Investing in Cryptocurrency — Warren Buffett Style Part II

Using a ICOs as an Advantage

Picture courtesy of WikiCommons

Disclaimer: To modify a quote from Tim Ferris, “I am NOT a financial advisor, and none of this advice should be taken without speaking to a qualified professional first. Also, my results [are most likely] due to pure luck and zero skill.” But…this is working for me.

Investing in cryptocurrency like Warren Buffett isn’t terribly difficult. You could sum it up into one simple sentence:

Invest in cryptocurrency by asking smart questions, doing your research, and holding long term.

The part of that sentence, asking smart questions, can make or break an investment. One of the four questions I ask before investing in any cryptocurrency or digital token is “Do I have any type of advantage investing in this token?” Let’s dive into this a bit more through the lens of an Initial Coin Offering.

An ICO is the method of funding for any given crypto project. Much like a Kickstarter, the company in question releases a coin for sale during a certain time period. Generally there is a fund cap. For instance, ExampleCoin may have their ICO run from June 1 — June 14th, and the fundraiser would end once $15 million is raised. With the funds raised from this sale, the company can begin operations in earnest.

ICOs are no joke — enormous sums of money are raised quite quickly — in some cases absurdly quickly. Gnosis, a prediction market tech, recently set the record for the fastest ICO, raising $12 million in ten minutes.

This is all well and good for the company receiving the funds, but what benefit does an ICO give investors? This is where investing in digital tokens gets interesting.

Each ICO is unique. The price per coin is different, the methods of purchase vary, and the timeline may be faster or slower than other ICOs. Knowing how to navigate an initial coin offering as an investor is key to making smart investments.

Do your research before an ICO, and become a part of the community.

Assuming you’ve already done your research and you believe you’re investing in a solid company, I recommend following them on every channel possible. Check out their Medium page. Do they provide clear instructions? Join their Slack Channel. Is the admin team helpful, prompt, and above board? Check out their Twitter feed. Are people saying good things about them? All these are necessary to prove they’re not just scammers.

You need more from an ICO than just a good community. You need an advantage. This is key to making sure you don’t ever lose money.

Some companies give perks for using a particular coin over another during their ICO. For instance, ExampleCoin may give you a 5% bonus if you purchase their coin using SNGLs instead of BTC.

Other companies keep the price of their token static during the ICO, even if the token is already listed on other exchanges. It is possible to find coins for sale at a lower price from the ICO (say $0.50 each), even though most exchanges sell it for a higher price ($0.71 each). This is a huge advantage and an investment Buffett would be proud of.

Still other companies give tokens away to early adopters. I’ve been fortunate enough to participate in an “air-drop” and a “bounty program,” both of which rewarded me free tokens for being a part of their community early on. The return on investment for free coins is infinite — so do your homework!

These are just a few of the advantages I’ve found during my time investing in cryptocurrencies and digital tokens. A huge help along the way has been the ICO Countdown. I check this frequently to stay on top of things.

A large part of initial coin offerings is having enough Bitcoin or Ethereum to participate, and not waiting until the last second to invest. ICOs end quickly! I use Coinbase to instantly purchase ETH or BTC. Get $10 of free Bitcoin when you use this link — it’s my referral link — and get started now!

Have you found any other cool advantages from an ICO? Let me know! I’d love to hear from you.