Invest in ICO in the Right Way - a Step-by-Step Gude
We are living in a time when reality is beginning to resemble virtual reality. Many of the processes affecting the well-being of people and nations seem to exist nowhere, but the people at the junctions of these processes are able to thrive and profit! A bright illustration of this is cryptocurrencies, which are slowly but steadily replacing fiat money.
At the end of 2017, the ICO boom peaked at $4.9 billion raised in Q4. Unfortunately, such gains attract not only enthusiasts but also those wanting to cash in on naivety and overconfidence. Scammers created dozens of projects that turned out to be rip-offs, which is why many people are likening blockchain and crypto to the Dot-Com Bubble. You can’t blame people for thinking that.
After we experience a black swan event, we unconsciously endeavor to rationalize it, but we only do this using data that reinforce our opinions. This is called the narrative fallacy; yet, we can overcome it with facts and comprehensive information. Let’s try to figure out what ICO is and how to invest in ICO correctly.
ICO is a fundraising activity that a company conducts by creating a new cryptocurrency or token. This will help encourage the project’s development.
Why do people invest in ICO tokens?
- Democratization: This form of crowdfunding allows you to avoid the time and resource consuming procedures of going through banks or venture capitalists. With ICOs, everyone can put money into a coin and generate revenue like a Wall Street tycoon.
- Whopping Profit Potential: People like to sink money into the “next Bitcoin,” purchasing coins at a cheap rate and selling them later on at a profit. Although many ICO projects provide their supporters with white papers and everything else they need to know to make a wise investment, there are still shady projects out there that provide their investors with little to no information about what they are getting into. Many gullible people still fall for this trick.
Investing is no longer limited to an elite community of speculators. Almost anyone can buy tokens or coins from a project! The only requirement is that you commit a certain sum of money. It can be $10 or $1,000 depending on how much you’re willing to risk. So, do you have to be an accredited investor to invest in ICO? No! You just need to have some spare change.
Once you decide to take a crack at investing, you need to ask how to invest in ICO and its cryptocurrency. All of these articles using odd terms and investor jargon can confuse any newcomer. But, the process of getting started is not that hard. Just follow these steps and very soon you’ll become a full-fledged investor!
Step #1. Open Your Exchange Account
For better or worse, it’s impossible to invest with fiat. You need to exchange your domestic currency for Ethereum (ETH) or any other popular currency that is accepted in the crypto world. The quickest way to do it is through Coinbase (or another big exchange like Coinmama/Bitpanda/Kraken/Bitstamp/Bittrex). For this purpose, you need to create a fiat-accepting cryptocurrency exchange account.
Step #2. Create Your Own Wallet
You are probably asking why you need a wallet if you can save all of your currencies using your exchange account. These exchanges are more like luggage lockers in a train station. In theory, all of your stuff is in a safe place. In reality, you never know how secure the lock on the door is. With wallets, though, you have more control because you have the private keys, unlike with an exchange.
There is a variety of cryptocurrency wallets that can be divided into three categories: Bitcoin wallets, Ethereum wallets, and wallets for alternative coins. We advise you to begin with MyEtherWallet because most ICOs are based on Ethereum smart contracts.
Step #3. Find an Appropriate ICO
When deciding which ICO you want to support, it is impossible to read every white paper and check every project. Start by reading articles written by crypto news outlets that describe the projects in which you are interested. The top outlets are TOP ICO List, ICO Watch List, ICO Alert, and Coin Schedule. Find the one you prefer the most.
You should also start reading and communicating on platforms like Reddit, Bitcoin Talk, Slack, Telegram, and Twitter because there you can find the opinions of experienced ICO participants, as well as find the answers to questions asked by newcomers just like you.
Finding an appropriate ICO is all about figuring out whether a particular project is viable and has the potential to become popular. Don’t invest in Bitcoin; invest in ICO. In other words, invest in the idea that stands behind the project.
Find an ICO idea that you find exciting, and that adheres to the following key factors:
- Fundamental concept: Is the idea they promote clear and explainable, or is it just a set of technology buzzwords?
- Team: Who are these people? Are they professional in their field? Are they legitimate?
- The hype: What is its rating on different ICO media outlets like ICOBench, and what is the engagement level of their audience on social media?
Step #4. Read the ICO Instructions and Invest!
Every project has its own ICO rules, terms and conditions, dates of important ICO events, and channels of communication. Visit their page and find everything you can about the project’s token sales, and then open its white paper and do the same. You can also attend ICO events that are specifically created to inform people about ICOs.
When you’re convinced that the project is legit, take some time to make sure that the token sale’s address is correct and your money will be transferred to the right place.
After you get tokens in your wallet, you will discover that investing in ICO without bitcoins is possible. First, find exchanges that list the tokens you purchased. When you find them, you have two options:
- “Hodl” the coins until your price target is hit (e.g., 2x, 3x, 10x the original value)
- Sell the tokens when their prices are acceptable for the rates offered by your exchange
Here is a list of common exchanges that list coins:
Tip: Coin Market Cap is a useful place where you can see all the prices on different exchanges.
Another question to clarify is: “When and how to invest in ICO early without striking out?”
The crypto market is growing at high speeds, and it is not falling. A single increase in prices can bring you significant income. This is especially true of tokens, which, when purchased at the ICO stage, can rise in price a thousandfold.
Keep in mind that bear markets are not a reason to avoid investing in ICOs, especially if you find a startup with potential. Startups often try to attract investors with bonuses like:
- Lower priced tokens
- Extra features for those who bought tokens immediately after launching the ICO
- Higher percentages of referral programs
An investor can take advantage of everything offered to him or her, and win more than in a favorable market situation when there would be no additional benefits. But, this is only true if he or she is sure that the token is promising and can withstand a bear market.
Check how much money you can afford to lose
Don’t make ICOs your primary income source. Be sure that the contributed sum of money will not harm your budget. Think of ICOs as a big game where your chances to win and lose are almost equal.
Protect Yourself from Scammers
Dishonest behavior goes hand-in-hand with ICO projects. Scammers can take you anywhere; Telegram channels, mailouts, fake landing pages, incorrect account addresses - you name it! To avoid being made a fool of, triple check the rules of the chosen ICO and ensure that the admins of the social media groups are the real representatives of the project.
Upgraded Security Measures
Do not use centralized wallets (e.g., Coinbase). Instead, choose private wallets where the only person who knows the key is you. Resort to encryption software and hardware wallets.
This article is not meant to be investment advice.