The development of the cryptocurrency sphere has opened for startups a new scheme for attracting capital through the initial placement of coins – ICO. So, for the entire existence of this mechanism, the ICO organizers were able to attract more than $ 4 billion, according to the.
This scheme allows you to very quickly and relatively inexpensively attract the initial capital, even in the absence of a working prototype. However, there are many pitfalls behind simplicity that a novice investor should know about in order not to screw up.
I will tell you about the main principles of selecting startups that will help you separate promising projects from insolvent and corny fraudulent ones.
The calling card of any project, no matter how trite it may sound, is its website. Therefore, the study of the project is worth starting with it. On any self-respecting site, you can find a full description of the project along with the contact details of the developers. Strange, but still not everywhere you can find it.
The project team
The success of any enterprise depends largely on a well-chosen team. Their exact contacts should be indicated on the site, a brief biography will be very good if they have experience in this industry.
This is an example of a comic startup Govnokoin. Here we can see all the “professionalism” and “stardom” of his team. Be that as it may, but most projects are just that. Therefore, it is worthwhile to carefully study all the developers from and to, in order to make sure that you really are not being deceived.
All relatively reliable projects should have a White Paper, which, in theory, should fully disclose the whole meaning of the project, its goals, ways to achieve them, down to detailed technical details. It should also disclose a detailed business plan and all stages of financing.
If you still decided on the reliability of the startup, then you need to determine the value of the tokens. To do this, find out why they will be used.
For example, the Invest startup token (IVC) will be used in the future to receive discounts on the platform, which is currently in beta testing. This option gives the token good value, subject to the profitability of the project.
It is also worth remembering the process of issuing tokens. It is better than it does not exist at all, so that banal inflation does not occur.
Next, pay attention to the distribution of tokens between developers and investors. An ideal ratio can be considered 70-80% in favor of investors. If the picture is different, then it’s worth considering several times before investing in the project, as developers can simply downgrade the price on the exchange after the end of the vesting period (freezing tokens for a certain time, usually a year, for startup members).
Investing in cryptocurrency startups is a rather risky topic. But, as you understand, in order to choose a promising ICO, it is enough to find out about the developers, their plans for the project, and also determine the value of the token in the project. Of course, not all projects will bring good profit, but if you know these simple principles, then your chances of success increase.