ICOs have a lot to promise only if one can take the time to navigate the right research with due diligence

bitcoins in palms
Bitcoin and Crypto Market Watch Thursday, July 07, 2022 - 16:13

We have launched Cryptogram, an India-focused free weekly newsletter on blockchain tech, global crypto markets, and Web 3.0 technologies which promise to change our future. If you would like to subscribe to this newsletter, click here. You can read our past editions here.

Following last week’s introduction to Initial Coin Offerings (ICOs), in today’s article, we will address the various aspects an investor needs to keep in mind while investing in ICOs. If you are new to the topic of ICOs, we advise you to go visit the previous edition here to gain a better understanding before going any further. 

Crypto assets are typically held and purchased through exchanges. However, there are only a few exchanges that have invested in ICOs. There are various websites such as Coinmarketcap, ICO Drops that usually list the upcoming ICOs with relevant information such as the stage, start date, end date, and goal (amount to be raised). As investors, one can find the white paper of your desired project, which is usually available on the project website to conduct research on it. 

Whitepaper 

A whitepaper is a document that contains all important information about an ICO project such as business idea description, amount to be raised, the intended use of proceeds, key members behind the project, and a schedule for the intended launch. As few of the ICOs end in a matter of minutes, depending upon the buzz it generates, it’s important to consider the time zone of the ICO. One of the fastest ICOs on record was the Basic Attention Token, which raised $35 million in 30 seconds to fund the development of a new web browser.

Investing in ICO

To invest in an ICO, one must possess some crypto asset, as it is not possible to do so with fiat currency such as INR or USD. The first step to beginning your journey as an ICO investor is to buy Bitcoin, Ethereum, or any relevant coin from an exchange and set up a crypto asset wallet that can accept Ethereum or the native token of the ICO project. 

Setting up wallet

Most of the projects accept Ethereum as many of them are based on Ethereum smart contracts. MyEtherWallet, Cipher, and Trust are the most commonly used wallets to store your crypto assets, although we suggest researching the wallet you choose thoroughly before you download and use it. Most exchanges carry huge transfer fees for sending your crypto tokens from the exchange to the desired wallets, so compare the costs before choosing one. Once you have transferred the required amount of crypto to your wallet, you are good to go.

Registration

The next step is to register for the ICO through the project website. Every project that raises funds through ICO usually has a website that indicates what the project comprises, the amount of money required, its goals, the duration of the capital raise campaign, and much more relevant information. One of the key aspects to notice before making any investment decision is to try and find their business model and analyze if they solve any real-world problems.

Regulatory compliance 

Most of these token sale processes usually involve the Know-your-customer (KYC) and Anti-money laundering (AML) process and have certain restrictions such as only permitting investors from certain countries due to specific rules. Once you have agreed to the terms of the sale and verified that your country is not among the blacklisted nations, your registration will be approved. After you have registered for the ICOs and have the funds available and ready, all you must do is to send the crypto from your wallet to the address of the campaign on the ICO start date.

Booking a slot for purchase 

If there is a lot of interest in the offering, the project usually places the eligible participants in a waiting room on the token sale date and assigns a random number to enter the sale. When it's your turn, you can log in and make your purchase. After which you can make the token purchase and complete any form of documentation that may be required. It would be best if you make sure your payments are cleared and save any confirmation from the exchange account or platform confirming your payment/participation in the sale.

Distribution 

Regarding distribution, ICOs have different ways to distribute the purchased tokens. Some usually distribute the corresponding tokens right away to the wallet address that you provided during registration; others distribute the tokens in tranches each week/month if they have any lock-up period. Either way, the process is only complete after you receive all the tokens you purchased in your wallet. 

Cautionary note

Make sure not to invest in anything you can't afford to lose money in, and refrain from making investment choices if you don't comprehend the business concept/model. Many people view initial coin offerings as a way to get rich quickly. But one should understand that ICOs have a lot to promise only if one can take the time to navigate the right research with due diligence on the project.

Use promocode TNM51 at www.giottus.com/profile#promo after registration to get Rs.51 worth free Bitcoin.

Disclaimer: This article was authored by Giottus Crypto Exchange as a part of a paid partnership with The News Minute. Crypto-asset or cryptocurrency investments are subject to market risks such as volatility and have no guaranteed returns. Please do your own research before investing and seek independent legal/financial advice if you are unsure about the investments.

Become a TNM Member for just Rs 999!
You can also support us with a one-time payment.