In an ecosystem of seemingly endless ICOs, it���s becoming increasingly hard for investors to discern the good from the bad. What should an investor look for when considering investing in an ICO? Here are a few key signs:The concept
When looking at the concept from an investor standpoint, ask yourself these questions:Does this business model require the blockchain to function, or was it simply an opportune moment for the business to conduct an ICO? Even if the blockchain can be used in the business model, is it necessary for them to have a token attached to the model / run a token sale? What is the utility of the token? Has this problem been addressed in the crypto space before? (Looking at you, decentralised banking ICOs) Is there still space for this ICO and concept? Does this concept seem feasible in the time that the whitepaper has outlined? Tokenization and utility
It is important to consider the utility of the token, as it will be a very good indicator of the longevity of the token. If an ICO simply states that their token is used to facilitate platform usage and can be traded on the crypto exchanges, the long term feasibility of the token in the crypto space is diminished.
William Mougayar has written an excellent write-up on this idea, stating there are four use categories of tokens: 1) a right,��2) a reward, 3) an ownership,��and 4) a toll.The team
The team is a huge factor to consider when looking at investing in an ICO. The team must consist of a combination of a traditional start-up team members along with specialists in the crypto industry.
A red flag that investors should look out for is when a company���s technical specifications regarding the blockchain are purely conceptual and ���developers are being hired post-ICO funding���. This shows the initiative is not trustworthy from a blockchain developer standpoint.
If teams are predominately packed with business-related team member...