On the one hand ICO is not regulated by any official laws which makes the certain risks higher. On the other its free from any kind of red tape and restrictions.
Investing in ICO is quite a high-risk — more so than traditional startup investing — but is motivated largely by the potential explosive growth in the value of tokens issued by start-up projects.
So how to spot and pick the right ICO? Here are some tips.
1)Transparent and successful team.
If the team of the project consists of experienced and well-educated members who is quite candid and who produced other successful projects its definitely a good sign. On the contrary if the members of the team try to stay anonymous then such ICO is more likely to be scam.
2)The product (technology, service) which they are going to produce should meet consumer needs.
The product or service they offer must address a real need area and use revolutionary solutions. Look for those projects which target product (service, technology) will meet consumer needs.
3)White paper should be of high quality
A white paper should be well-written and substantial enough to provide compelling arguments on why people should trust the venture with their investments.
Nitpicking about such details as the figures and citations also could be helpful. If the concept of the project isn’t based on any academic resources and they tend to cite sensationalist media instead of subject-matter experts it can be a red flag to the accuracy of facts which are presented.
4)The stage of the project is also important
ICOs that offer nothing more than an idea bear significant risk compared to ventures that have proofs of concept already available for evaluation and testing.
5)Mining should not be advertised up front
If you see a lot of adds devoted to mining on ICO website its usually a red flag. It means that ICO project doesn’t have any other significant features that could drag in the investors.
6)Evaluate market capitalization.
When investing in any asset it is important to estimate its current market capitalization. Put this another way if you are going to invest in the asset that will produce long term increase of use for certain market, it needs to be as under priced and under capitalized as possible. In this case you as investor are entering at best possible price. If market capitalization is way above the actual real use of market it very often leads to strong price drop.
Here we offered some tips to pick the right ICO. But anyway it shoud be taken into consideration that its not like all the successful projects meet all these requirements. And on the contrary – if the project meets them it isn’t guaranteed that its successful. So the choice is yours!