The Best Upcoming ICO is the One That’s Right For You
When you evaluate the best upcoming ICO that will help you meet your investment goals, you may find what seems like the entire eco-system of the blockchain cryptocurrency world – ICO listings, review sites, youtube video reviewers, Twitter influencers, Twitter Bots – responding positively before, during, and after an ICO. (Go ahead and look up any historical ICO and look at how they were treated before, during, and after their ICO event, paying attention especially to what they are promising people they do, what they actually do, and what happens to the coin price at those intervals.)
The blockchain world includes pay-to-play reviewers, meaning that listing sites that provide reviews are paid for by the ICO issuers themselves. Many of these places do not force themselves to disclose how many of which coins or tokens they may be holding. This includes various review sites, individual reviewers, articles, and more, who at this stage of the blockchain market’s maturity may view promoting any big fish as promoting their own interest. Not only may they be paid by offerers, but they may even be holders of the crypto they are reviewing as they try to get others to buy it and therefore make the price go up.
Here are some critical questions you can bring to bear upon your process of determining what the best upcoming ICO for you to participate in is. (Check out Sun Fund’s offer, here.)
1. Don’t go it alone.
There are tons of great Meet-ups like Blockchain NYC where you can get into a room with other people who are just as new as you are to crypto. (Sun Fund did a Meetup with them.) Here’s an example of one in New York City.
Heres a Reddit forum discussing new ICOs, and its just one Reddit place you might find the best upcoming ICO for you. Other Reddit groups are formed around individual cryptocurrencies like Ethereum and Bitcoin:
2. Read all authoritative papers/documents/statements published by the issuer.
Start with the abstract (the elevator pitch, basically) and make sure you have a general understanding of what the offer is. When you read the abstract or introduction of the white paper it should be able to clearly convey what they are trying to do. If you cant wrap your head around the basic idea from that page, you have to ask yourself whether the people issuing the paper have a clear understanding of what their goal is.
Blog Posts on Offerers Official Blog Site
As time passes officers make decisions about details of their technology and business strategy and update potential investors (or investors who got in Pre-ICO). See if there are any changes that may not be published in the white paper, or any notifications of changes to their white paper.
Check out any of the major crypto news sites and search for articles within those sites about your targeted ICO. There may be not only articles but also press releases with useful, timely information.
3. Critical Questions To Determine the Best Upcoming ICO
These are areas of concern you can bring to bear as you look through an ICOs vision.
Whats the Big Idea?
How scalable is this idea? Put another way, is this a business that can grow globally?
Is it a closed-system blockchain with a huge growth potential? Or is it an open system?
Is it limited to an industry? or is it limited to a very narrow application? One feature of the best upcoming ICOs is that they make the most of the decentralized nature of cryptocurrency.
Are there regulatory hurdles that will make the adoption of the new technology cumbersome, expensive, slow?
How many years do you think it will take for the project to generate revenue?
Does the team in place have a background in the industry that their ICO is addressing? Eg. if someones going to develop an ICO to develop a blockchain platform to facilitate a book club, do they have knowledge of the publishing industry?
Was this team performing a similar, profitable business function before the ICO? If you compare the teams and their experience, ask yourself which team can deliver the best upcoming ICO of all of them?
Can you identify who is responsible for this business?
Try asking an offerer a question about their offer do they give you a good answer in a timely manner?
Is the ICO claiming they are going to create a new technology to meet their objective, or do they depend on an already developed technology?
How plausible is that technology to you?
How long do you think it would take to develop, build, test, and finally begin implementation of that technology?
Are there competing technologies out there?
Use of Proceeds
What is the use of proceeds?
Do they clearly define how the proceeds will be used?
How are they breaking that down?
Where is the company located?
Is it located in a country that would be willing to defend you and get back your money?
This is particularly relevant if the entire dev team and ownership are in a country that is under sanctions from the US Government. You can see if an individual or country has been sanctioned by checking here. Sanctions can be highly specific, so please make sure to read about any sanctioned country very carefully:
The owners may not necessarily part of the team that is building the technology. You should confirm that you understand who owns the company and in what country they’re located, and also if separately, where the business is rooted.
So lets say you’ve found the best upcoming ICO for you – what rights would you have as an investor? Do you have clearly defined rights in the ICO or does holding tokens offer you no rights as an investor?
It is increasingly common for ICOs based in the US to issue tokens that are legally defined as equity securities. In some cases, as investors look at token offers, the token can actually be a special class of preferred equity shares. Look for articles like this to understand the space further:
In some cases, offerers can register an offer with their domestic financial authority. Here is a list of financial authorities by country:
When an ICO claims that they have a phenomenal use-case and theyre going to raise $x millions, ask yourself: can a large corporation in that field or any other incumbent develop that technology, and therefore displace this young newcomer ICO, just by spending and staffing up? An incumbent in the market will fight tooth-and-nail to keep their customer base.
And subsequently, is the ability of the startup going be impeded because the barrier-to-entry is high?
Is the technological advantage proprietary or is it open source? If everyone can adopt the same technology, it comes down to customer acquisition costs. Those are high in retail, and you should determine whether there are many competitors in a particular industry the ICO intends to disrupt.
Blockchain technology can certainly present a disruptive threat an industry in the short term depending on the industry: The ability for competitors to catch up — especially where there are retail customers — may be relatively easy.
If someones issuing a utility token see what the corporate structure is, and how they make profits. If someones selling a utility token, how do you know what your rights are as an investor? The SEC says they see a lot of tokens claiming to be strictly utility tokens that are actually security tokens. This may present problems for an issuer. The SEC says just because an issuer claims they are offering a utility token doesnt mean that token isnt acting like a security.
Be sure to look at the SEC website for further definition.
Is there a clear path to revenue?
Is there a clear path to profitability within a 5 year period (or your intended HODLing period?) Is the use-case coherent when viewed in that light?
Is the case for revenue overly broad, or create a model that will drive money into an asset class however it may come in terms of revenue, or fee income, or otherwise?
Can the disrupted industry respond to whats happening by adopting their own version of what the ICO is proposing, or will they be permanently disrupted? Is there an incumbent that can immediately respond by simply spending money to develop an identical technology?
Utility Token vs Security Token
Does it claim to be a security – meaning theres an expectation of some kind of greater return from your purchase of this?
Does it claim NOT to be a security?
(Check out https://www.ccn.com/utility-token-ico-probably-securities-offering-sec-chairman/) for more information and his analogy for understanding utility vs securities.)
Barriers to Entry
Are there any barriers to the economic sector for entry of this particular business?
Are they able to participate now, or do they have to get over those barriers in order to generate revenue?
Have they operated profitably in this space before their blockchain application, or is their team mainly IT people who think they can adroitly slide into an industry sidewise and start taking money from people because blockchain will empower customers? How realistic is that?
These are just some aspects to look for in an ICO, but there are many others. Mainly, we hope you’ll approach this field with a critical eye and avoid getting swept up in baseless hype as you search for the best upcoming ICO for you to participate in.
Sun Fund does not give investment advice. Please consult with a qualified investment professional for any investment guidance.