Blockchain technology and cryptocurrencies have brought an avenue of financial liberation to millions around the world. Cryptocurrencies are fast becoming an investment option for an increasing number of wealthy people who are seeking to find alternatives to gold as a store of value for their assets. Some other avenues of making returns on investments in the cryptocurrency space is by participating in cryptocurrency trading where coins are traded against other coins on online exchanges; others also participate in Initial Coin Offering (ICO) events – this is tantamount to investing in early-stage cryptocurrency-based enterprises by purchasing tokens they have on offer.
There are several enterprises launching ICOs weekly as such space has also been invaded by projects with little or no value. It has therefore become important to continuously educate people who seek to make some returns by investing in ICOs on the basic things to look out for in order not to end up buying into totally worthless blockchain projects. Some of the leading cryptocurrency platforms like ICOWatchlist have also recognized this challenge and have begun initiatives to help sanitize the largely liberalized industry. The following are some things to look out for in order not to end up investing in worthless ventures;
The Token – One of the most important things to check out about a project is the token backing it. You have to be sure the token is actually useful and that it grants returns on investment (ROI) by way of a dividend payment from the company or by way of being traded on exchanges or both. You should be largely wary projects whose tokens do not present you with these options for ROI.
The Press and Platform Listing – If you heard nothing about the project in the media (especially cryptocurrency media) or not seen them listed on listing platforms, then you should be wary of such a project. A project that is not willing to publicize cannot be trusted with your investment monies. A project should be willing to be available for public scrutiny and one that does not avail itself for this is likely to be suspect.
The Team – You should carefully scrutinize the team. A good project will usually have members of their team available. Also, the team should ideally have some years of experience in the primary field that the project seeks to operate and also some experience with blockchain technology. Even though some good projects might not reveal the members of their team, you will likely be more comfortable with one that does reveal its team.
The Code – The underlining code on which the project is running should be made public through platforms such as Github, Reddit or other such cryptocurrency social media. It is a major red flag if a project team decides to keep its code a secret.
Auditing – Before investing in an ICO, you should be sure about the crowdsale’s audit processes. A project is likely to be more genuine if it has a third party entity auditing its code and also the company’s financials and balances of the crowdsale. You are likely to be investing in a good project if this is being done by the company.
The aforementioned are not the only factors to look out for before making a commitment to invest in a project but it is a start. There are some other factors to keep in perspective. You can easily do additional research online to get this figured out. Basically, you do not throw monies at a project that is not willing to do the painstaking work of ensuring that its projects and components are viable. It is preposterous to have project teams that are not willing to spend time and resources to ensure that their project becomes successful but would instead want to collect millions of dollars from investors – you should be wary of such projects.
Written by Emmanuel T. Darko
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