What is ICO and how to invest in
ICO is an acronym for “Initial Coin Offering”, it’s a cryptocurrency crowdfunding method used by companies to raise funds. Whenever a cryptocurrency company wants to launch a new token or dApp, an ICO is option to invite investors to support the project. Investors purchase the token or dApp with the sole aim of making profits when it increases in value. It’s similar to making profit in the stock market share when the price increases after IPO.
To qualify for ICO, a whitepaper has to be published by the company. When ICO started in 2013 with the launch of Ripple, millions of dollars were raised within one week of launching and that became a turning point for companies to raise capital for their project. Between 2013-2018, over a thousand companies participated in ICO, raising over $1billion in the scheme. When Ethereum launched their ICO in 2014 and raised a staggering $18.4 million, everybody saw ICO as a recipe for success in cryptocurrency business.
How to invest in ICO
ICOs offer the public the opportunity to invest in a project at its early stage. If the vision of the project is successful, the investors will reap amazing returns. Just imagine investing as little as $50 in bitcoin in 2011 then, when it was $0.30 per single BTC. The investor will be smiling to the bank with a whopping $1.75 million dollars by now. Such opportunity is still showcasing itself, what is needed is for one to take the right steps.
These are the steps to invest:
#Step 1. Register for the ICO via the project site.
Certain information will be needed via “Know Your Customer (KYC)” in some cases. All you need to do is to supply the information needed and be honest in giving such information.
#Step 2. Setup a cryptocurrency wallet you control
Cryptocurrency wallet is needed to store the tokens and do the transaction. Don’t use the exchange wallet; you don’t have control over it, which might likely put you funds in jeopardy. We have a good number of the wallet software you can have 100% control, such as MyEtherWallet, MetaMask, Cipher, Mist ImToken, Purity and many more. Please, note that, we have many cloned sites of these companies, ensure the site you’re visiting is authentic.
Ensure your private key used in setting up your cryptocurrency wallet is safe. The effect of losing a private key or the private key being compromised is devastating and leads to loss of assets.
#Step 3. Fund your wallet with Bitcoin or Ether.
Funding your wallet will enable you to transfer money to the ICO campaign address in order to receive your tokens. If the token is ERC-20 and the wallet is MyEtherWallet, then you need Ether.
#Step 4. Buy the ICO tokens
Since you have funds in your wallet, you can now buy the tokens by sending the money to the ICO campaign address. Be careful when sending the funds to the address, your money cannot be retrieved if there’s an error.
What to look for before investing.
- The Project: Is it a problem solving project? Many go into ICO campaign without a working product. What is the foundation and the technology that drives the projects. These are main things you have to look for before investing.
- The whitepaper: This is the most important element in the ICO campaign. The whitepaper must be detailed and convincing that, the team can deliver. What is the roadmap? Do thorough due diligence before investing.
- The composition of the team: There’s this popular saying that, you can’t give what you don’t have. How experienced and in-depth are the members of the team? A good project should be willing to give detailed information about the team. What we can do is to check their profiles in LinkedIn and other social media as well as get information from other sources.
- Community communications: How willing are they to communicate to their future investors? A good project must be willing to answer questions on issues about their product. Analyze their project before the public and engage audience in Webinars.
- Suitable token dissemination: Information such as number of pre-sale tokens, hardcap and how many tokens are reserved for the team. One needs these information to take a decision, remember; Investments during the pre-sale ICO is more rewarding than the actual ICO period; just a tip.