Prior to the introduction of smart contracts on the blockchain network and Initial coin offerings, early phases tech companies needed to depend on investors, going public, and themselves to fund their projects.
Initial Coin Offerings is a form of crowdfunding, where companies provide their own tokens for other individuals to buy, in order for them to raise money. As an investor you can get the benefits from both worlds, and financial benefits in the long run. ICOs are also are a dangerous financial investment endeavor, so there are a couple of elements you should be mindful of before putting your capital into such projects.
Check out the white paper
White documents are essentially what the company is pitching to prospective financiers. The white paper needs to be well-written, as the quality of the file can either make or break a company. As a prospective financier, you have to check out completely the white paper and find out if the group behind it is serious and if their project is strong. Make sure to fact inspect the information and statistics in the file.
Find out more about the developers
ICO investors should never skip research. You have to do some reading about the group behind the project. While most companies that launch their ICO are newbies to the market, their employees may have been associated with other comparable projects in the past.
It is suggested that you do a background look at each employee. See just how much experience they have in their field, what other projects were they associated with, if those projects stopped working or not and so on. Invest more time into learning about the company and the other items and services it provides if the ICO is held by an already established company.
If a start-up does not list its employees and developers or other essential details, they may be rip-offs, as there is nobody that can be openly held liable for the result of the project and ICO. Check out the crypto ICO review before investing into one.
Purchase tokens with long-lasting use in mind
Tokens that have no other use other than for raising money may not deserve it. With this in mind, think about the long-lasting worth and possible use for the tokens you will be buying. At least make sure that you can access the company’s services if you will not be able to sell the tokens for an earnings.