Not sure about which ICO to invest in? Or perhaps you just want to learn more. It can be daunting but we’ve got you covered here with 7 best practices that show you how to choose an ICO to invest in. Don’t go investing without them.
Practice 1: Know Thy Risk with Cryptocurrency
It’s important to understand the risk that comes with cryptocurrency before you even consider investing in an ICO. The reality is that cryptocurrency isn’t like most other investments and does carry with it a higher risk. Crypto isn’t backed by any business or country. This means it’s open to hacks, scams, and other non-legal activities.
However, it’s not all doom and gloom as it is possible to invest in an ICO safely. Many investors do so all the time. You’ve just got to be willing to accept the risk and understand what you’re getting yourself into. From here you need to do your research and take into account the following six best practices for choosing an ICO to invest in.
Practice 2: Check The ICO’s Site
This should be a no-brainer as so much can be discovered about a potential investment by simply looking and studying their website. A poorly designed ICO website with bad content (lacks authority and credibility) should be a red flag for you. It could very well be a scam. Whereas on the other hand, a well-designed website with good content (credible and factual) is generally a good indicator of a great investment. Research the team behind it when studying the website. Are they credible? Do they raise a red flag with you?
Practice 3: Use Online News Groups for ICOs
The most common and best way to date on how to choose which ICO to invest in is to go to a trusted and reputable online cryptocurrency news group. Such a news source is invaluable in giving you up-to-date information on pretty much every new coin offering available. But only go through a reputable and credible news source. As we like to emphasise around here: always do your research!
Practice 4 : Know What a ICO Coins are For
Critical to ICOs are the tokens or coins themselves. Aside from functioning as the form of security, these tokens or coins often perform other functions with the ecosystem or platform. Some of them can be used within the platform or be later exchanged to other cryptocurrencies like Bitcoin. Ensure then that you understand their function.
Practice 5: Read and Study an ICO’s White Paper
Always read and study an ICO’s white paper to give you a better idea about what it’s supposed to do. Read it several times OVER till you understand it 100%. Whitepapers have been crucial in helping investors learn about Bitcoin. It’s the easiest way crypto investors can spot red flags before losing money. The whitepaper will tell you crucial information like if the ICO will be used as a payment method or if the token will be used as a fundraiser to create new technology.
Practice 6: Understand the Target Market for an ICO
It’s important that you understand the target market for the ICO as inevitably it will be subjected to the regulatory pressure and market of its target industry. Knowing the target market enables you to have an idea of what opportunities and challenges such a venture involves. In the world of crypto , it is especially important to follow this adage: ‘’forewarned is forearmed.”
Practice 7: Go on Crypto Facebook Groups
Although there is never a guarantee with cryptocurrency Facebook groups, they can still be a source of useful information. Essentially they act like an online forum where you can exchange ideas, information and ask questions amongst the group members. Caution applies here as just like with online forums, Facebook groups are susceptible to spam and scams. But this shouldn’t prevent you from still seeking them out, doing some research, and then using your common sense to see whether you should continue or stop.
Final Thoughts on How to Choose an ICO to Invest in
Any ICO can be risky but by being aware of the risks and accepting them, along with doing your research well, you have a chance of investing safely in an ICO.