ICO Analysis, a brief overview

As an ICO/cryptocurrency investor, you must be prepared to DYOR (do your own research) and take the time to analyze and study any potential ICO you may wish to invest in.
It is so easy to get caught up in fake marketing and hype, leading you to make bad decisions.
No matter how great the website looks or how many of your so called ‘trusted’ YouTubers promote any given ICO, you can only really trust yourself and what you as the investor believe to be the truth.

Below are just a few key areas that you should be aware of and research for all potential ICOs that interest you.

Real World Issues

Does the ICO you are interested in solve any real World issues or bring any new initiatives to market that will improve or enhance any given industry or process? Always look for something that will make change for the better or introduce something new and exciting. Try not to fall for projects that offer the same or similar product or service as others unless they are more advanced or have better technology that will surpass the competition.

Comparing ICOs

You will generally find that that there will be competitors to the ICO you are looking into. You need to take the time to research them as well as you may find that they are a better option for your investment.
Establish which project has the best potential to deliver the expected ROI in the long term.
With so many ICOs launching on a daily basis it is difficult to hone in. Some projects will be similar in nature and others almost exact copies.
Researching any ICO/project can be overwhelming so it is important to take a high-level view initially as you simply won’t have the time to study them all at length. If you are still interested in the project after taking a brief high-level view, move forward and get under the sheets to take a close look.

What to look for

Creating a rating system will help you weed out the wheat from the chaff. Your rating system should include the following areas:

Excluded countries: — be sure to check what countries are excluded from the ICO. Regulation is constantly changing, and you may find that you will be unable to take part in the ICO. Just as important, it may limit the potential number of investors.

The team: — check all main team members such as the CEO and other senior positions as well as the advisors they have on-board. Look at their LinkedIn profiles and Google them to check their qualifications and length of experience in relation to the project and/or its market sector. Ideally find ICOs that have both experts in the project area as well as the blockchain/crypto industry. Both business and technical experience are required for it to be a success.

Presentation: — download and read the white paper at length. It should contain information regarding what the product is with a clear and concise description. A roadmap should be available outlining their plans in both the short and long terms. Judge the roadmap on your expectations of how long you want a return on your investment. You will find that some ICOs roadmaps may not show any real progress for many years where others just a few months. It should list the milestones they hope the achieve and when they expect to achieve them. Be sure you understand the use of the digital token.

Marketing: — be sure that they have a professional marketing team lead by a marketing manager with a proven track record. Marketing is a key factor in a startup’s success and without the correct marketing, you can be almost certain that your investment will fail, no matter how good the product.

The ICO details: — look at the start and end dates of the pre-sales and how and when people can buy into the public sale. Check what currencies are accepted. If an ICO will only accept limited currencies that may not be popular, this could impact the level of investment they receive.

Minimum Viable Product (MVP)

An MVP is prototype or alpha/beta version of the product which gives enough information to clearly demonstrate the value of the product and that prove that it will meet customers’ needs.
While MVPs are not available with all ICOs, be weary of any ICO without one as they may only have their idea on paper and may not have validated it. A MVP increases trust in the project and its investors. An ICO with an MVP should make it available to interested parties to gather feedback, opinions and to allow for testing to take place.

Social Media

Social media plays a large part in the promotion of any ICO, both good and bad. It is easy to fall for the FUD (fear, uncertainty and doubt) or also the FOMO (fear of missing out). All social media posts and articles need to be taken with a pinch of salt. You should never use social media alone to interfere with your judgement. It does however play an important part in the decision-making process. It is important for any ICO to attract a buzz on social media, but at the same time look out for obvious manipulation which may be ‘pumping’ or ‘dumping’ the project. It is recommended that you start by looking at the projects’ official social media posts such as their own page on Facebook, Twitter, YouTube, Instagram and Telegram group. Once you feel comfortable and understand the project enough, so as not to be swayed by non-official posts, you can then enter other social media sites and see what the community have to say about your new found ICO. Don’t forget to look for articles in the likes of Medium, Steemit and also forums such as BitCoinTalk and Reddit.

Gut Feel

Sometimes you need to rely on gut feel. If you feel good about an ICO and all the other details add up, like good team, great idea and a suitable roadmap, you shouldn’t be afraid to invest in a project that you firmly believe in. Just be careful and be sure to do your research and try and remove the emotion from your decision.

Soft Cap, Hard Cap & Uncapped

Soft cap: — the soft cap. It is the minimum amount required for the project to be progressed. If a soft cap is not reached, then most projects will be closed and the capital will be returned to the investors. Always be aware of how the soft cap is progressing. If it appears that it may not be reached, you may be better waiting for the last few days of the ICO or researching a different project. The soft cap should form a major part of your research.

Hard cap: — the hard cap is the maximum amount of capital that a project aims to gather. Most projects will stop collecting additional funds once the hard cap is reached. Today we see many ICOs with large hard caps which may struggle to be reached. The hard cap is an important factor when reviewing ICOs at it is directly related to the initial supply and demand of the token you invest in. Always find out what will happen to any left-over tokens should the hard cap not be reached. In the event of them being ‘burnt’, this may increase the value of the tokens as the supply will be reduced. Some ICOs will redistribute left over tokens to investors, this can have the adverse effect of decreasing the value as the supply is increased. If you find a project which appears to be struggling to meet its hard cap and you can confirm that surplus token will be burnt, it may be worth investing due to the token burning process potentially increasing the value of the sold tokens. Likewise, if excess tokens are redistributed, it may not be worth investing in, so always find out and understand what will happen with the left-over tokens.

Uncapped: — Not all ICOs are capped. Where capped ICOs offer the benefit of a tangible target, uncapped ICOs have no limits and are open ended during the ICO time frame. Uncapped ICOs collect as much as they can. The benefit of this is that all investors can take part and invest as much as they wish according the individual investment limits. A negative of an uncapped ICO is that there could be an excessive number of tokens and token holders leading to uncertainty regarding the longevity of project and value of the token.

Bonuses and Referrals

Many ICOs offer incentives to potential and existing investors. These can be in the form of discounts, bonuses and referral schemes which offer additional tokens as commission.
Be sure you understand what offers are available with your chosen ICO, as again this could affect the price of the token you are buying. In some cases, massive bonuses are offered towards the end of an ICO, which whilst it may help the hard cap be reached, has the risk of decreasing the value of the token and also upsetting existing investors who did not receive such an attractive bonus, if any at all.

In Summary

Don’t be afraid to ask questions to reduce any doubt or to double check facts.
If an ICO is worth your investment, they will take the time to assist you in your journey.
You must combine many facets before judging any ICO, including (but not limited to) the ICO team, product, roadmap, caps, social media, ICO review sites, scope and return on investment.
It is a lot of work, so be prepared. Never, jump on the back of some else’s view or hype and always make your own mind up.
There is a plethora of information out there regarding ICOs both good and bad.
As well as using social media and other public forums, you can also use websites which are dedicated to reviewing ICOs. These generally vet all the reviewers in the team and generally provide more reliable information when compared to other avenues of research.

A few of these include: — ICOBench, ICOHolder, TrackICO