You can often find cryptocurrency enthusiasts pondering over an initial coin offering (ICO). While they are enthusiastic about blockchain and cryptocurrency-related offerings, considering the big bonanza that investors usually get when these tokens / coins list on the exchange; they aren’t really sure what to check before they jump in. So, we have made you an ICO checklist; a little primer for ICO investors to go by, to help them better decide upon an offering.
1. The Utility
When analyzing a new coin or token offering, one must review the product/service for aspects such as:
- What need is it catering to?
- What utility is the offering going to provide?
Once the sector is established, it is a good idea to review the competition, if any exists. With the scale and speed with which we’re seeing ICOs hitting the digital asset market, there’s always a good chance for an existing or in-process offering catering to the same need or utility. Once the competitor is identified, have a quick look into its projected offering if not yet launched, or its acceptance and success to date, for launched offerings. Since the first mover advantage works in most cases, market sizing and assessing whether untapped potential still remains could help build more confidence in the offering use case.
3. The Team
When analyzing an ICO, one must also not miss out on looking into the key names attached to the offering. These include the team running the show, including but not limited to the Chief Executive Officer, the Chief Technology Officer, the Chief Cryptographer, and the communications & marketing personnel. Here, the list of strategic advisors must be paid special attention to. Offerings that have blockchain and crypto-technology experienced personnel onboard with them in an advisory capacity, often tend to have quicker and better acceptance in the crypto space.
A good number of token and coin offerings are now establishing viable partnerships before they officially launch, thus ensuring a ready market for their product / service offering. An ICO with established, sound partnerships in place before launch is a “good-to-have” factor when making an investment decision.
5. Working Product / Service
One must also look at the operational plan associated with the product / service on offer. If the coin is being issued to fund the scaling or growth of an existing product or service, it leaves less ambiguity with regards to the implementation of the proceeds, as per the plan. For ICOs that have the product / service offering in its incubation or developmental stage, investors bank upon the trust and vision offered by the whitepaper for the use of their pooled proceeds. Also, they will need to remain very watchful of the roadmap draft being implemented as scheduled.
6. The Whitepaper
The knowledge and depth offered by the ICO’s whitepaper is another key area that helps assess an ICO. Some whitepapers are very well drawn up, outlining each detail in the simplest of manner for investors, with a well-guided roadmap, use of ICO proceeds, technological infrastructure, etc., while others seem to be drafted simply to fulfil the formality of launching an ICO. Investors are often left with a plenty of questions in their mind after reading such whitepapers. A well-drafted Whitepaper is ideally equipped to solve an interested party’s queries, both technical and otherwise.
7. Existing Investors
ICOs that are able to garner financial and / or advisory support from eminent blockchain investors, fund houses and hedge fund managers, are able to attract more investors to their offering.
- The initial investment (generally with a lock-in period) brought in by these seasoned blockchain investors helps build retail investor trust regarding the company’s foundation
- The names of these seasoned blockchain magnates serve well to market an ICO better, and to reach a wider audience.
8. Social Media Presence
The amount of social media presence that an ICO commands is also an important factor to be considered while assessing an ICO. Reviewing the offerings in terms of the Telegram community, YouTube reviews, Facebook likes, Twitter tweets, and Google search volume, are a few of the many mediums that help increase an offering’s social media presence. Discussion forums such as Reddit and Btctalk also aid the increasing of an offerings’ social media presence.
A quick look into the maximum token / coin supply warranted by the issue, the amount circulating (if any), the number of phases in which the supply of tokens is going to be released, and subscription levels of past phases, also help assess the market demand for the token / coin offering.
Now, it only makes sense investing in something which already has well-drafted ways to either:
- Trade, or
- Exit, when required
This is exactly why the token or coin being sold at an ICO needs to be listed on a cryptocurrency exchange to provide investors with the necessary liquidity. Of course, an investor may hold on to their investment for the longer-term. But for traders and bargain hunters, and even investors, having a ready and liquid market for your investment is a necessity in a boom or bust phase.
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