Initial coin offerings (ICO) are similar to initial public offerings (IPO). They provide the means for public crowdfunding. Seeing as cryptocurrencies are new to the public and generally not well understood, they seem to attract ICO projects that are often put together in haste.
Investors should be skeptical because ICOs have cost millions before ever delivering a product. Usually, scam projects do not divulge much in terms of a whitepaper. Instead, they merely bet that a few enticing keywords about a fantastic investment will result in some funding. Other times, there is an elaborate plan detailed within a whitepaper, but gaping holes are disguised by abstract writing. Sometimes there is an honest intention to solve challenging problems before bringing a cryptocurrency to the market. However, it is left up to the investor to decide how committed a development team is and how they will endure the project.
Some top promoted ICOs are found out to have never developed back-end technology. Their landing pages and sales funnels attract an investor’s spare dollars for penny investment. The hope is to catch the right coin on the way up as early as possible. Therefore, the better the design of the user interface, the greater chance that enough people will invest early to give some legitimacy to a brand. Scams tend to reinvent their marketing based on how much investment they accumulate.
The goal of a real cryptocurrency project is to develop a blockchain, sidechain, or some other type of coin or token for digital transactions. Most real projects will include a timeline of the back-end development milestones. Often times, this begins prior to the ICO date. Another assurance for investors is a crypto industry standard of being socially engaging.
Investors should expect a new ICO to go out of its way to answer their questions and provide them with regular progress reports that highlight any and all achievements, obstacles, and so on. The foreseeable future should be laid out in a timeline or similar medium that investors can use to take account of progress.
Blockchains are disruptive technology with the potential to add wealth to investors and the global economy. Still new, they require shrewd investment strategies. Be patient and approach the industry as one might consider investing in a promising company. Discern between the truth, speculation, and hype. The industry has enough talented and concerned individuals to enable the savvy investor to succeed.