ICO (initial coin offering) has recently become a quite popular and promising direction. This segment of the cryptocurrency market is developing at a tremendous speed. In this article we will talk about the most risky, but at the same time, the most profitable stage of investment in crypto startups- pre-ICO.
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- What is pre-ICO and why do it?
- Airdrop and bounty campaigns
- The main risks for investors and startups
- How to select projects correctly at the pre-ICO stage?
- Where can I find up-to-date information on current pre-ICOs?
Every year, investments in crypto startups are getting more and more numerous, but competition in this segment of the market is also growing, for this reason ICO requires an impressive amount of investment. The following things are necessary to conduct a successful ICO:
- MVP (minimum viable product) is a prototype of a future project that lacks much of the functionality. In this version, the product has only the most important features, without which there is no point in further development. MVP is designed to visually show the project idea to a wide audience.
- Budget for advertising campaigns. This part of expenses is one of the most pricey ones.
- Support of well-known experts in the industry. To do this, you need a budget for flights, meetings and conferences.
Not everyone willing to tokenize their startup has an initial capital, so many teams decide to conduct pre-ICO. This stage is necessary for young teams in order to introduce themselves, to find like-minded people and, most importantly, investors for a full-scale ICO. In order to attract investors, organizers make big discounts on their own tokens.
It is worth noting that you can get tokens at this stage not only for money – they can also be earned. As a rule, developers allocate a certain percentage of coins (5-10%) for airdrop and bounty programs.
What is it?
- Airdrop means free distribution of tokens to all interested users who will spread information about the project in various ways (post in social networks, forums, comments, likes, etc.).
- Bounty is also a distribution of coins for the work done, but unlike airdrop, assignments are much more difficult (writing articles, logo/site/app design, WP translation into different languages ), and rewards for these tasks are obviously higher.
This is the best advertisement for ICO projects, and for users it is the opportunity to become investors without risking their own funds.
The fact is that at the stage of pre-ico startups offer to purchase their tokens with large discounts. Besides long-term investors, this attracts speculators who are not interested in further development of the project. Their main goal is to earn money on the first increase in the exchange rate of coins, which can cause a collapse in the token value.
Investors, who buy coins before ICO, risk even more, since it is difficult to evaluate a particular project at this stage. There is a great chance of running into scammers that will simply flee with the collected funds or into an inexperienced team that overestimated their own capabilities.
We remind you:
Many investors are interested in the question: “How to participate in pre-ICO with minimal risks?”. Unfortunately, there are currently no methods that would give 100% project evaluation results. But, nevertheless, there are some moments which you need to pay special attention to:
- Jurisdiction. As a rule (but not always), serious projects are chosen by those countries for registration, where mechanisms for regulating cryptocurrency are developed, and not vice versa.
- Team. Despite the constant growth of the crypto community, there are not so many serious and active market participants. It is necessary to analyze the team members according to their former successes or failures. Investing in those projects which involve absolutely unknown people needs to be done with great caution.
- Whitepaper. The main document of the project, which should be studied properly, describes in detail the terms of purchase, freezing, withdrawal, issue of tokens, etc.
Unfortunately, the statistics are disappointing, as more than 90% of all crypto startups fail for one reason or another. Evaluating a project at early stages is a rather difficult task, which requires a deep immersion in the process and an understanding of the market. Therefore, starting investors should not to choose this direction, since it will rather remind a game in a casino than an investment portfolio.
If you still want to try yourself in this field, the list of projects (pre-ICO list for 2018) can be found here:
Pre-ICO is a rather risky, but potentially profitable type of investment in the cryptocurrency market. For startups this is a chance to conduct a full-fledged ICO, during which you can potentially attract billions of dollars in investment. Investors, also potentially, can get a huge profit by investing in a promising project at the earliest stage. But this approach to investment requires a complete immersion in the process.
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