ICO Valuation

in #ico3 years ago (edited)



Part #1 - How to spot ICO Scams

ICO Valuation

Following our last post about the Ultimate ICO List, we’ll start a series of posts on how to properly evaluate an ICO opportunity.

So far I’ve been part of 17 ICOs. Gladly, I made some decent amount of money from it and I do not believe it was (entirely) by chance. Nowadays, most investors I see, come from a technology background. As a fellow programmer, but also economist / lawyer, I'd like to adapt some old analytic techniques to a new economic field, the crypto-economy, also providing some legal insights. That's what's been working for me so far.

Even though currently the market is quite bullish and basically every new token sky rockets, I am a strong believer that in the medium run only the solid well-executed projects will endure. In no time we will have more funding proposals than money to fund them and wide adoption of the crypto-economy. That will have several implications: (i) centralized traditional players will put up a competition with current early blockchain enthusiasts; (ii) Regulation will come and impose non-anticipated costs on ongoing projects; (iii) regulation will shut down some projects; and several other possible outcomes.

To my view, those outcomes represent possible threats to current projects, and a good portion of current projects do not seem to be preparing for them. I constantly see projections that implicitly assume that their field of action won't ever be regulated and projects that count on huge banks or real economy competitors to never put up a fight against them for market share.

I believe that the best way to protect yourself against this kind of risk is by effectively choosing (i) a business model that is viable from day one; (ii) with a team that is committed to the project; (iii) a team that has high opportunity costs; (iv) a team that effectively has the skills and tools to get the job done; and (v) a project that either lacks competition or has the product to beat it.

In the crypto-world this is done in a slightly different manner than what is done in real economy for one main reason: We're in the wild. With almost null crypto-economy and ICOs regulation, anyone can do anything. Meaning that someone can launch a token, get your money, do nothing with it and get away with it.

Again, I strongly believe that the best way to protect your money from this kind of risk is through thorough analysis.

In the following posts I’ll be sharing some tips I gathered from my experience, and hopefully it'll help fellow investors to make smarter decisions and more profit. It is in every investor's interest to have a more qualified, critical and demanding market that fosters profitable projects that can actually make our daily lives better. As opposed to fever projects that end up failing for the lack of quality management or flawed market analysis and evaluation.

Looking forward to hear some of your expectations and comments about our new series of posts !