• 06 April 2021
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ICO Investment Guide: How To Rate Initial Coin Offerings For Success

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Up until very recently, the cryptographic realm was a total mystery to many. Admittedly, the general public has become more aware of the innovative digital currency in recent years, but many aspects of it continue to elude the understanding of the average person. One such aspect is the topic of ICOs. Initial coin offering takes its lead from IPO, otherwise known as initial public offering, a term synonymous with the stock market and financial investment. Just like IPO became part of the lexicon, so top does it seem that ICO will.

Awareness of ICOs has already began to increase substantially and it’s not hard to see why. In 2017, the trend for impressive returns on investment continued across many cryptocurrencies, old and new, while the public had become increasingly savvy when it came to the subject by the end of the year. Some of the fastest-growing search terms of 2017 fell under the umbrella of cryptocurrency. In addition to terms like ‘cryptocurrency’, ‘blockchain’ and ‘Coinbase’, there was a massive growth in search volume for the term ‘ICO’. Certainly, more people have become superficially familiar with the term, but understanding it with any depth is a whole different ball game. For those scouring new ICOs for future returns, there’s a whole heap of factors to consider to maximise the chance of profitability and avoid disappointment.

What matters the most when ranking an ICO?

There’s a shortlist of essential questions you need to ask when considering the pros and cons of an ICO. You’ll want to secure an answer for each of them, whether the news is good or bad, before making your decision.

For a start, you’ll want to pursue research on the personnel behind the project. Look at who’s who when it comes to the team behind the ICO, assess their overall credibility in the field and their track record of business. In short, you want to build up a thorough insight into their background and history. Next, you’ll want to see whether they’re white paper holds up to scrutiny. Does it set out the main aim clearly? Does it successfully nail home the mission points of an ICO? Are checkpoints for success laid out with an established timeline? You’ll want detail here, with quantifiable elements that can be measured.

Delving into the detail of coin supply is your next port of call. Look for information regarding pre-mined supply, capped supply detail and limited supply. Additionally, investor confidence metrics are crucial, so make sure you discern what’s in place in this respect. A realistic timeline is also essential. Bold claims are one thing, but deliverable results are much more enticing to the sensible investor. The kind of timeline that scores top marks not only lays out the path ahead to achieve the product promised, it also shows how optimal output will be attained and introduce growth opportunity detail.

Assessing the use of a token is also pivotal. Weigh up the pros and cons of the practicality of the product, see whether it’s trading value is appealing and look to find any unique selling points. If you’re finding promise in a prospective new ICO venture, don’t neglect to rate one of the most important areas of scrutiny in communication channels. Social media channels are only a tiny slice of the pie. In addition to this, forums, email and phone contact lines, not to mention an updated stream of content via blogs and websites. Appearances at public events and via advertising, not to mention trade shows will also bolster an ICO ranking.

Finally, an ICO can achieve an even higher standing by adhering to rules, laws and regulation. Currently, there’s not a throttling level of regulation around the cryptocurrency and ICOs, but as the world catches up with the cryptographic sector, this looks set to change. However, even today, an ICO can benefit from showing its compliance, creating a deeper sense of trust with potential investors and driving customer confidence forward.

Why an ICO review is crucial for succeeding with cryptocurrencies

Although it looks like an exhausting process, taking the time to thoroughly review an ICO pays off big in the long run. It’s regretful that many seem happy enough to jump on the bandwagon and follow the crowds tailing hollow hype. It’s not uncommon to see someone who airs on the side of the caution when investing in traditional fiat currencies showing a more blasé attitude to investment on the crypto market. Particularly with ICO token sales, investors can have a tendency to see a product as ready-made and overlook the growth potential (or lack thereof) of it.

It’s these elements that add value to a new platform, product or service that are really at the heart of succeeding in the crypto game. Those investors who’ve looked to the future and made their ICO token investments wisely are the ones who’ll reap big in the future. With minimal effort and only a slight financial outlay, almost anyone can pocket a profit down the line. As cryptocurrency continues to flourish as a market and awareness increases, there’s been a significant rise in the amount of associated services and websites, providing plenty of reference points for those keen to get more clued-up on everything crypto.

What to consider when ranking ICO tokens

The above section has clearly outlined the level of detail you need to consider when discerning the worth of investing in an ICO. That being said, even the most grounded of investors can find it hard to resist bold claims about the next big thing or revolutionary next step. Most of the time, any ICO throwing around these kind of claims is either outright misinforming potential investors or will eventually prove to fall significantly short of the benchmarks made for itself. However, paying attention to these kinds of claims will help you hone your decision-making process and make an ultimately better judgement.

Essentially, be sure to hold up any claim made by the team behind an ICO against fact. Any conflicting information is an immediate red flag, while statistics and references that simply don’t hold water can seal your decision to ditch thoughts of investment. However, prospective investors need to be armed with a lot more than a casual eye for a clear problem. A deeper analysis needs to be a standard operating procedure and a meticulous method needs to become a staple of investment steps. Looking to safeguard against loss and increase your chances of profiting with an ICO? We’ve broken down an approach to a more thorough analysis below.

Calculate risk factors to your investment

As far as metrics go, the risk against your investment is of paramount importance. Determining the potentials risk of investment can seem quite complex, with multiple things to consider. Many of these factors are similar to the points raised previously when discussing why an ICO review is a must for investors, with in-depth research into those individuals behind the ICO and associated business and scrutiny of any white paper unavoidable steps.

There’s more specific considerations to think about when it comes to identifying risk, however. After preliminary research into personnel and white paper reviews have been completed, next identify whether there’s a risk of the minimum viable product not being adjusted down the line. In short, the costs to produce the minimum viable product are relatively low, meaning that inevitably, supply will outweigh demand. Should a company not adjust the situation and work to drive levels of demand, the future is bleak for said company. It’s also a no-go situation for potential investors.

Delving deep into the legality of the ICO and business behind it is another given, but many investors skim over any serious research into the legal credentials of potential investment opportunity. In addition to getting clued up on relevant law and regulation, make sure an ICO has a dedicated legal team ready to go should they encounter any troubles with falling foul of regulation and compliance. It’s not so much to protect individual investments on a personal level, but negate the chance of investments being compromised in general. What’s more, you’ll want to see what type of businesses are associated with the one behind the ICO. If any affiliations to nefarious characters and corporate identities are found, it’s a red flag to stall your plans to invest. No legitimate company will actively want to partner with another business or consultant with a negative reputation. Those that do are likely to be working towards erroneous ends or aren’t anywhere as clued up about the business of cryptocurrency as they make out. In either case, it’s the investor who ultimately loses out when the endeavour fails.

Keep your finger on the pulse to determine how popular an ICO is

Again, this one seems like an obvious considerations, but there’s plenty of side notes to remember when assessing the worth of an ICO investment prospect. The simple line is, if an ICO is creating plenty of buzz and discussion online, then chances are you’re looking at a project that’s both comprehensively put together with an effective marketing strategy, and one that stands a higher chance of success. It suggests that there’s an idea at the root that a wide market is interested in, including potential investors.

To get an idea of the level of buzz an ICO might be generating, there’s a few easy ways to draw your conclusions. For one, check their main social channels like Facebook and Twitter to get an overview of their outgoing communication and content, not to mention how many followers they have on each. Going deeper, see how many times the name of the company crops up on news websites and other media outlets. The higher the instance, the better potential for an investor. As long as it’s good news you’re finding, of course. When looking for information online, determine how easy it is to find results relevant to that business. Plenty of results in the first few pages of Google after entering your query are glowing signs for potential investment.

If you’re getting good results from all these areas of analysis, you’re likely looking at something worth investing in.

Looking for long-term profit?

Many of those new to the world of ICO investment are jumping on the bandwagon, keen to capitalise on the boom times promised by many an online article and media piece. As has been the case for years with all kinds of investment opportunities, these proportion of the investor market are often looking for big profits and quick turnaround on delivery of their investment. Granted, many prospects can deliver a short boom period where profits are possible, but they are more than likely to then fizzle out, with no long-term rewards.

If you’re someone after a long-term investment opportunity, getting to grips with profitability prospects over long stretches of time is essential. In addition to determining long-term business operation, you need to consider several questions. Firstly, has the business been developed with the right kind of model that ensures sustained growth over a long stretch of time? Additionally, be meticulous when overlooking the financial strategy of a business, with this being a must for any ICO that intends to function efficiently for longer.

Personnel are again a key point to scrutinise here. Even if you’ve got initially promising vibes from those behind a project, you’ll want to ensure they have proven experience in the sector and in driving business in general. Even a brilliant idea executed well at the start can falter and stall due to inexperienced individuals behind the scenes, with little hope of establishing long-term profitability. Establishing who relevant competitors are is another item for your analysis checklist. If you can identify any competitors for a business, look at what areas the one you’re hoping to invest in excels over the competition in. Are they unique enough to warrant an investment and, if they are, can they protect their strong selling stance for a serious stretch of time?

Finding initial coin offering investment prospects online

Word of mouth might have been enough for investors to pick up prospects in the past, but the online era has changed things significantly. As crypto becomes more mainstream, you’ll find a wide variety of references online to take the hassle out of finding information on new ICOs, while also serving as a handy way to highlight brand new ones to consider. Sites like TokenMarket.net, ICOAlert.com and ICODaily.net are just a few of the online destinations you can fire up to get a good oversight of what’s currently going on in the world of ICOs and cryptocurrency.

In summary

ICO investment opportunities are becoming increasingly popular, both for those already firmly entrenched in the world of cryptocurrency and those altogether less experienced in such investments. The basic rules of cryptocurrency need to be remembered to ensure you’re making the right choice when parting with your money of course. Keeping clued up on the latest rules and regulation developments will always strengthen your stance with ICO investments. However, as more and more ICO investment prospects pop up, the average investor needs to demonstrate more finesse when it comes to making the right call and securing a sizeable return with long-term rewards.