Investing in blockchain and cryptocurrencies is probably the most profitable form of investment those days. In the same time the volatility of cryptocurrency markets is so high that the risk of loosing almost all the invested funds is as high as the potential profits.
There is one option which can bring even higher profits, at even higher risks: Initial Coin Offerings. Because some ICOs are so profitable there are so many scams that it's very easy to lose money if you pick the wrong ico to invest.
When looking for ICOs to invest in I check a few things:
- Value Proposition - this is the most important factor for me. What problem does it solve, why would someone use it? A coin aiming for success should have a good one.
- Potential Market - is there any market for it? Does it disrupt existing businesses? If they identified the need you should be able to see the potential market. It should be big enough, but not too big.
- Which are the competitors(blockchain and traditional)? For example, a blockchain competitor for Google would probably fail, because Google is currently good enough. But betting industry probably can be disrupted.
- Is there any prototype, minimum viable product developed?
- Whitepaper - it's important to check it. You will see if there is some meaningful ideas or only bla bla bla.
- Who are the founders. If there are people who were previously involved in other blockchain projects like Dan Larimer or successful entrepreneurs like former Mozilla CEO, Brendan Eich then the ICO will probably be successful, at least on short term.
If you know any other factor that we can use to identify good ICOs to invest in, just leave a comment.
I have looked at only one ICO so far and that was a new mining project with cheap electricity. I didn't bite in the end because I believe that mining in its current format is not sustainable and there is something wrong with our greatest economic leap having to burn that much energy to sustain itself. But enough about that. I have a dumb question.
I realise that an ICO is the way that the startup is funded, but is an ICO just the birth of a new cryptocurrency in other words ether was once an ICO?
Many ICOs are simply lame. Sometimes some perceived as lame are successful and that's the beauty of investing in ICOs.
Investing in ICO is like investing in a startup. The founders are releasing some coins to fund the project (and also to build a community). Ether had an ICO(presale) in 2014 at around 30 cents per ethercoin.
Good post. It's upsetting that some of the newer ICOs are banning Americans because of the hostile stance it looks like the US government is taking toward it. I actually wrote a bit about it here: https://steemit.com/cryptocurrency/@surfingsnowman/a-balanced-perspective-on-accredited-investing if anyone is interested.
Cheers!
Ryan
I wasn't able to register for the 0x ICO in time.
I feel like people will make quite a lot of money after it hits exchanges.
Thanks for the tips @steem-buzz
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