If you have chosen to take part in an initial coin offering, in order to better understand their intricacies, there are a few things you need to be aware of. If you've familiarized yourself with certain basic principles, the rest of the ICO method becomes much easier to understand.
ICO token
What exactly an ICO token really is and how it can work for them is one of the most complicated things to remember for potential investors.
The primary distinction between ICO tokens and cryptocurrency coins is that ICO tokens are not theoretically currencies and need no blockchain. Cryptocurrencies have some form of monetary equivalent and can be exchanged as such, although this consistency is not available for ICO tokens. When an ICO is over, tokens reflect how many crypto-coins an individual is entitled to receive.
ICO tokens can thus come in various shapes and formats. No two ICOs can assign their tokens to the same form of value.
For example, when it goes live, one ICO token may give you part of the coin, while others may offer other benefits, probably even shares in the company. This is a perfect way to look at the opportunity of emerging technology to make money and to be the first to get on board when these technologies finally come out and see the light of day.
Some tokens have equity, while others may work in the form of credit, where the individual who operates the start-up is essentially given a loan.
It is crucial that you always read the whitepaper and contract that you agree to, so when you wait for the renumeration that you are due, you do not want to be disappointed. In the modern world, being cautious and alert is extremely necessary in order not to be scammed or conned.
How to participate
Before determining if an investment in an ICO token is the right option for you, there are many points one must remember. It is important to build up an awareness of what you are investing in and how it operates.
Make sure the team behind the ICO is one you think you can trust and get behind. For a project, a good mix of seasoned developers and creative business minds is a good sign.
You undergo a relatively easy procedure to participate in an ICO, which allows you to follow a few clear steps. Your chance of losing money is significantly decreased if you implement them properly.
First off, you need to buy the cryptocurrency needed to purchase the tokens, which are Bitcoin or Ethereum most of the time. As you do not want to purchase currency that you do not need, be sure to check which of these is approved.
First, you will need to build a crypto wallet where the crypto currency can be stored. Make sure you look for offline storage, which gives you your private key access.
You need to submit your public address after you have set up the wallet, and you are ready to be part of the ICO.
Avoiding ICO scams
There are plenty of precautions you can take to keep an ICO from being scammed. While scams are becoming more complicated and more and more difficult to detect, there are still some precautions that can be taken.
The most important thing is, in the entire process, to use common sense. After all, if it sounds too amazing for anything to be true, then it probably is.
A project will talk about ambitious expectations, making you believe that the next big thing is investing in you. It's important to perform research into the validity of these arguments. A project can never guarantee anything, but if anything goes well, make yourself aware of its potential.
The ICO's white paper is another thing that you need to look at. Here, with the way the coin offering works, you can find what is incorrect or accurate. If the paper is professionally written, that is a positive indication, but you can also see if the actual technology is described in a realistic way. It's generally best to be careful if there are several buzzwords but little substance.
Finally, look behind the project into the squad. Are they trustworthy people with years of business experience who are trying to develop innovative new technology? If not clearly identified by the team behind the project, this is a bad indication. In addition, if the team members' social media accounts have only been generated recently, and are not especially famous, you should think twice before sending them cash. It is not difficult to track the developers' social media history, and can save you a lot of trouble in the future.