The trick is in doing due diligence, since there are almost as many fake ICOs as there are scams in real life

The ICO roller coaster is rocking! For anyone who has been watching the crypto space, the ROI is very alluring. Unlike the heavily regulated IPOs whose business models are almost always tested, ICOs are unregulated and easily accessible. There are almost no barriers to entry; anybody can start a project and float an ICO with relative ease. The good news for investors is there is potential to earn good money. But like any other form of investment, there are risks involved.

Getting Started

The current cryptocurrency market capitalisation stands at slightly over $200 billion, compared to fiat money in circulation which is approximately $1.5 trillion in the US alone according to Business Insider. Solid, revolutionary blockchain projects should see a rise in value as there is a high likelihood that crypto-currencies will be adopted by various industries.

The trick is in identifying these projects, since there are almost as many fake ICOs as there are scams in real life.

Here are some of the successful ICOs and their ROIs so far.

Infographic source: https://icowatchlist.com

Taking a quick look at these ICOs, there are common features that can be attributed to their success.

The Team

The most critical factor is that the team floating the ICO should be made of real people with accomplishments in building companies. An investor should study the team and its advisors, checking their experience, previous projects, and their success rate to give them an overall picture of what the team can achieve and their dedication to the project. You can get most data about team members on AngelList and LinkedIn.

It’s also wise to check the competency of the development team. In the crypto arena, a small fault in the code presents a huge risk. The best example of such a mistake is The Decentralized Autonomous Organization (DAO), a vulnerability in the code led to its downfall even though it originally showed great potential.

Why?

Another important factor to consider is the WHY of the team. What problem is it seeking to solve? An ICO that does not solve a real-world problem or has a valid reason for existing is a red flag. If you have the patience, you could review the White Paper and Road Map on the project’s page.

Taking a look at the white paper should give you an idea of the vision and objectives of the ICO. A good example of an ICO that brought about a real solution is Ethereum; it provided a platform which decentralised apps and smart contracts could be built upon. This was a much-needed solution.

Investing in ICOs potentially has good returns. There are many factors that can give inform investor which ICO will have a good ROI. Data analytics and token economics can be used to filter out potentially bad investments from good ones.

Don’t Give in to FOMO

Investing in ICOs just for fear of missing out (FOMO) is not a wise thing to do; I dare say it’s an easy way to lose money. However, having a good evaluation mechanism in place to guide you through the process of choosing which ICO to invest in, in which quantities and how long to hold onto the coins can significantly increase the chances of having an excellent return on investment.

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