Market Issues Affecting ICOs
ICOs (initial coin offerings) are increasingly popular among investors. It is not surprising anymore to see a new ICO launched every week. There are many platforms where startups have the opportunity to crowdfund their ideas into reality via an ICO.
However, it’s becoming more difficult for investors to separate the good ICOs from the bad ones.
Despite how fast crowdfunding is revolutionizing financing for crypto startups,there are also many challenges. One of the biggest challenges facing ICO investors is a ‘get-rich-quick’ mentality. When an ICO seems too good to be true, you need to pay attention to your gut. Not all ICO projects are made equal.
Let’s look at some telling signs that an ICO isn’t all what it seems.
1. Projects With Unrealistic Goals
Scam projects normally offer you lots of promises such as a good token offering even though their projects add nothing new to the market. It is important that you do some research to if there are realistic potential for companies to deliver on such promises.
For instance, how professional is the development team? Real professional developers do not make promises beyond telling you the potential of their project. No serious team will make predictions about the success of their token offering. Projects which make too many promises should be avoided.
This is a document that explains how a certain cryptocurrency platform is going to operate. It often includes simulations, calculations, charts, and specifications among other features. However, some platforms will use a fake white paper with no clear path to implement the ICO project. This is exactly why you need to be very careful.
Does the document explain how the platform clearly works? If you are not convinced by what is contained in the white paper then you should be on alert.
3. The Team
Just like any other project, having a team of experts is important for the success of an ICO project. When assessing the project, it is important to consider the potential of the team to achieve their goals.
Who is behind the project? Has the team been involved in a related field before? If your answer is yes, then there is a possibility that the team has the potential to deliver.
However, don’t rule out all ICO projects from anonymous developers as scams. What this means is that you should do some research to weigh the chances of success of the project.
4. Their Token Isn’t Listed on an Exchange
If an ICO cannot find an exchange to list their token, look out. Exchanges closely scrutinize ICO projects and if they don’t measure up, they don’t get listed. An exchange’s reputation suffers if they list a substandard token with fly-by-night developers. If a token is listed on an exchange it’s a positive sign for investors that the project is a legitimate one.
So What Does a Legitimate ICO Look Like?
Let’s look at an outstanding ICO from an Estonian-based startup, CrowdCoinage. [link]
There are several reasons why the CrowdCoinage ICO could be one of the best bets for investors in 2018. CrowdCoinage is an Estonian FinTech startup with a mission to help other startups crowdfund successful ICOs. A job market is also planned where startup companies can hire financial, legal and marketing experts for their ICO projects.
CrowdCoinage is unique because it relies on a community-based voting system to decide whether to accept or reject any ICO project. The community also controls the funding release for ICO projects. Startups must attain specific milestones in order for the community to release funds raised during an ICO.. This offers investors a significant amount of control that’s lacking on other ICO launch platforms.
The platform is also planning on assisting startups obtain Estonian e-Residency. e-Residency is a unique program offered by the Estonian government which creates a secure, verifiable digital ID for individuals worldwide. Individuals who are accepted into the program can go on to establish Estonian companies. This allows startups from all over the word to gain access to a wider market via Estonia’s EU membership.
As well, CrowdCoinage will strongly encourage startups launching ICOs on their platform to enroll in the e-Residency program as a measure to assure investors they are dealing with reputable businesses.
As well, their token just became available on the Token Store Exchange [link]. Investors can know for certain that the token and project behind it have passed intense scrutiny.
Investor safeguards like the voting process and e-Residency verification from CrowdCoinage are important to look for in any ICO that you may be considering. Any ICO that doesn’t create safeguards for investors should be avoided.
The Bottom Line
Being able to identify a great ICO from a poor one can play an important role in keeping your hard-earned cash out of the hands of scammers. Participate in forums and crypto communities to stay informed, as those in the know will alert the community about any sketchy ICO projects.
However, always remember that no matter how attractive an ICO token offering may seem, you should always proceed with due diligence. Despite all these precautions, you should never invest an amount that you cannot afford to lose. So, before committing yourself to an ICO, make sure that you do some deep research.