Thanks to 2017 being so successful for cryptocurrencies, dozens of ICOs were conducted in 2018. However, due to the massive hype, people started ignoring the features and didn’t do the needed research. In order to avoid sloppy projects and even worse, scam ICOs that plagued 2018 there are a few steps every investor should follow.
How to research an ICO
The research process of the ICO starts with the way you found out about it. Was it a convenient method of marketing a project? Was it relevant to the website that you visited? Try to follow this pattern before going deeper into the research process. Once you’re convinced that the marketing strategy used was relevant to the product, you can move to the next stage.
Read the Whitepaper — Then read it again
The Whitepaper is your map of the project. Imagine the project as a country. The token itself is the capital, which is the most important aspect, and the team is the government, without which the country cannot function.
Make sure that your experience of reading the Whitepaper is as simple as possible. The Whitepaper is meant to answer questions, not create them. Look for legal documents detailing the company’s location and registration number.
The token must have a niche
A token created without a niche has a very low chance of beating the competition. However, a currency that is designed for a specific purpose is due to have at least some kind of future. One of the primary examples of this type of tokens is the AssetStream AST Token, which aims to simplify the microfinance sector. Thanks to the popularity of the industry, the token is guaranteed to see constant use, which creates demand and drives the market further, making it a safe investment.
Always make sure that the token itself has at least some chance of succeeding in the future. This should be reinforced by the company themselves, by providing a 5-year plan for the future.
Research the team
The team is the backbone of the project. If they prove to be incompetent, the project is doomed to fail. Therefore, make sure that they are up to the task.
The best way to do this is to look at the developers, as they’re the ones responsible for building the project. This is best done by looking at their GitHub profile and studying their previous work. This may require some programming knowledge, therefore its best to research with somebody experienced.
How to research an ICO step by step
Past experiences of investors can lead our ways to avoid scams. Many of them write on their blogs, social media, and forums. Aleksei is an experienced investor who started his crypto journey by getting scammed in the boom of ICOs.
He thought he found a perfect ICO, conducted research and was waiting to be involved in the creation of the next Bitcoin (as their marketing promised). Seemed like he followed every essential step of researching the ICO, but in the end, he got scammed, and a once-promising ICO disappeared with his investments.
Later he discussed this issue and found loopholes in his actions. Let’s break it down:
- Researched the Whitepaper
- Studied the project team
- Located the company and checked its legitimacy
The one thing Aleksei missed was studying the token itself. It didn’t have a niche, it was just a cash grab. But his experience taught him a valuable lesson that you can use too.
Practice what you’ve learned
Just creating a mental picture of the research process is not enough. Try out these new tricks on the AssetStream ICO. Take a look at the website, check the Whitepaper, contact the team members and study the token. You’ll notice how much the newly found information can affect your decision and state of mind.