How To Avoid Becoming An ICO Idiot - The Ultimate ICO Investment Advice! - Part 1
Since the meteoric and orgasmic rise of Bitcoin last summer (2017), I have had a fair few friends, family, associates, and complete strangers grill me about cryptos and in particular ICOs. I guess the reason being is that I've been into cryptocurrencies for a few years now and so I have become the crypto go-to guy for all these people.
Last night I had a conversation that lasted the best part of an hour and a half. I was telling a friend why he should steer clear of the particular crypto project that he was telling me about.
He was very excited because he'd met the people behind the project, and they had even offered him a percentage cut if he could help them raise money from their ICO. It struck me that the advice I gave him, is oft-repeated advice, and wouldn't it be good if the next time somebody asks me, I could simply point them to this article, so here we are!
Stage 1 - Defining Reality
Check Out My Huge Block!
Gone are the days when a new crypto can impress with its speed and size, the 'Check out the size of my impressive block(chain)' are well and truly over; were they ever even here?
Seriously though, if all an ICO has to offer his 8mb block size, and 14 quadrillion transactions per nanosecond, just smile politely and back away slowly (or rather quickly).
Now don't get me wrong, the graphene blockchain upon which our beloved Steemit sits, is a fast chain, with super impressive block stats, however it does not exist as a vehicle for those statistics, which brings us nicely onto our next point.
What's In A Product?
So the days of trying to impress you with the blockchain is (hopefully) over, now any decent crypto worth its salt must have a product behind it.
That's right folks, the coin itself is not the product, or at least shouldn't be.
So here's the first question you should ask yourself when trying to evaluate whether to put your hard-earned cash into an ICO or even just a crypto in general.
Does the project have a product?
Answer yes: Continue to next question.
No: Around 95% of your interest should evaporate, prepare to move onto next project.
Does the product exist now; or will it in the near future?
There are many projects out there with pending products, some are real, some will never come to fruition. So once you have established if there is a product, you need to know if it exists now.
If for whatever reason it doesn't exist yet, then you have to find out if there's a beta version, and here's the million dollar question:
Will the product launch BEFORE the crypto token sale?
This is just another way of asking if the product exists, but it's worth asking in this way, as a lot of ICOs try and pull the wool over your eyes when it comes to this. Not mentioning any names of course [cough] Synero [cough].
Stage 2 - Identifying Real World Actions
OK, so now you've established that the new WhizBang Coin has an amazing new electronic nose trimmer that is going to change the world for owners of hirsute nostrils the world over. The next question you need to ask is:
Is the success of the product in any way linked to the success of the token?
This is a very, very important question, because it's all very well and good if the company has the most amazing product in the world, however if the purchasing of that product does not effect the crypto, then it is pointless.
There are MANY CRYPTO PROJECTS LIKE THIS!
In fact I'd say most crypto projects (with a product) are like this, they show you their shiny new electric nose trimmer, which is revolutionary and amazing, it will sell millions, no billions!!!
So buy the coin right?!?!
NO!
Because they haven't demonstrated how selling every person on earth a nose trimmer will effect the price of the coin, because the profits have nothing to do with the coin.
In other words, the product can do well, while the coin tanks. The only reason anyone will buy this coin, is because they think that somehow the profits of the company will rub off on the coin, this may be the case, but is a vanity coin something you want to risk your cash on?
The Tunnel Of Yeses
This trick is often used in ICOs to make you think that real world actions are going to be linked to their token.
It goes like this, I say a bunch of things that you have to agree with, because they're true (unless you're being pig-headed), and then at the end I tag on another statement which is at best questionable, but nonetheless it gets to bask in the reflected glory of all the truthful statements that have gone before it.
These statements often come in the guise of an 80 page whitepaper.
The sun isn't a ball of ice.
Computers are running more and more of our lives.
One day there will be an artificial intelligence.
We will go to Mars at some stage in our development.
The sea is wet.
Deserts are hot.
Cryptogee is a handsome god-like figure.
The new WhizBang Coin is great.
See what I did there?
It's crude, however this is what practically EVERY SINGLE ICO is doing right now, and they are doing it a lot more subtly than demonstrated above.
You have been warned!
STAY TUNED FOR PART TWO, IN THE MEANTIME LET ME KNOW BELOW THE MOST LUDICROUS CLAIMS YOU HAVE HEARD ICO PROJECTS MAKE!
You made me spill my drink @cryptogee. Lol.
I have not really bothered with icos I dont have the money to invest in it anyways but I do a little bit of airdrop and I I have come across several that have nothing at all to give just a coin that is presently worthless.
Your advice is quite good and I will definitely take it into consideration if I ever try to expand my crypto wallet and knowledge.
Haha, don't knock it, at some age (so I've heard) , every man has to face up to the fact that he needs an electric nose trimmer :-0.
I think there are some good ones out there, and if you just use the first 2 questions, does it have a product? and is the success of the product linked to the success of the coin? Then that gets rid of 95% of them, the other 5% are worth a look.
Who knows, you may come across that $0.25 ICO that blows up to tens of dollars, maybe more.
Cg
I hope so too. Everyone is talking about Lambo and moon; I am yet to see it. That will be a good way to end the year.
Indeed it will! Try applying some of these criteria to Lambo and see if it stands up; I personally haven't heard of that one yet.
Cg
A detailed overview for analysing a crypto ICO...I know many crypto Ico enthusiasts and I might as well refer them to this particular article of yours...
Hats off to you @cryptogee
First of all i want to appreciate your work because you are putting efforts into awareness spreading post and in my opinion most of the people attract towards the words or fake face of website and that's why scams are increasing. First of all we have to go through all important aspects, mainly two aspects, and that is White paper of particular project and team behind it and research on that particular project, so that you will get proper details if this project is really have any word in the market. And the most important part is never invest what you cannot afford to lose. I don't have any experience regarding ICO's but last month i saw one new project where it was reading as the social network platform and when i browsed that website, literally reflected as the website is created by the 5th grade small kid and not only that, the funny aspect was, we have to transact BCH to perform any action every time, i was literally laughing after watching it because, i was imagining about the project idea behind it. Thanks for sharing and keep sharing the important stuff. Wishing you an great day. Stay blessed. 🙂
Haha, yes, stay away from those dodgy websites! :-)
Cg
Yes.
With ICOs you also need to be critical about their asking price. There are ICOs asking for tens of millions of dollars when they could do with less, a lot less. Some ask for reasonable amounts, others take whatever is thrown at them.
What will the team behind the ICO do if all their tokens are not sold? Will they pocket the rest of the tokens or will they burn them, making your investment more valuable?
Yes very true, to be honest I could write another four of these, but I think I've concentrated on the questions that will blow away 95% of the ICO opportunities, leaving you with a 5% that's worth scrutinising further.
Cg
Some solid advice when evaluating the potential of an ICO.I also like to look at the roadmap, the whitepaper, I check out all the team memebers linkedin pages to see if they are legit and have real experience
I also check out forums on reddit and bitcointalk to see what they have to say and try to engage with the team via linkedin, telegram, discord or email
Finally i look at their allocation is it premined allocation, what will be the circulation amount and what will be the total circulation and then finally look at the market cap they proposing to go after
To listen to the audio version of this article click on the play image.
Brought to you by @tts. If you find it useful please consider upvote this reply.
Great article, thanks for sharing. I've smashed the upvote button for you! I think there is an issue with some many ICOs that it is hard for new users to tell what is a good and what is a poor ICO. I would focus on earning tokens until you learn what you should be seeing in a good project.
I use Crowdholding to earn tokens (https://www.crowdholding.com). They are a co-creation platform were you get rewarded for giving feedback to crypto startups on the platform. You can earn Crowdholding's token as well as DeepOnion, ITT, Smartcash and many other ERC-20 tokens.
Thanks for stopping by; and thanks for that really good info, I'll be sure to check them out.
Cg
Exactly agree!
Plus us handsome (and humble) guys got to stick together! LOL
The only thing that outshines the magnificence of my handsomeness, is the magnitude of my humility! :-D
Cg
Thanks for information
This is some sound advice. We at Blockbasis would like to add that it is very important to also read the white paper. It typically has information all investors can benefit from. The roadmap is also an important part that should be given a fair read as well. All in all, just ensure that your investment is well thought through and researched.