When you’re facing interest rates on savings that are still incredibly low, you’re likely looking for unique, high-return investment opportunities. One possible option for the modern investor is initial coin offerings or ICOs.
When you speculate in ICOs, you’re taking a big risk, but you’re also becoming part of the cryptocurrency world, which exploded in 2017. ICOs are a fundraising opportunity that let investors become part of projects and companies early on, and potentially see big returns, but also possibly big losses.
If you’re thinking about putting your money toward an ICO, what should you know first?
Perform Your Due Diligence
Speculating in ICOs is no different than any other risky investment strategy in a lot of ways. You absolutely need to make sure you’ve done your due diligence before you make any money moves.
As you research an ICO think about the product, the people, and what the press is saying about it, and what the overall buzz is.
With ICOs the product can include a prototype or just a plan, but if you’re looking at ICOs that already have a prototype in place, it can mean the chances of success are higher.
You do want to look at the team and their background, and while notable buzz doesn’t necessarily mean success, it does offer an air of validity to a project.
Learn About the Offering
It’s also important to learn about the specifics of the offering itself.
For example, how many tokens will be available for the duration of the offering, will the owners create more tokens in the future or leave it at a fixed amount, and will the tokens have the same value during the entirety of the ICO? Also, can anyone invest, or do investors have to be accredited?
Setting Up Your Wallet
You’ll need to choose a cryptocurrency exchange and wallet, such as Coinbase. Go ahead and set up a few weeks before the token sale you’re interested in because it can take a few days for transactions to be completed.
There is also a fee on sites like Coinbase, and it’s higher for credit cards than your fee if you just link your bank account and move funds that way. You will need to buy Bitcoin, or you can opt to buy Ether instead.
Once you’ve done that you’re going to have to move onto using something like Parity, in order to move your Bitcoin or Ether to a wallet controlled by you. One of the benefits of Parity is the fact that it allows users to schedule transfers at certain times, and then you don’t even have to be around when the transaction actually occurs.
Making a Purchase
Finally, after you’ve done the steps above, you can go directly to the crowdfunding page of the company that’s having a sale, and you can purchase tokens there in most cases. Of course, every ICO is a little different, but you’re usually going to be sending your Bitcoin or Ether to a specific address.