As compared to existing forms of investment, ICOs too is risky sometimes. On the other hand, not every investment becomes the next huge thing. However, this does not imply all risks are worth taking; also nobody ever claims of how their careless risks made them earn millions. I personally love to follow Warren Buffet’s suggestions on how to pick stocks.
The amount of advertisement and what kind of publicity the ICO is getting is an initial step in determining if the project is worth it. The amount of advertisement alone cannot tell this much: Few companies are absolutely sure of the product, Few are careful and do things slowly. All the things are similar, ICO with a lesser amount of advertising tend to have a reliable record.
Details on the Event
People should not assume what is going to happen during the event. Because of this you should have faith in ICOs where the directions to participate are meticulous. Tezos is a fine illustration of this case in my view. ICO had several ways to participate, had precise directions and illustrations.
Aggressivity of ICO
Legitimate ICOs are usually concerned about selling too many coins, which is a basic pattern. The ICOs take various steps to sell them. Moreover, when they perform all actions with the intention of selling as many coins as possible, in case they have not spent a lot of time in making the plan. This is frequently reflected in the ICO that have a cap. A huge number of coins are traded during launch.However, there are few valid reasons for not having a cap. If you do not discover them and they are not trying to convince you, it is better to stay away.
Few founders are visionaries, but always remember that they will always play with your money. Setting few expectations just after the launch of an ICO is really a sign of a start-up. If the purpose of the coin is to become recognized currency based on country, it is your duty to evaluate twice.
Who is behind the ICO?
This is truly the first rule successful investors use to select stocks, including Warren Buffet. So, The concept goes like that: everything begins from the top and flows down; hence, great leadership gives greater possibilities for progress. The similar law can be applied while investing in an ICO too as the purpose of an ICO is to just support a project.
The main members will be completely responsible for the most significant roles in the company, and hence will decide its success. Moreover, you should try investing with leaders who were previously successful ICOs.
Is the investment secure?
This question somehow lets you avoid scammers but also seeks an answer to the protection of investors’ funds. Moreover, The DAO is especially a great illustration of this, where hackers succeeded to steal $60 million worth of ether tokens. In such a case, the company was capable of overcoming frequently all the lost tokens, but others have totally lost their investors’ stocks. To stop this, check whether the company has designated a part of the funding to cold storage, in case of emergencies and to recover losses. Moreover, the SEC has asked all ICOs to keep some of the stocks as security for the investors.
What are the details of the ICO’s whitepaper?
Other small features of the ICO will be stated in the whitepaper. However you might not read through the whole document, you may wish to examine the main details like whether there is a strong or unlimited cap. With the Bancor ICO, like, it has an unlimited cap, however, it raised about $150 million, the investors were not benefited. It largely depends on supply and demand here, and the object loses significance if it has an infinite supply.
Other factors to consider
Beyond these questions you must to ask yourself, you should also consider why you are investing initially. If your aim is making a long-term investment, then ensure the company is having a real vision and a project which is difficult to copy. Moreover, if you just desire some immediate returns, look for those ICOs with the largest interest. Then always look at the laws ruling ICOs in the country where they are held. Few countries may require investors pay taxes from their profits, while others have totally condemned ICOs. Just to be on the safer side, make sure you know all the details ICOs in the region.