So, you are looking for an ICO to invest in. Very few are lucky enough to have met and got to know the people who launch an ICO in person. Most are likely to be spending hours searching for a good investment opportunity online. If you are an unlucky one, you must’ve felt lost in all the options.
The choice may seem obvious – invest in the ICO that is praised the most on blogs and forums. It is the easiest option, but is it the safest one? Some say if people are talking about an ICO so much, there has to be something valuable to it. Others try to convince us that the hype should never be taken into account.
Should you trust the hype surrounding an ICO or ignore it like an annoying fly? Let’s find out.
What Makes An ICO Hyped?
First things first. What does the word ‘hype’ even mean?
Basically, the hype is a marketing strategy to convince you that you not just should. You MUST invest in this ICO because everyone else is going to. If it seems to you that everyone is discussing a certain ICO and everyone wants to invest in it, it is the hype that you are seeing. The hype is created by all the articles praising it online, mentions in the listings like “Top 10 ICOs To Invest In This Summer”, posts on social media, speeches at conferences, etc.
Creating hype is not something only ICO organizers do. This strategy is as old as the world itself. Think about any iPhone. It was advertised much before its release, and news outlets like Time and The Guardian reported on the new iPhone presentations.
Some attach a negative meaning to the word ‘hype’; others see it as something neutral and natural. It is up to you to see it as ‘bad’ or ‘good’ in terms of morals; we will focus only on whether you should rely on it when making an investment.
Should You Trust The Hype?
If it’s hyped, is it overrated? Or is it a scam? Well, it would be an oversimplification if we answered just ‘yes’ to either of these questions. There is always a chance an ICO turns out to be a scam or unable to give you a return on your investment.
However, there is clear evidence you should be careful about what ICOs you invest in. One of the many examples is Benebit ICO: the scammers disappeared with an estimated $2.7 million worth of investments. This ICO was among the most hyped ones in 2017. The scam was revealed when one user realized the photos of the team members were stolen from a school website.
While using the hype as the main reason for investing is like playing Russian roulette, discarding it altogether is kind of impossible. Even if you sort all the ICOs by their start date instead of popularity, there is no way you can thoroughly review each and every one of them. So, our message to you is simple – take any hype with a grain of salt and research the ICO properly before investing.
4 Things You Should Consider Besides The Hype
#1. The Concept & The Stage Of The Project
You can get a return on investment only if the project succeeds, i.e., it becomes profitable. You don’t have to be a business guru to see if the project is going to survive. Just pay attention to what problem the product is going to solve and what need it is going to satisfy. Does it make sense to you? Does the project really need to be based on the blockchain technology?
Opt for the ICOs with the product that has already been launched but has limited functionality or at least has a beta version. In the latter case, you can also see how profitable the project is. It is also a good sign if the source code is uploaded to GitHub. This means that the team is not afraid to show what they have not and is open to suggestions.
If all the ICO landing page promises is a huge return on investment, run! ICOs shouldn’t be focused only on paying off the investors. If the team doesn’t have a solid business plan, chances are you won’t get any return on investment.
#2. The Team Behind The ICO
One of the easiest ways to spot a scam is to research the team behind the ICO. You need to know that real people are in charge of the project.
Check the photos through reverse Google image search to ensure they are not stolen. Google the names. Visit the team members’ pages on social media (LinkedIn, Facebook) and evaluate their expertise.
The latter one is not that complicated. Check out what projects the team members were involved in before and whether those projects were successful. See if they have relevant experience in crypto-related projects. Don’t hesitate to contact them and ask tricky questions.
#3. Bitcointalk.org Thread
Bitcointalk.org is the biggest forum on crypto-related topics, and it is the place where you announce your ICO if you want it to succeed. The fact an ICO is announced there doesn’t matter that much. It is an opportunity for you to see how the team members react to potential investors’ concerns. Read the thread thoroughly – if the ICO team member avoids answering some questions or ignores them, it is quite suspicious.
Also, don’t be too lazy to reach out to ICO developers via personal messages. If they ignore the message or avoid giving a straightforward answer, it is a huge red flag. You can also search for words such as ‘scam’ or ‘con’ on the thread pages to see if experienced forum users have any doubts regarding the ICO. Be careful with newbies’ opinions, though – they may not be experienced enough to be trusted.
#4. The Whitepaper
Even if you don’t have a huge technical background, read the whitepaper. Don’t just look through it – read it thoroughly as if it is the new Game of Thrones book. The whitepaper is your primary source of information about the project.
Pay attention to the business plan and the project timeline. Is it rational? Is it realistic? Does it make financial sense? Remember: any project has to bring added value to the world to succeed.
Highlight all the moments that confuse you or look suspicious. Research them, ask a professional for advice, and/or write to the team members about your concerns.
The Bottom Line
There is nowhere to run from the hype. All you can do is remember that the hype is not the decisive factor for making any investment, especially in the crypto world. To make a wise decision, analyze the concept of the project and what has been done for it so far, who is behind the ICO, explore the Bitcointalk.org thread, and read the whitepaper.