If you’re part of our Facebook group, then you’ve probably heard us talk about ICOs (Initial Coin Offerings). This is a relatively new phenomenon in the cryptocurrency world and a lot of people are misinformed on the topic so they decide to stay out of it all. However, if you do decide to dive into ICO investing there are a few things you should know
Getting to Know the Team and Idea
It’s important to know what you’re investing in before you invest in it. I see a lot of people buying purely on the hype that comes with the ICO and the intentions to dump the coin as soon as it hits the exchanges. This is a horrible strategy because you have no clue who or what you’re giving your money to.
So how do you get to know the team?
Usually, on the homepage before an ICO starts, there’ll be a page that explains the initial idea in simple language anyone can understand. Most of a time this page will contain a section about the team. It’ll show you who’s running the project and a little about them, usually. If the team looks good then you’re off to a good start, you can continue to the whitepaper.
Reading the Whitepaper
The real stuff lies in the whitepaper. The whitepaper is a document that contains all the technical information about the company, the idea, and the token you’re buying. It’ll explain what the funds are going toward and how they’ll be used.
Read through the whitepaper! I can’t stress this enough. I’ve seen a whitepaper that explains that the tokens that you get from the ICO are useless and can’t be used for anything. Why would anyone want to invest in that? Because they bought on the HYPE and not with KNOWLEDGE.
Avoiding ICO Scams
With all the new ICOs popping up, so do more scams. A lot of ICOs get shut down due to scams. For example, a few weeks ago InsureX’s ICO had to stop early due to a scam that was taking their user’s money.
There are a few different types of common scams going around. Phishing scams are the most popular. It’s when someone makes an exact replica of the website and posts links to it to social media sites such as Facebook, Telegram, Slack, Reddit. Usually these replica sites will have a similar domain to the legitimate one.
In order to make sure you have the correct URL, check the companies official Twitter, Facebook, Slack/Telegram and Reddit. Cross check all of those and you should be good! Just don’t click random links from random people. Be smart.
Another type of scam is one where you end up sending your money to an incorrect address. Never send your investment to a random address you receive from a Slackbot, on twitter, or on reddit (or anyone for that matter). ONLY ever send to the address you see on the official site.
If you believe in the team, have read the whitepaper and are smart enough not to fall for any scams, then you can invest in ICOs, you have my permission! If you’re unsure about something, or something seems fishy then it probably is. If it;s too good to be true, than it probably is.
At the end of the day, there’s just as mush money to be made with Bitcoin, Ether, and Litecoin so I don’t see a need to invest in EVERY ICO you see. Select a few if you want and follow them closely. If you follow the procedures outlined here, you shouldn’t be burned in a bad ICO investment.