
Firms that are determined to carry out a token offering will not be worried about making their real identities public. Usually, it is an alarming sign if a project lacks to indicate specific data regarding their founding investors, advisors, and team.
It is likely that if the firm is concealing something from you, it is possible that they are hiding something unpleasant.
Projects such as UbiquiCoin are different; it is a ‘two-coin’ blockchain ecosystem that gives precise specifications of their launching narrative as well as the team.
They can portray many years of experience in their sector. Where UbiquiCoin is concerned, these skills add up to more than 100 years of accumulated experience. It does not just ascertain authenticity but also works as a distinguishing element and competitive edge in the long term.
2. Get a community that is robust and successful
Another crucial part of any blockchain venture is the community’s quality. In a crowdfunding environment that is competitive, firms should not only understand their clients but also establish a robust and dynamic presence among them.
Coin offerings that thrive the most host very active forums, blogs, and events, giving the community a say regarding the firm’s decision making. Also, you can control these channels of communication to raise queries, relate with other investors who are keen and gain more knowledge on the project’s technical details. Mainly, it is a negative indication for blockchain ventures when their community is silent and unoccupied.
3. Search for social confirmation and validation
It may not be everything, but, it is usually useful to check whether firms have a kind of social proof of user validation. Companies such as Cointal, which is a top peer-to-peer marketplace for the cryptocurrency, that presents very many active users, publish press pieces and reviews which show their product quality.
Their unity service that facilitates the immediate changing of currencies by users using a variety of things such as ACH transfers and credit cards has attained maximum focus from the space already.
In the past couple of months, in trading volume, Cointal has processed more than $15 million, offering additional social verification. It is a good sign that the team can get support from the more significant blockchain community.
4. Obtain technical details and a product plan
Any imaginative designer can produce some concepts and create a sophisticated landing page, but it requires a real technologist to actually create a technical plan for a product. Many projects, if not all have a white paper that the public can access, which gives details of how they shall create the product and when.
When you study this implementation strategy, you need to know when a project makes unfeasible declarations regarding the practicability of their plan. Also, if the idea does not have any technical basis or particular feature-sets, it is likely that the team is in the beginning stage of the procedure and cannot pick any vital backing, to begin with.
Another aspect to note and analyze for advancement is the blockchain project codebase. You should at least aim to ensure that the team has started to create repositories to keep their code. If it is empty, this is not a good indication.
5. Carry out your separate research
Since you are a learned investor, you have a role in carrying out comprehensive, independent study before investing capital. In the current society where each person and members of their family are making believe that they are authorized professionals, it can be very challenging to know whom to trust.
In summary, you need always to make independent decisions, eliminating the loud opinions of salespeople and marketers who want you to back their interests. Focus on glaring prejudices from creators and writers who have their secret personal goals. It is extremely easy to get involved in a scam if you are not aware of what you seek. Therefore, at all times, be observant when dealing with any offering.