The Importance of Doing Due Diligence before Investing

thaticoguy (25)in #icos • 6 years ago

Forgive me for this rant today, but I feel it's necessary given the amount of time I spend sifting through endless whitepapers, verifying actual accounts and determining use cases. Dig in.

Who would've thought the majority of ICOs out there would amount to nothing? Nearly 60% of ICOs in 2017 are gone with the wind. Already nearly 76% of ICOs this year are barely above water even after raising 8% more than we have for 2017.

So, what's to stop the garbo ICOs from collecting money that could be used for worthwhile projects?

It's simple: YOU. ME. US. We need to really take the time to breakdown these projects trying to raise millions of dollars for ideas they're not even close to developing. I understand we're in the infant stages of this technology and getting a piece of the right pie could turn the smallest of investments into worthy bags that could create generational cash flow. But, take a breather for a second and truly evaluate an ICO before even thinking about tossing your weekly tips into Coinbase.

Things to ask yourself before opening your wallets

If it's too good to be true, it probably is.
I hate to say this, but if a company is promising to deliver everything in a hand basket before even having anything to show proof, they're more than likely to fail. In this case, it's better to focus on as little as possible - solving one problem first before promising to solve every other. Example: Centra backed by Floyd Mayweather and DJ Khaled - 2 "blockchain experts" and advisers (obvious meme).
How much money are they trying to raise and what will it be used for?
No matter how much money you're choosing to invest in a project, it's best to analyze every possible scenario and think logically rather than FOMO (fear of missing out). You'll thank your pockets later. A fine example would be Apple and how it was started with $1300 (about $5,774 in today's money given inflation). Now, some of these projects could actually use a few million to create a proper platform from start to end, but when you run into situations like Telegram raising nearly $1.7B, red flags should be raised. Be as realistic as possible.
How strong is the team?
I'm sure you're aware of the phrase, "teamwork makes the dreamwork." It's true. An ICO can have all the money in the world, but if the team behind it has no strengths and no experience in their roles prior to raising money you should be cautious. Would you want a freshly graduated surgeon to operate on you or would you prefer one with experience (yes, they all start somewhere, but bare with me)? What about a tattoo? Would you want an apprentice on day one or someone with experience? When looking at these teams, it's important to compare their current positions on the team with that of their previous experiences. If Debbie is the Chief Marketing Officer for XYZ ICO, but has only ever worked at McDonalds or Pizza Hut as a regular employee, how much knowledge and experience do you think she actually has in marketing?

Now, there are obvious exceptions to each rule and these are just a few of the basics. Having a strong foundation when doing due diligence can prove to serve your pockets and your peers well. Now, go out there and contribute to the world. It's ever changing and needs more people like you.