crypto ico

What Is Crypto ICO And How To Invest And Make Profit From It!

Amongst the biggest trend in the cryptocurrency market, ICO has been debilitating the trend route. The idea that goes behind ICO is the one, where you will have to pre-sale crypto coins or tokens belonging to a particular blockchain, which in turn will provide financial backing for fund approval of various projects or new applications.

The sheer amount of money that has been invested and made with ICO is quite debilitating. 2018 has seen them making 6.3$ billion in just about 4.5 months. These stats are quite proof that people are slowly getting intrigued by the idea of ICO.

What is Crypto ICO

To put it in simpler terms, ICO is crowdsourcing but with cryptocurrency. So they are part of the crowdsale blockchain which has successfully integrated and has managed to complete several milestones.

  • They have integrated a simple way for DAPP developers to get the funding they require.
  • Anyone can become an investor. All they need to do is purchase the tokens involved in that particular DAPP.

With ICO Ethereum’s success in raising 18.4$ million; ICO saw itself getting ushered into a new age. These pre-created tokens can still be of value while trading on crypto exchanges (if they are still in demand). With Ethereum’s success in this sector, they have become one of the primary methods of funding projects.

Also, on a side note, you must’ve come across the term token a lot of times. Essentially it doesn’t have any definite definition. But it can be explained with a broader understanding of this word.

So, the token is a symbol of something that is being represented in any particular ecosystem, for instance, it can value, de-value, hold stakes and make voting right. Their roles aren’t fixed, they fill in for the roles that necessitate their existence.

There are two kinds of tokens according to the SEC i.e. Security Token and Utility Token.

Security Tokens are crypto tokens that pass the Howey test for them to be eligible.

Utility Tokens, on the other hand, are gateway tokens that haven’t passed the Howey test. They can be used as services or products.

Things to consider before you invest in ICO

Initial Coin Offering or ICOs are extending themselves in number with the launch of many blockchain/cryptocurrency based platforms. ICO is amongst the several steps of getting into the digital currency sector. Since ICO offers low price, early investors are likely to get a huge chunk of profit in their long run in this course. Though ICO saw its downward spiral in the year 2017, where 46 % of ICOs failed. But that would only mean that one needs to further their research before investing in ICO. Since they are unregulated, choosing an ICO can be a tedious task. There are certain things to have a look out for before investing.

  • Uniqueness and Scalability

The scalability of the token must be taken into consideration before any investment. If there is a long term scope, the token will lose its relevance in the long run. Their existence must be followed with explicit differences between the platforms that already exist i.e. bitcoin, ethereum etc.

  • Hype within the Community

The hype is real and if a particular ICO is creating a buzz within the community, then chances of success are higher. Keep checking on social media whether it’s buzzing or not. If the hype is apparent within the community then people are going to go for that particular ICO. One of the major reasons for ICO failure is their lack of hype.

  • Supply and Availability

The availability of coins after the end of each ICO period is also a sign that you’d want to consider before investing. The supply and demand ratio runs deep within this economy where the demand and capital become significantly high with lesser supply. Token distribution is also to be taken into account. If 50% of the token is being shared within the team, then flag that as something suspicious. Find more about the token shares and the way they are being distributed. A project that can be trusted will roadmap their token distribution with the coverage of each milestone, much like what happens during crowdfunding.

  • Code Quality

One of the best parts of these projects is that they are open sourced which is why you get to keep a track of everything that’s been happening. These aspects can be tracked with commit logs which the developers use to name and push the code once it’s debugged within the GitHub repository. So, you can evaluate the code and a working code will always amount to its eventual success.

Investing in an ICO: How to maximize your profits!

The first place that you’ll likely look for is the one where ICOs are provided with ratings. Because there is no point in investing in tokens during a frenzy when you can take your time to assess and decide.

1. Most of the ICO ratings are done by experts who keep a track of everything that goes on in the
market. On the other hand, existing players who are old investors rate and review as well. This impacts
and tilts the way for the ICO concerned in the market.

2. If you want to know what’s on the menu, then go through the ongoing ICO list where you can just browse through. This way you will be able to find out what’s new and trending. But higher rating doesn’t necessarily mean high profit. Many ICO has sunk before and the likeliness of that happening before any investment can’t be negated.

3. Publicity matters here. It’s resounding success revolves around the way they are marketed, and how the public is they with the project. Even if the founders seem to be trustworthy, public transparency is one of the things that you need to look for before investing.

Investors should always make informed investments on ICO and know how the market is fairing.

Caleb Lombardo
Caleb Lombardo
Caleb is an experienced cryptocurrency analyst, day-trader, and enthusiast. Since 2015, Caleb has been involved in various cryptocurrency projects as an advisor and executive. His passion for cryptocurrency and blockchain technology led him to the acquisition of Stackzea.