Columnist of the portal Medium on how to find good projects and what to avoid.
The purpose of this article is not to scare you, so you have never invested in cryptocurrencies and especially in the ICO (initial placement of tokens). For those new to cryptosphere: ICO is the same as the IPO (IPO) securities. If you don’t know what it is, I’ll make this simple: this is when a company tries to raise funds by offering shares (shares in case of IPO and tokens for cryptocurrency) before the shares or tokens will be on exchange in the open market. In the case of the stock market to participate in the IPO can only accredited investors and the initial investment and the purchase of some stock you will have to pay a couple of million dollars.
On ICO such stupid restrictions do not apply: in most of those where I have invested some money, the minimum investment was $10, so part of the ICO can be anybody, subject to certain criteria. For example, you don’t have to live in a country with strict legislation in the field of cryptocurrencies (one such country is the USA) and required to follow a KYS (Know your customer).
KYS is a procedure which is used by banks around the world, and it is designed to identify those people who seek to launder money through financial institutions. Once your application is accepted, you will just have to wait for the dates of your ICO and invest in it as much money as you want. Purchase tokens during the ICO can be extremely profitable, as the profit potential is very high. If you search the Internet, you will find a lot of stories about how during the boom the ICO in 2017 people become millionaires after a couple of such investments. Just type in the search box the name “Ian balina”. If you haven’t heard, this is the man that allegedly began with an investment of 20 thousand dollars, and after a few months became a millionaire. However, this in no way makes it the cryptocurrency guru.
Now that you have learned something about ICO and why all cryptosphere talk about them, try to understand how to find good projects and what to avoid.
Invest in ICO
Before you invest in anything, the first thing you need to do your research, and sometimes it takes a lot of time. However, if you hope to get a good profit, go to the choice carefully. Looks like such a study to ICO? This is a difficult question, and every YouTube guru or blogger is your answer. First you need to read the White Paper (“white paper”) project. The authors of blockchain projects call for a detailed business plan. It says what benefits will this project bring to people like the authors are going to achieve your goals and sometimes even about the difficulties they have to face. Personally, when I meet of White Paper in this section, a positive attitude, because it means that the project team is aware that not everything will go smoothly and not trying to put people off.
The next step is the study of the project team. If the company website has no clear information about team members, it is alarming. If such a section exists, you need to go on LinkedIn and see what these people experience. Rate if they can help this experience to this project. Often, the co-founders of a startup and the other members of the project are trying to convince others that they possess superior qualifications, but perhaps their value to the team is not so great. Take, for example, the following case:
This is the profile of one of the founders Yappadappadoo on LinkedIn. Apparently, this guy’s got only experience in creating a couple of sites associated with Golf. Apparently he can help the team with development. However, I wonder whether he will bring enough benefit to the project based on the blockchain? If you can answer this question or, more importantly, to ask it along with other issues, so you’re on the right path to choosing a good project for investment. Yes, it takes a lot of time, but ask yourself whether to invest your money in this company? This is the main question the answer to which we look for every time, and no one in the world there is no right answer.
The next stage of the study, you will have to seriously resort to using Google. For example, I searching in Google information about possible competitors, as well as have scored in search of such queries: “why you should not invest in company X or company X Scam”. These queries almost always allow you to learn many useful things. If you just ask “why should I invest in company X”, then the search will give you tons of results where people will compliment this project. Often this will be the YouTube videos — not all, but many will argue that this project has great prospects. In addition, there are dozens of sites where reviews are published ICO, and it may seem like the solution to all problems, because you can save yourself time. But be very careful!
The dark side ICO
Let’s talk about Ian Balin. He has a YouTube channel that is subscribed to by over 120 thousand people. There he talks about promising new projects and says whether to invest in a particular startup or not.
At some point, Balin has created , where everyone can see how it assessed various projects (see below).
As you can see, he conducted a thorough analysis of each project. I use here the past tense because he declared that this table will no longer be in the public domain (at least its updated version). I highly recommend you watch his videos, to help you better understand what I was going to say.
Your research should be based not on the opinion of other people, such as Ian, and those criteria that you consider important. And here’s why. Ian occasionally praises some of the projects, but his chart shows that he is a consultant to most of these projects. If you do not understand what this implies, I
explain: if you advertise the project in which you act as a consultant, this creates a huge conflict of interest, because consultants receive a stake in the project in the form of its tokens. That is, balina and other YouTube gurus become consultants and get tokens, then tell you in their commercials, what a great project, around there, the hype, the price of a token increases, and then they can sell their tokens, and to close up shop. Ian will make a profit, and you have to wait until they lauded startup in something will increase. I’m not saying that’s what he does, I just mean that he has to do this very good reason, especially due to the fact that at the moment there are no laws relating to the ICO, and everywhere is full of scammers who want to cash in quickly.
Do not trust the review sites ICO
This is also a very important point. There are plenty of sites where it is said that they conduct a deep analysis of the new ICO, and the word “deep” here means that they evaluate publicly available information and in accordance with its criteria exhibited to the project a particular rating. If you need examples, just type in Google search “review of the ICO”. What I most not like is the fact that many such sites there is a column “Level of risk”, and some projects receive a rating of “Low”.
How is it possible to some. ICO to make an assessment of “Low risk”? Even if bitcoin is considered the largest and most important cryptocurrency in the world, is highly volatile and risky tool, how can a completely new project, which, as we have seen above, in the column “Level of hype” was rated “Very high”, to be rated as “Low risk”? The fact that these sites probably compare some ICO with others, but if you are comparing two risky investments and one of them is less risky than the other, it still does not make it reliable. In other words, be very careful, checking such reviews, they can be useful when conducting their own research, but should not replace it the study.
My last advice: do not trust the opinions of “experts.” Take, for example, the site ICObench.com they carry out their own analysis of the ICO, but consider more and ratings of the “experts.”
Look, sometimes it’s just a circus. Some of these guys have a serious impact on the overall rating, for example, a certain Vladimir evaluated at 5 and did not comment on it. And what you will help such comments of other experts as a “Strong, hardworking and very dedicated team… Clear vision”? Why this team is strong and purposeful? If they proved their hard work with regular success?
Always critical about other people’s opinions, if we are talking about ICO. Here too, it would be a conflict of interest: how do we know that these guys get from the companies money for such positive feedback? To high ratings, not supported by detailed analysis should always be treated with suspicion. I go to this website to find out if the negative reviews I’m interested in the project and what they say about it at all, and if someone acts with reasoned fear that I can’t refute, then I usually decide not to invest in it.