/ How To Analyze ICO's and Cryptocurrencies

January 29, 2018

ICO's might be the future of fundraising, and also the biggest trend in cryptocurrency today. It has become a tool that could revolutionize the whole financial system, and ICO tokens to become the securities and shares of tomorrow.

It has become a tool that could revolutionize not just currency but the whole financial system. ICO token could become the securities and shares of tomorrow. 

ICOs are mostly unregulated, which makes it extremely easy and paperless, and that brings both good and the bad out of it. With the highest risk, of course, comes the highest reward, and many ICOs have been a lucky score for the investors, while some never saw their money again.

Learn how to properly research ICO's and reduce your risk of losing money in the wrong one.

When I am analyzing an ICO, the first step is checking out its market position, comparation to the other upcoming or finished ICO’s, and trying to get the clear picture where they want to position themselves in the future. 

As an investor, you are trying to establish if that product has the potential of delivering the expected ROI in the long-run, its competition and actual need for implementation, is it all just a “take the money and run” scheme etc.

The problem is there are multiple ICO’s launched every day, which equates in thousands every year - and we will probably see the number growing. Right now, there are more than 1500 cryptos available, and most of the people have heard just about Bitcoin. With so many token sales flooding the market, it can be overwhelming and difficult to separate the good ones from the bad, without the in-depth analysis. 

/ ICO rating system

The most effective way is reading all the crucial ICO success indicators, and then make the decision yourself. Everyone is saying DYOR and read the whitepaper, which is a lot easier to say than do, but most of those hype/fud types of people don’t read or even understand those whitepapers.

ICO success indicators include the team behind the project, information on the ICO itself and their transparency, tokenization and funds management, product presentation and marketing, and while the last one is based mostly on intuition, it sure saved me a few times - “the feel” in their communities such as Reddit or Telegram. 

/ Team

Before reading anything, I am checking the team. It is important for the profiles on team members to be transparent, easily accessible and with a sufficient amount of information disclosed. Additional links to LinkedIn profiles are only helping improve their credibility. 

What I am looking for are solid teams with experts employed on different aspects of the ICO, which gives it more chance for success. Teams with relevant cryptocurrency experience are generally rated much stronger than complete industry novices. The presence of an advisory board or VC firm behind it will further improve the integrity of a particular project.

/ ICO information 

The actual information on the ICO should be clearly visible and available. All the important dates for the pre-ICO and the official ICO, and info on how to participate and what currencies are accepted. 

Find the information on token supply, how much they are planning to sell, how much they’re keeping and at which prices, are they planning to burn some tokens or offer node (dividend) programs - also pay in mind the ICO’s team is choosing the ICO token price, and the listing price after the ICO is finished.

/ Product presentation and social media

It should be very clear if the product is a platform or a service, roadmap and milestones the company plans to achieve, the actual uses and need for the digital token. Professional video presentation with an overview shows further quality and commitment from the ICO team. 

With so many ICO choices, it is essential for projects to attract amount of attention to their product. While marketing in the early phase might not be crucial, it is important they are active in their communities and on the different social media sites like Facebook and Twitter, building the transparent relationship with their community. 

The feeling you get in their Reddit or Telegram communities will tell you a lot about all the people involved in the project - is it credible, smart, transparent and community-driven?

/ Technical

MVP, or Minimum Viable Product, which is based for the developers, is a prototype (beta) version of the future product, including a minimum set of features enough to satisfy customers’ needs. It is used to get feedback and make changes in the project, and offers open code to allow anyone to see if the company has any groundwork. Some ICO’s offer bug bounties - a program rewarding developers crypto tokens for finding bugs and vulnerabilities, and improving their code.

Before making the ICO rating decision completely by yourself, you should always hear the opinions of the experts in the cryptocurrency world. It is always good to hear the same story from a different perspective, no matter if it’s a lawyer, finance guy or a waiter. 

ICO’s have two points - one is the funding of a completely new concept, the other is to fund the expansion of an existing project or to move it onto a Blockchain-based network. The second is more likely to see success as it’s based on an already proven product or service, and therefore, experts will favor these projects. A product or service that addresses an actual problem in the market would also enjoy a higher rating and its chance of success. 

Some other links that can help you:

Hopefully, now you have enough information to start researching and buying into hottest crypto ICO's on your own, and don't forget to be very careful. Good luck!

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