My ICO Selection Criteria
Gday everyone!!!
Today I'm going to cover how I select an ICO to invest in. This isn't the ONLY way, maybe its not the BEST way, but its MY way.
So I have 4 criteria that I look at.
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Usage:
What is the use of the token, and more importantly what problem does it solve? So lets look at 3 examples.
Powerledger - the problem is that power consumers get royally screwed by the big energy suppliers, so it allows home producers to sell to their neighbours. Real life problem and decent solution.
Vice Token - content producers get bugger all of the monster $100Billion as there are way too many fingers in the pot. So the Steemit model will reward producers at the source. Real life problem, decent solution.
Next we have Bitcar, this is an ICO being spruiked on Facebook. The idea is to buy tokens in exotic cars. Theres no real problem there. If theres no problem then theres no solution. My spidey senses tingle and tell me this has a major red flag so steer clear. Its likely to be a scam.
Cost
A lot of people say that the cost of the token doesn't matter and we should only look at Market Cap. This is rubbish, the cost of the coin is VERY important. I personally go into an ICO expecting 100X returns for the risk I'm taking. So if I choose an ICO that has an initial price of over $1, then it needs to go incredibly high to see those returns. Where as if I get something under 10c then it only needs to pump a moderate amount to get the returns.
Again we looks at Powerledger, these were approximately 6c and now its sitting at around the $2 mark. According to Blockfolio with my POWR ICO investment at this minute I'm looking at 2219% profit. So its well on its way to the target I have for it.
Token Supply
This one is very important, I like the low-mid 9 figure area. This means the coin has some stability, but it can also have some good pumps at times. When you start getting into the Billion token area, it takes a lot of volume to make significant gains.
Community
The last criteria is the community. It doesn't matter how good a project is, if it has a dull and unengaged community it has NO hope of succeeding. If you look at the Bitquence ICO, this was massively hyped by @suppoman and his crew of faithful followers. This doesn't mean it was a shitcoin that was effectively spruiked, Bitquence (now called Ethos) is a very good coin, but it had the push behind it to help it succeed.
Vice also falls into this category, it has some strong voices behind it again being pushed by @suppoman and the telegram channel is on fire 24/7. This gives a potential investor some confidence in the team and the community that it isn't just a shilling scheme and will dump straight away.
So I hope this helps some of you that are interested in ICO's, I'll do a follow up on current coin investments and how I choose those as well if your interested.
That's a really interesting strategy Gohba, thanks for sharing. I'm still wary of ICO's but I guess if you pick the right one it's a massive return.
What about EOS as an ICO? What are your thoughts there?
To be honest I dont know. The 12month ICO period is a major negative to me. Plus I don't know what the point of the blockchain is, rather than being better than Eth.
The problem I do have with it is that Dan never sticks around to finish a project. He dumped and ran on Bitshares, and Steem, if he going to do the same thing with EOS before its fully operational.
Great information! This type of content should continue to be published. Greetings from Venezuela
Hey @gohba.handcrafts - great points. I think you are spot on looking at price and token supply
...What about the team behind the ICO and the corporate structure they put in place? And the market space they are moving into? . Also how do you judge their ability to scale quickly? .... or am I reading too much into when crypto investments start so much smaller than traditional investing? I just think the team and corporate structure matters a lot when so many ICO's playing david vs goliath.
yes you are 100% correct. I don't know many tech people so 90% of the time the team doesn't mean much to me. Though if I do see an advisor like Bill Tai or Vitalik etc then it will hold some weight with me.
Is that because of previous projects they have been involved in?
yes exactly
The customer should be considered as well. Everyone needs to have electricity. This could be a potential solution to people all around the world.
Vice however will have a limited market. It still can be very successful if it does well for it's specific niche, but it's success will be more limited.
However, let's get real and this is crypto. If you can get a cheap coin an the owners stick around to release something to get it on exchanges it could pump at anytime for no reason lol.
Your last statement is 100% true. Just look at Doge. The team fully admit that its a shitcoin that serves no purpose and its still making people rich.
this article has really helped me think about what else to invest in, since I currently only hold steem. thanks @gohba.handcrafts. Brilliantly written.
Thanks mate, glad you found it helpful