Ninelives of ICOssteemCreated with Sketch.

in #money6 years ago (edited)

Hi Everyone,

Today on Ninelives we are going to delve into the wonderful world of ICOs, Initial Coin Offerings. ICOs are a relatively new concept and should not be confused with IPOs which are related to stocks. There is nothing secure about an ICO, they have very little regulation at the moment and are often illegal to participate in. They are extremely risky and more often than not you will lose all the money or tokens you contribute getting nothing or very little in return.

This series is called #ninelives because cat's are said to have 9 lives due to their amazing ability to survive; I will share with you 9 criteria to help you choose a coin that will survive beyond it's ICO phase. I do not recommend you invest in ICOs and following the criteria listed below will in no way guarantee you success or ensure a positive return on your investment. Proceed at your own risk and obey the law!

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Nine Questions to Ask About ICOs

  1. The Team: A project will rarely succeed without a great team. Check the team members history, look at their Linkedin accounts, Google them, research their GitHub activity. Double check the CEOs, developers and advisors. Make sure they are credible, competent, accomplished and they are actually on the team! Ensure it is not just some make believe paid endorsement or outright fraud. Experience counts! Be like a cat use all your senses 😸

  2. Is a new token necessary? Most projects can just use a existing token and make an app to work with Ethereum, Bitcoin or some other crypto. Why do they need their own coin and your money? Is a unique blockchain necessary and does it need to be decentralized? If they don't have a strong need for a unique decentralized ledger, I would probably find another project to support.

  3. Quality of the project: Is there a Minimum Viable Product (MVP) You can often look into the code of the project as many are open sourced. I don't know much about coding so I read people's opinions on the code and ask friends in the industry if it looks good. I also READ THE WHITEPAPER! and the expert opinions on it. If you can't understand the whitepaper or see a useful product, do yourself a favor and don't invest in it.

  4. The community and media: Is the marketing and community team professional? What do third party websites have to say about the project? Promoters are lost always paid and people saying good things about an ICO are just in it for bounties (free tokens). Yeah should join a project's Telegram channel and see how it is managed. Follow them on Twitter, Facebook, Steemit, periodically check their website for updates and subscribe to their emails. Search for them on ICO ranking websites. If they have no presence or run a poor campaign, they may fail, even with an excellent product. They could just be a pump and dump scheme so evaluate the quality of the marketing and customer service.

  5. Competition: In marketing terms, do a SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis. Evaluate their competitors, are there similar coins that do the same thing? Other coins may copy them as there are few patents and projects are open sourced. What is the first mover advantages? The size of the market they intend to capture and the possibility of saturation or number of competitors?

  6. Soft and hard caps: How much money do they need to raise and is it enough (softcap)? What is the maximum amount of funds they plan on raising (hardcap)? How many tokens will they issue and what is the maximum amount that can be issued? If they don't reach their hardcap will they burn (destroy) the remaining tokens? If they burn the tokens they don't sell, will they also burn other tokens in even proportions? ie. tokens meant to compensate the team. Some projects need more funds than others. Look at the structure and timing of how they plan on raising the funds and how much. Don't get tricked into investing because of lucrative bonuses and avoid projects that generously reward first movers and insiders.

  7. ICO proceeds: What do they plan on doing with the money they raised and any tokens held in contingency? How much of the funds are going to the developers, marketing, bounties and being held for future uses? Ensure the compensation for the team and founders is not too generous (i.e. more than 50%) Does the compensation of management align with the token holders best interests? Are they giving away excessive amounts of free tokens? Do they tie expenditure of the ICO proceeds into the project's road map?

  8. Current and future stages of the project: How far along are they and what have they achieved? Do they have a working product or have they even started working on a product? Does the white paper outline realistic future goals or is it vague? I want to know if a project is achievable and if the cryptocurrency will have a future demand. You should also check if the project has the support of any blockchain venture capital companies and if they are talking with exchanges. If the token is not compatible with an existing token (eg. ERC20) do they have their own wallet and main net?

  9. Redflags: where there’s smoke there’s fire, if you hear a negative professional opinion take it seriously. If there is a promise of spectacular returns, drawings that look like pyramids, get rich quick plans and intense urgency, steer clear! Is the project concerned with laws and KYC (Know Your Client information)? Is their content and whitepaper original or plagiarized? Do they answer concerns and constuctively respond to criticism? Do they have an actual office and a registered business? Do they have a license for what they are doing? Is it legal and what are the restrictions? Do they plan to have an audit? If a company just wants money and has no consideration of the law, buyer beware.


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Thank you for taking the time to read the Ninelives of ICOs. I hope you learned something and wish you luck in your future endeavors. ICOs are as risky and complicated as investments get. Please exercise extreme caution.

I do not recommend investing in ICOs. If you invest in ICOs ensure you have a hard wallet like a Trezor or Ledger S Nano to safely store your coins in, you cannot use an exchange wallet. If you don't understand 95% of what was written above, I recommend further educating yourself before even attempting to take part in an ICO. This is not financial advice and is for your informational purposes only.

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If you scratch my back, I'll scratch yours. Please UPVOTE, FOLLOW and RESTEEM. If you upvote me, follow me and comment below I will follow you back and upvote any quality content of yours I come across.
Comment including your opinion on how to select a good ICO or anything you disagree with or think I have missed are encouraged. I will upvote the first nine comments (min 0.02 SBD) which contribute to the conversation below in a meaningful way.

Bye for Meow 😺 mRrrrrrrrrr......

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I really like these criteria; I think that web traffic can be an important predictor of success too, as traffic equals exposure equals press. Just my opinion. Regardless, 100% upvote from me! :)

Web traffic is definitely important as it's related to point 4 about media and community, kept it to 9 for the series. You want to look for quality volume though, not just people looking for airdrops. Mind if I add it to point 4?

Many of these points can also be applied to buying altcoins. Always read the whitepaper, research the team, see where they are in their roadmap and look into the partnerships. The further a product is to having a demand the better the coin. Price and volume really mean nothing, there are top 10 marketcap coins without a useful product. Steempower is one of the most used coins out there and passes most of the criteria.

I like to see how the sale is progressing financially and the community reaction to this. Looking at the overall altcoin market in relation too this can help.

Yes, never rush a decision just to get a bonus

Hey @crypticat

Nice post. Thanks for sharing.

Some great advice there. Like you have mentioned it's a checklist that works for altcoins too.

When there are so many promising, young and undervalued altcoins out there I'm really not sure why anyone would risk their hard earned money on an untried, untested ICO! I understand the rewards for getting in at the beginning could be very high but there are legit, more established setups that are still very cheap sat there waiting.

Maybe I'm the one missing out but the risk reward just doesn't fit with me.

Cheers, Gaz.

ICOs are definetely risky, I do it more for the experience and never go in large. You get bonuses and feel more connected to the project if you get in early but often it dumps as soon as it hits an exchange and you discover the project isn't great after you're comitted. Check out the Invictus Hyperion fund that will be launched soon. They plan on doing an ETF for ICO investing, very risky but am interesting concept.

Nice one. I'll definitely take a look.

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Coins mentioned in post:

CoinPrice (USD)📈 24h📈 7d
BTCBitcoin7947.790$-1.14%16.0%
ETHEthereum507.695$-0.18%22.05%
NANONano6.350$6.6%30.59%
SBDSteem Dollars2.726$8.65%42.27%

Quite interesting. Thank you!

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