Past couple of months were wild west on Ethereum with ICOs . Probably was impossible not to make some nice profit. You just needed to jump from one ICO to another even not botthering yourself by reading whitepapers or making a small research about the projects. And the snowball effect begins. Developers seeing investors throwing away their money so easily, started making more and more new projects on Ethereum blockchain. Basically, in most cases, you even do not need that particular business model to be using blockchain technology, but why not make it if people are willing to give their money. So turn around, find an old idea, check if it is not already on blockchain, create white paper, website and write few lines of code using Ethereum smartcontracts. Thats enough for the beginning.
So it means all ICOs are just a scams? No, not all, there are many good projects out there. For example, one of the first ICO on Ethereum blockchain Etheroll. Their first attempt was very successful but the DAO hack happened. Etheroll creator decided not to risk with investors money and made a refund. After some time he came back with another ICO and the soft launch of the project. And now its only one Dapp on Ethereum which is fully working and already making big money without any marketing yet. Whats more, they even share 100% of profit to tokens holders. While the project is still very young, it has so much space to grow with only a 7 million tokens in total.
How to decide if the ICO is worth your money? You just need basic simple steps to significantly lower the chances get trapped by a scam. Always bee suspicious and raise questions to yourself.
Does their website look nice and smooth? If they did not put enough effort to make a professional site, they probably just want a quick profit. Do you understand the main idea of their project just from the information on it?
Read whitepaper. Do you understand everything what is written there? In most cases (not only in ICOs) if the creators can’t explain their idea in simple words and always use complicated therminology it means they just want to impress you but not to sincerely clarify about their project. (For me, one of the most explanatory and interesting to read was Civic whitepaper.)
Do they have a beta version of their project? If no, be aware that it is still more a dream than a real thing and at this point you take double risk on this investment.
Find on their website information about the team behind this project. If they aren’t well known public persons, do they have the links to personal social site like Linkedin? Check what they have done in past. It doesn’t mean that new unexperienced team is a guaranteed failure, but the risks is higher for sure.
I always look with suspicion if I see advertisement of new project ICO launch. Remember that best projects spread very quickly without any marketing.
At the end, take some time to think if the project is needed at all. Does it solve any serious problem? If you are convinced, do it! Just do not forget invest the amount you are afford to loose. And always diversify your portfolio.
Whats going to happen with all new ICOs in near future? It has to change. First of all, how it’s done, and the CIVIC crowdsale showed the direction. It was done with minimal impact to the whole network of transactions, with no greed to get more than you need and with the widest spread possible to prevent most of the tokens to be concentrated in few hands.
Whats more frightening, that even the most controversial and with a very suspicious dev teams behind it, projects are funded with millions of dollars. In most cases what we have is just a dreams written on whitepapers and millions in pockets. Wait for the first few big ICOs to fail, and that snowball will hit the wall. Big retrace periods will be more frequent and those bubble projects will loose the most in value and the weakest ones might never recover. People will loose money. And at some point it’s okey, it’s inevitable, because people need to have a lesson to make smarter and more responsible investments in future. From that point, in order to get investors attention and get money from them, ICOs will have to show working projects and not only whitepapers. People will be smarter and more picky. Of course, Ethereum might create strict regulations for new ICOs but what can be more fun than sit and watch how market is healing itself from humans stupidity.
Be smart - play safe. Remember, that greed is the biggest evil in nowadays world.
Perfectly!
ReSteemed
Excellent writeup... thank you!
Very good post. Interesting to see I'm not the only one that is thinking about this. I really believe in the ico model, why do wealthy people are only allowed to invest in early stage startups. The issue is that the ico scene currently doesn't have any due diligence, besides that they have 0 obligations to their token holders, this is the issue we have to fix. Does anyone know about: https://www.coincheckup.com They seem to give this complete indepth analysis of all cryptocoins. Sorted by team, product, company, advisors, previous investors, etc. For example: https://www.coincheckup.com/coins/Etheroll#analysis For a complete Etheroll Detailed analysis.
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