From this article you’ll get to know about special 4Ts algorithm which will help you to choose the right ICO to invest in.
We ll begin with the description of different types of tokens which could be issued by ICO projects.
There are 4 types of tokens:
– Rights inside Blockchain
– Assets in the material world
– Rights in the material world
For cryptocurrency we know that it’s actually digital money – such as Bitcoin for example. We can tell that a coin which is called “Bitcoin” is a token for Bitcoin system.
For a token as rights inside Blockchain in this case token could be compared with a ticket or a pass to the certain system. For example such type of tokens could give you an access to the certain closed information or database.
Such tokens also could be sold at the exchange and in such a way they can play the role of digital money as well.
Speaking about tokens as assets in the material world its necessary to say that the main feature of such tokens is that they are charged upon real goods (or services) which the company is going to produce in future.
The tokens which give one the certain rights in the material world are very much alike shares. It means that if you buy such tokens when the time passes it will be possible for you to get some dividends or to sell those tokens with profit.
For the last type of tokens their issue and sale is very much alike crowdfunding. The main difference is that buying such tokens investors use cryptocurrency as a mean of payment meanwhile in crowdfunding fiat currency is mainly used.
If speaking about tokens as instrument of raising money for a start-up project it’s necessary to say that it’s not like in this situation Blockchain is always essential. Tokens are usually just sold for cryptocurrency and then they are monetized by investors again.
The main reason why ICO campaigns are so attractive for the investors is that the profit which one could get speculating tokens could be very significant.
In comparison with shares tokens have following advantages:
– Tokens could be split into parts and summarized
– Tokens are anonymous and the information about their owners isn’t kept anywhere
– Tokens could be sold much easier and quicker than shares
To understand whether it’s worth to invest into the certain ICO or not you can use the following algorithm of 4 Ts.
The team of the project is very important because highly experienced and well organized talented team is absolutely essential for the start-project to become successful
It makes sense to invest in a project only if its theme is going to be popular. The price of tokens could increase in future only if the demand will be high enough.
The main question about the technology which is used in the project is whether it really needs Blockchain or not. Now the world “Blockchain” is extremely fashionable and unfortunately its quite often used just to attract the investors. In such a way one American tea company increased the value of its shares 5 times just having changed the name of the company from The Long Island Ice Tea into Long Blockchain Corporation.
That’s about which type of token are going to be used in the project and whether you re happy with it or not. Token Report explored 226 ICOs and only 20 campaigns from them were using their tokens for the real needs of the project.
All this information as a rule could be found on the websites of ICOs. You also can get it from Whitepapers.
As a summary its necessary to say that considering rather high risk of ICOs one should be very careful choosing the right project to invest in. Hopefully the advice from this article will be helpful for you.