Investing in ICOs and Staying Safe
As the cryptocurrency sector continues to grow, both in Australia and globally, attention is not only focused on the big players such as Bitcoin and Ethereum. More and more cryptocurrency holders have become intrigued with a broad range of alt-coins.
Beyond even alt-coins, there are many investors seeking to get in at the very ground level. This can be achieved by investing in ICOs. ICOs or Initial Coin Offerings. These are often touted as highly risky and unstable investments to make, and sure enough, finding a good one can be something of a wild goose chase. However, this is your best opportunity to get involved at the earliest stages of cryptocurrency investment.
In this piece, we will outline how you can get involved in ICOs, where you need to search, what you need to be looking for and above all, how you can preserve the security of your crypto investment in this slightly risk heavy sector of cryptocurrency.
Where to Start
Similarly to investing in Bitcoin or another major cryptocurrency, there is a lot of misinformation or at the very least misconception about how difficult it can be to get started. In truth, it is relatively easy to invest in your first ICO, just as it is cryptocurrency.
We would recommend a good starting point as one of the many available ICO rating sites. These sites such as IcoBench, Token Market and IcoGlory usually provide you with a comprehensive listing of upcoming ICOs for the following month or later. You can also track recently launched ICOs.
Not only do these sites provide useful summaries and ratings of each upcoming ICO, but, it is from here that you can access the projects whitepaper and official site. As you can imagine, the official site, promotional videos and other elements are formulated to make the project look good and promote its positive attributes. This means that if you are considering investing in these future cryptocurrencies, it is absolutely vital that you read the Whitepaper comprehensively.
The company or project whitepaper is where all of the key objectives of the project are outlined. This will include launch dates, project goals, a roadmap detailing how they aim to achieve their goals and it should also contain quite detailed information about the team members involved in a particular project.
Once you have completed a thorough review of the whitepaper and feel like you have identified an ICO which you would like to invest in, don’t stop your research there. Every upcoming ICO worth their salt should have an announcement page on the popular cryptocurrency forum bitcointalk. Here, there will be pages and pages of discussion from group members, many of whom are knowledgeable, experienced, cryptocurrency investors and advocates of Bitcoin and other cryptos from the early days.
Here, you should be able to further educate yourself about your chosen crypto and pick up a general consensus about the future prospects of the project thanks to the direct and frank nature of the conversations between project team members and other forum members. If the ICO does not have a page on this forum, you should be extremely cautious.
Buying your Tokens
Armed with knowledge, you may now be ready to purchase your fledgling cryptocurrencies. Many ICOs are for ERC20 coins. This means that they are often based on the Ethereum network. Due to this fact, many of the projects require that you make your ICO investment using Ethereum.
If you already have some Ethereum, it is often just as simple as transferring from your cryptocurrency wallet to the wallet address provided by the ICO. Following this, your purchase has been completed. When you will be credited with your tokens is dependent on the timescale of the ICO itself, but this should be clearly referred to in the projects whitepaper.
For many of the ICOs, you will need to open a wallet which is ERC20 compliant and which has the ability to store tokens. Because of its open source nature and ability to add virtually any new cryptocurrency or token to your wallet, it is recommended that you use MyEtherWallet for initial crediting and storage of your ICO tokens.
How to Store Your ICO Tokens
As mentioned, storing your ICO tokens after purchase is as easy as opening a compatible wallet. Many times this will be MyEtherWallet. It can take a considerable amount of time, even after you tokens have been credited to your wallet, for them to become tradable on an exchange. This should all be made clear in the whitepaper, usually in the roadmap section which discusses the proposed timelines of the ICO.
During this time and of course after, it is important to keep your tokens safe and secure. This means keeping your private key well-hidden and your computer and other software free of malware and other programs which could compromise the security of your holdings.
Whilst the majority of people are happy to store their tokens online using just their private key and MyEtherWallet, many with a larger investment may want to opt for some hard storage. This can quite easily be accomplished by transferring your token balance from the site to a Trezor hardware wallet. Along with the Ledger Nano S, Trezor is one of the most highly respected hardware storage wallets and represents a very secure place to store your tokens.
If you prefer a mobile wallet alternative, ImWallet is one of the most respected in terms of mobile storage for your ICO tokens. In fact, it is the first wallet to offer mobile token storage on both iOS and Android. It is versatile, offering support to a wide range of tokens and blockchains and has mostly garnered very positive user reviews in terms of performance.
Selling Your Coins
After the ICO has been completed and the tokens have been credited to your designated wallet, it is very likely that the company is question will have negotiated some deal with one or a number of cryptocurrency exchanges. Once the token has launched on exchanges, it is no live and tradable. Your ICO has become a verified and selling cryptocurrency.
As with any cryptocurrency, you may opt to sell your holdings at some point. This will be done through the medium of the exchange. Again, in theory, this is a simple process. Transfer your coins from your holding wallet onto the exchange using the address they have provided and sell at your command.
With your ICO, now a fully operational cryptocurrency, the process may be further complicated depending upon which crypto exchanges the company have decided to partner up with. In the beginning, these may be somewhat lesser known exchanges such as EtherDelta or KUCoin. If you wish to sell your crypto, you will need to register an account with these exchanges. As your cryptocurrencies influence and hopefully value continues to grow, then it is probable to be picked up by some of the larger exchanges such as Binance.
As with any cryptocurrency or other commodity, you are free to sell your holdings at any time. It should especially be noted however that with new cryptos, especially coming from a recent ICO, price fluctuations can be more volatile than usual whilst it continues to find its place in the market.
Popular Australian ICOs
There are a wide variety of ICOs being launched on a daily basis which cover all manner of areas. Here, though are a couple of ICOs which have drawn some attention in the crypto sector of late:
This is a real estate platform which may already be recognizable to many Australian and New Zealand customers given that the service already has in excess of 20,000 users. The aim of their ICO is to help integrate the real estate market with blockchain technology.
By doing this, the excessive commissions and fees can be eliminated with a direct medium of contact promoted between buyer and seller as well as commissions in the form of RET coin to agents who refer customers to the platform. This type of project typifies the attempted decentralization which cryptocurrency tries to achieve, all to the benefit of the user.
This particular ICO is scheduled to begin in early-April with big purchase bonuses for early investors as is often the case with ICOs. More information on the company, including its profile and whitepaper can be found here.
Bitcar is an ICO run by a Perth based business. They offer investors the change to own and trade in fractions of exotics cars via their platform and Bitcar token. This is a market from which all except the super-rich have often been excluded.
This particular ICO is allowing for investment through a range of cryptocurrencies including Ethereum and Bitcoin. You can also invest in this particular ICO using traditional fiat currency. According to the figures, one Bitcar token is valued at $0.10USD. This is the company valuation and pre-launch price. As with all ICOs and more traditionally companies which became publically traded, the hope is for this price to rise in the post-launch period.
In this particular case, the company hopes to earn an investment of around $22,000,000. Of this amount, approximately $7,000,000USD has currently been raised with the ICO scheduled to run until April 20th. More information can be found here.
As with all cryptocurrency investments, you want to make sure you are following the right guidelines for protecting the safety and security of your investment. Investing in an ICO is no more risky than any type of traditional investment so long as you have performed your due diligence. This means, reading the whitepaper thoroughly and studying all the available information you can find on the company, its project and offering. You also need to consider elements such as how many tokens are being released and how useful the token can be.
From a technical security standpoint, you need to ensure that you maintain all of your private keys, wallet passwords and backup phrases in a safe and secure manner. Without these things, you can easily find yourself locked out of your wallet, in which case it can be next to impossible to gain access to your holdings of any cryptocurrency.
As with many situations in life, investing in cryptocurrency is no different. If something seems t good to be true, it very often is.
Investing in ICOs is the natural next step to take in advancing your interest in cryptocurrency investment. It serves as an excellent opportunity to both diversify your portfolio, grow you knowledge of the sector through the experience you will gain and it also allows you to identify projects which you truly feel passionate about.
Investing in an ICO means you are a member of a core group of investors supporting a cryptocurrency from day one. This in itself can be an exciting and rewarding journey which, even though it has a slim chance of success, can ignite your passions to delve more deeply into the cryptocurrency markets.
If you are passionate about investing in crypto and would like to introduce some fledgling cryptocurrencies to your portfolio or even discover the new Google or Microsoft of the crypto world, investigate more about ICOs today!
- The views expressed in this piece are merely opinions of the author and are not in any way intended as financial advice. Every investment decision you make is at your own risk. Do not invest more than you can afford to lose.