An initial coin offering (ICO), a type of crowd funding using crypto currencies, is a means of raising capital. It is vulnerable, prone to many scams, Ponzi schemes and law violations. It can be a source of capital for startup companies. In an ICO, company source cryptocurrencies from crowd and investors receive these in the form of “Tokens”. Once the project launches, these tokens will be used as functional unit of currencies.

Identifying a good one

Team — People behind it.

- Research about the team and its members.

- Transparent team and ICO process.

- Background check.

- Track records, expertise.

- Defined legal framework.

- Place.

- Are they real? Do they have a crypto venture capitalists backing them?

- Make a conversation with the team. Ask and clarify all your doubts regarding the project. If the developers are reluctant to certain question, do not, invest with them. Read reviews on various social platforms where you can find more about the project.

- Images and names of all developers on project — this can be verified on their website and from their social proofs.

- Coins developed and released by hidden developers are more likely to be scam.

- For newly incorporated companies, many of its founders may have been around in their respective industries. It is possible to review profiles on LinkedIn and search for news and mentions in their prior projects and efforts.

Business Model

- Whitepaper understanding

- Whitepaper is the most important part of any project in the crypto world as it has complete details of the Project. A few investors seem to have little to no understanding of the blockchain technology behind the project and its plans.

- It is important to ascertain/foresee what the project can bring some value to this world.

- Read the white paper, Terms of Service and Policy.

- How they are going to crowd source?

- ICO Road map and its stages.

- Token necessity for the company — why they need it? Aim of the project?

- Token Distribution — A good business plan always has definite ways to utilize the funds & know the requirement in advance. Most projects mentions their token distribution patterns and also the phases in which the funds will be utilized in accordance with the roadmap.

- Who are their investors?

- Who are their advisors?

- Check the progress of the project. Do they have an alpha and beta versions?

Role of Blockchain

- In the recent past, there has been a lot of revolutionized advantages of block chain technology which has been serving people in a lot of ways around the world.

- But nowadays, every new project, due to increased need of security checks, highlights the importance of blockchain technology.

- However, it is important for an investor to know if the blockchain technology brings any contribution to the project, as in few instances the company brings up the name “blockchain technology” only as a means to market their product and raise funds from the market.

Code Evaluation

- Check for the quality of the development team by analyzing the codes.

- Crypto projects generally have an open source code, which provides people with the opportunity to introspect and check for its integrity, authenticity and also builds trust among people.

- Github repository — if the ICO you are evaluating has its listing in Github repository, it is good, and it also means that the project is being worked on.

To Conclude,

A thorough introspection and evaluation need to be done on these factors and few others in order to find a good ICO.