What To Consider Before Investing In Initial Coin Offerings 2018

It seems like only some Robinson Crusoe living on an uninhabited island hasn't heard about ICO (initial coin offering) and investments in cryptocurrency. In short, it is a means for a company to attract funds in cryptocurrency publicly. Ultimately, it is much like an initial public offering of company shares (in fact, any company assets) aimed at selling these assets for cryptocurrency. Unlike an ordinary IPO that involves the public offering of stock at a security exchange, this process is largely unregulated, and the companies do not undergo any serious credibility checks.

Not going into the economic risks of this venture, I'm going share the technical aspects related to information security that may present additional risks both for the buyer and the seller. I'm also going to give practical and technical advice on what to look for when buying assets of ICO companies for cryptocurrency.

First of all, you should clearly understand what you're buying from the company. In general, everybody realizes that those so-called tokens are equivalent to certificates, vouchers or other documents confirming the ownership rights to a certain company asset. The big question is, what kind of asset do you buy specifically? It turns out, there is no universally accepted mechanism of ICO and that every company may sell anything they want. Usually, they sell the following: the right of ownership to a certain part of the company's intellectual property, the right to a percentage of the company's revenue (dividends), the right of ownership to an internal resource (virtual values, for example) or something else. It is very important to understand what you're going to get, or, more specifically, what the token you buy is linked to. Of course, the total value of tokens is not at all guaranteed. The company can always make an additional emission of tokens, thereby reducing the value of one token -- and there are plenty of other mechanisms to manage the value of virtual assets.

The second thing to check is who the company's partners are. Namely, which electronic platforms/exchanges/systems are actually ready to exchange company tokens for electronic money. Your level of trust with these companies should reflect your level of trust invested in the whole project. This information is usually available on their websites or in the documents attached to their newsletters. You will also need the information about the leaders and the project team. As a general rule, startups are very open and usually publish this kind of data on their websites. The absence of such information is a warning sign.

The third important detail is an SSL certificate. When opening a company's website in the browser, look for a green padlock icon in the left part of the address bar. If there is no such icon, you should be concerned. If you see a red open padlock, leave the page immediately (just like you always do in such cases, I hope). Even if the lock is green, be sure to check that the SSL certificate is issued in the name of the company you're planning to purchase assets from. It is easy to check in whose name the certificate was issued: open the Security tab in the Debug console (right click any place on the webpage to call up a pop-up menu, then choose Inspect).

If this field is empty, the company chose not to validate itself as a legal entity. There's nothing criminal about it; it's just an indication that for some reason the company decided not to disclose some information and chose a simpler way to get a certificate. But it is something to be wary about.

The fourth and most important thing: Buy some tokens and inspect them before making a major investment. Make sure that the wallet number for the second transaction was the same one that you used for the first one. This simple and reliable method will protect you from becoming the victim of the latest hacking incident if the company's ICO site is compromised and its wallet number is changed to one belonging to a third party.

It goes without saying that ICO is a risky investment opportunity. I hope the technical details I provided will allow you to avoid mistakes and prevent you from losing any money out of negligence.
@syedshah1