The growing trend of cryptocurrencies all over the world has created a drastic change in how people carry their business activities nowadays. These cryptocurrencies are slowly taking over almost every industry in this world. IT Companies, banking firms and even the Government of almost every firm are working towards the creation of their own cryptocurrency. Started with Bitcoin, now there are so many cryptocurrencies being introduced every day. According to Forbes, 2018 will see many cryptocurrencies double in value.
With the growing trend of digital currency all over the world, small investors and people who were never involved in the conventional way of investing, are now buying coins and tokens while sitting at home. This is because they can see a good return on investment.
One of the best ways of purchasing cryptocurrency is by investing in blockchain companies and startups through Initial Coin Offerings. Initial Coin Offerings is a method through which blockchain companies and startups are able to raise their funds. The idea is to attract investors and convince them to fund their project and in exchange receive their cryptocurrency in the form of coins and tokens which will achieve a great amount of value once the project succeeds. In order to buy an ICO, all you need is a cryptocurrency and a cryptocurrency wallet.
Tips for finding the best Initial Coin Offerings are:
- Analyze the Whitepaper
The first and the most essential tip to investing in the best Initial Coin Offering is to thoroughly go through the whitepaper of the coin or token you are investing in. A whitepaper is the official written document presented by the blockchain company to its potential investors. It will include all the major details about the company, coin or token and important information for the Initial Coin Offering investors.
- An investor must never ignore reading the whitepaper before investing in the ICO.
- Since it is a big investment and the investor expects to double, triple or quadruple his return on investment, he should know everything about the startup he is investing in.
- The whitepaper is the key factor on which big investors spend their money to support a project. The whitepaper contains information about the project, the future of their blockchain company and they plan to do with the coins or tokens introduced. The better the whitepaper, the better the investment.
- Get to know the project developers
Always remember, while you are investing in an idea, you are basically putting your trust and investing your hard earned money into the human resources involved in creating the idea. It is extremely crucial to understand the people who are working on the project you are investing in. It is one thing to read about the project on paper and another to understand the project idea from the people who are the most passionate about it. The people who have created it is the ones who can make an investor understand what the vision and mission of the blockchain company are.
If you are lucky enough to get in touch with the team behind the project, set up a meeting and have a discussion about the project from their point of view. Most of us can’t do that. Therefore the best way to get to know the people behind the project is to do a great amount of research before investing. If you feel that the team involved is not really qualified or don’t seem suitable enough, then it is definitely not the right fit.
- Unlimited or hard cap?
Blockchain companies usually ask their investors to either fund an unlimited/open cap or through a hard cap. In an unlimited cap, the idea is to keep funding the blockchain company as per their needs. When an investor keeps investing endlessly in an Initial Coin Offering, then they keep getting the desired cryptocurrency in return. When there is a huge supply of these coins or tokens in the market, its demand decreases. This means if a very large amount of people end up investing in one Initial Coin Offering, then the return on investment for the investors will not be great.
On the other side, there are Initial Coin Offerings that take funds on a hard cap. This means whenever the project hits off, the number of coins or tokens in the market would be less and the profit earned on them will be high due to increased demand. A hard cap is mostly a safe option but not all open caps don’t work. You should be careful about the fact that not a very huge amount of people should’ve invested in the ICO. Also, it should not be the case that you’re the only one who is investing.
- Long-term use of tokens purchased
One of the most important factors to keep in mind while investing in Initial Coin Offering is to understand the long-term benefits of the coins or tokens received in exchange for the funding you provided. Mostly, when the coins or tokens you get after investing in ICO, the main benefit you get is that you can sell those coins at a higher price later to achieve a good return on investment. However, it is advised to invest in an Initial Coin Offering that provides a lot more than just a higher resale price.
Initial Coin Offerings are just as risky as any other traditional means of investment. This is the reason why there are chances that maybe the token or coin you invested in will not gain a great value and hence there is not a great return on investment. A blockchain company must offer way more than just a resale value of your tokens or coins.
- Understand the vision of the project you’re investing in
Companies that have a well-planned roadmap to a brighter future for their blockchain company are the ones that have decided the vision for their company. As an investor it is your duty o understand that vision and analyze whether you are the right investor for this vision. Usually, the companies that have a full plan laid out in front of them for the future are mostly the ones to succeed the most. The companies that are short-sighted are not usually the best companies to invest in because this will lead to only short-term profits and that will not be a great return on investment for the future.
- Fund Transparency
It is always safe to invest in blockchain companies that are very transparent on how they will be using your funds which they took via Initial Coin Offering. Since you are investing in the ICO of a blockchain company with your hard earned money, it is only fair that you know where it is being used. Blockchain startups even share the small factors like what percentage of your funds will be used for marketing, research, and development, future investments, employees and more. When you know the important information on how the funds are going to be utilized, you will be able to make better calculations as to how much return on investment the investor might receive.
- Internet Research
The essential tip to investing in the best of Initial Coin Offerings and the most successful blockchain companies and startups is to endless research on the internet before really investing. Understanding the backgrounds, present situation, current value, past value, future value, listing on the exchange or not, future investments of the Initial Coin Offering companies are only a few factors to look for in a potential investing company.
The internet is full of reviews and opinions and experience about their cryptocurrency’s position in the market. Read what people have to say regarding the investment you are going to make as per their experiences. In order to understand the analysis of the ICOs and also to have a look at the most trending ICO tokens in the market, check https://www.icotokennews.com/. This website is great for understanding ICO tokens even for beginners.
Some important notes
- Investing in Initial Coin Offerings is definitely tricky, but once done correctly can make you a millionaire in a very short span.
- Big blockchain companies have grown tremendously which has increased the value of their respective cryptocurrency that is their coins and tokens by 5000%.
- Startups that just had an idea at the beginning of their business are now worth millions of dollars.
The new trend of investing in Initial Coin Offerings instead of the conventional and traditional methods of investments has become very popular and is taking over the entire world. The above-mentioned tips are a guide for investors who are beginners to this new technology shift in the investment business. Big companies are also creating projects to create their own cryptocurrencies. This just shows how Initial Coin Offerings are taking over the investment industry and how it has the power of multiplying your return on investment by triple or even more.