When it comes to your first ICO investment, it can feel pretty overwhelming. In this year alone, hundreds of ICOs have been funded for more than $3.2B. There’s no sign of the ICO market stopping anytime soon.
But if you’re new to cryptocurrency then figuring out exactly how to invest in ICOs without losing your coins is harder than it looks. Maybe you’ve heard that ICOs are where the real money is at. It’s true that you can make massive gains from a successful ICO, but you can also lose everything on a bad bet. So as with any risky investment—don’t put in anything you can’t afford to lose.
Part 1 – How to Find & Research ICO Investments
Before you can invest in an ICO you have to choose from the hundreds of initial coin offerings launched each month. If this is your first ICO it’s easy to feel intimidated by all the technical details, or worse persuaded by pretty websites and shiny press endorsements. Remember:
YOU DON’T HAVE TO BE A CRYPTOCURRENCY EXPERT TO INVEST IN A PROFITABLE ICO…
Read the Whitepaper
Stalk the Founding Team on LinkedIn
- What companies have they worked for?
- What schools have they attended?
- How long has the company/team been together?
- What experience do they have with blockchain/cryptocurrencies?
- Does the CEO have experience leading technical teams?
- How active are they in social media, forums, etc.?
- Do they have a history of conflict?
Review the Roadmap
Research Popularity and Sentiment
- Quickly research how many people are interested in an ICO
- Easily compare the interest in multiple ICOs
- See how people are responding to the ICO
- What is the overall sentiment of the company and it’s proposed project?
- Hacked – In-depth analysis of upcoming ICOs from experienced financial experts
- ICO Drops – Brief overview of upcoming ICOs
This article first appeared in Brave New Coin
Part 2 – The Anatomy of an ICO (Infographic)
What is an ICO or Initial Coin Offering?
An ICO is a means of raising capital for a new cryptocurrency venture. ICOs are frequently used by startups as an alternative to venture capital funding or bank loans. In an ICO campaign, a percentage of the cryptocurrency is sold to early backers of the project in exchange for other cryptocurrencies, usually Bitcoin or Ether.
The Anatomy of an ICO
Terms & Conditions – Read the terms and conditions carefully before choosing an ICO. T&C may include anti-money laundering (AML) or Know Your Customer (KYC) requirements meaning you will need to upload a photo ID.
Token Price – This price reflects how much you’re paying for each of the new tokens befoe bonuses. Compare this price with other tokens already listed on exchanges to get an idea of the profit potential of the investment.
Countdown – ICOs usually last between 30-60 days. The beginning and end is determined by when a block is mined in the blockchain. This is often reflected by a countdown timer.
Bonuses – One advantage of ICOs is that they offer token bonuses for early investors of their proejct. It pays to plan ahead and invest in the early stages of an ICO.
Crowdsale Cap – The total amount of new tokens for sale during the ICO. Be cautious of any ICO that doesn’t have a cap.
Accepted Tokens – Only specified currencies can be sent to the token sale address for each ICO. ERC20 (ether) is the most common.
Token Sale Address – This is the actual address you send your investment to.
Exchanges – Many ICOs are planning ahead and working out agreements to be listed on certain exchanges as soon as the ICO is complete. If that’s the case, you’ll usually find the names of these exchanges on the ICO website.
Part 3 – How to Send Your Very First ICO Investment (step-by-step)
Step 1 – Purchase Ether, Bitcoin, etc.
- Accepting terms and conditions
- Using a predetermined cryptocurrency for investment
- Sending your investment from a specific crypto wallet
- Agreeing to anti-money laundering (Know Your Customer) terms
- Paste the ICO deposit address
- Choose how much ether you’d like to send (or chooseSend Entire Balance to send it all)
- Set your Gas Limit (typically, the ICO contribution page will have a recommended gas limit)
- Click Generate Transaction
- Click Send Transaction
- Approve the transaction
- Visit Ethplorer and paste your transaction address into the first white box
- Click “Ethplore”
Now you should be able to see the details of your transaction:
- Symbol (in this case ENJ)
- Decimals (18)
- Contract Hash (The random combination of letters and numbers)
Copy these pieces of information and paste them into the Add Custom Token pane in MyEther Wallet