Initial Coin or Currency Offering, also known as crowdsale, is a way for small and prospective startup companies to find investors and give life to their business ideas. Overall, ICO works as a crowdfunding project when a company releases a certain number of crypto-tokens and then sells those tokens to its intended audience, most commonly in exchange for Bitcoins. This procedure leads to project funding and benefits for both sides.
ICOs have been a real success in the recent years. Given such a popularity, many companies and businesses participated in it and ,therefore, just as in any other business industry, the rate of failure reached over 50%. However, high failure rate points out the riskiness of such investment and at the same time highlights the possibility of extremely high profits. There is no need to mention those businesses whose value skyrocketed after ICO.
Simple Steps to Make Profit from ICOs
There are generally two things to thoroughly consider when investing in an ICO and actually being able to turn this investment into a profit. The biggest one is staying away from getting scammed, and the second one is not participating in one that is filled with fear of missing out and a high amount of capital raise. Upon consideration of these two factors, one should start analysing available projects for ICO.
Crucial things to look for when evaluating an ICO:
- Appearance and functionality of the website: if requestors cannot quite code in the most basic programming language or invest in a decent website, how can we expect they can write in Solidity or understand blockchain?
- Qualifications of the team: is there a track record on the team and business? Are there reputable advisers on their board?
- Accuracy of information in social media: the last thing you want to do is be a part of an ICO who appears to be bigger than they really are. Anything that is inflated gives the wrong vibe, faking your fame is not cool.
- Amount of investments seeked: it usually does not take that much as 50 million dollars to create an alt coin. Make sure the project concept makes sense and is in line to the amount they are trying to raise.
- Location of the company: when looking for an ICO to invest in, ensure its operations are in a reliable and stable location.
Upon conducting analysis and making investment decision, it is important to follow the trading principle of hold, sell, hold some more. This implies that as soon as you have received your tokens, you can start to trade them on exchanges for other cryptocurrencies or cash. A good idea would be to immediately sell 30% of your tokens and begin to recoup some of your investment. After that the key is to hold the remaining 70% for a few months before selling again.