The year 2017 has seen an explosion in the cryptocurrency market. The price of Bitcoin has skyrocketed, the popularity of other cryptocurrencies like Ethereum and Litecoin has increased, and there has been more interest in initial coin offerings. An initial coin offering (ICO) is similar to an initial public offering (IPO) in that they are both used to raise funds, but there are some differences.

In an IPO, the investor receives shares and through these shares is entitled to equity within a company and has the right to vote on matters related to the company. In the case of an ICO, the investor receives digital crypto tokens. These tokens offer no equity within the company, but they offer the likelihood of an increase in value. The tokens can then be traded on exchanges at a later date and the investor can sell them for a profit. These tokens also have uses within the blockchain ecosystem of the company conducting the ICO. For instance, in our upcoming ICO tokens will be used for all financial transactions on the LiveEdu platform.

For some persons, the thought of investing in ICOs can seem confusing as there is a lot of technical jargon and incorrect information floating around. However, while investors must be wary of some risks, as with any investment, the process to start investing in an ICO is not that complicated. For a more detailed guide about participating in an ICO, check out the guide we published for our upcoming ICO.

1) Get some cryptocurrency

The first step if you want to get involved in an ICO is to have some cryptocurrency. Bitcoin (BTC) is obviously the most popular cryptocurrency available right now, but another great one to use is ethereum (ETH). To get this cryptocurrency you need to go to an exchange where you can buy it. One of the exchanges mentioned in our guide was Coinbase. Coinbase has grown into one of the more popular exchanges due to the ease and quickness with which you can buy tokens using a credit card.

Some of these exchanges require you to use a bank transfer which can take longer. Coinbase allowing you to use your credit card means it does come with higher fees but the ease of using your credit card is useful. With any exchange, you will need to verify your identity when you sign up, this will require a photo ID like a driver’s license or passport. This verification process can take some time so expect to wait around 3 days until the verification process is completed.

After your identity has been confirmed you are free to purchase BTC or ETH and it arrives into your Coinbase account. This can also take some time, so make sure you have a week or so available to get all of your cryptocurrency together before you participate in an ICO. However, we don’t recommend you keep your cryptocurrency in your Coinbase account but instead transfer it to a wallet. In fact, to participate in an ICO, most will tell you that you must have a wallet which you send BTC or ETH from. This is because you don’t have full control of your coins when they are sitting on an exchange and might not receive any tokens you purchase in a crowdsale.

2) Get a wallet to store this currency and ICO tokens

The key step to participating in an ICO is to get your own wallet to store tokens in. Our guide provides step by step instructions on how to get an ETH wallet like MyEtherWallet or Electrum a desktop wallet for BTC. It is particularly useful to have an ETH wallet for a crowdsale because many tokens nowadays are ERC-20 tokens. These tokens are based on the ethereum standard so storing them in an ethereum wallet would be ideal.

There are other online wallets available such as Parity and offline hardware wallets such as Trezor or Ledger. If you want to become a serious investor then ultimately it would be in your best interest to acquire one of these offline wallets which aren’t connected to the internet. That way, you can store them on a USB drive for safe keeping. However, unlike MyEtherWallet, Parity, or Electrum, these wallets are not free. For someone just getting into ICO investing, a wallet such as MyEtherWallet is more than enough.

3) Buy tokens

The final step to participating in an ICO is to purchase tokens in the crowdsale. Each ICO will have an address where money is to be sent to purchase tokens. Instructions including the address to send BTC or ETH and other details such as gas requirement or data will also be provided if necessary. Once you have purchased tokens, the holders of the ICO will let you know when to expect your tokens and where they will be sending them. Many will send your tokens back to the same address you provided when you purchased tokens, which is why it is important to not send BTC or ETH directly from an exchange as you won’t receive them.

After you receive tokens you can choose to store them in your online wallet or better yet move them to an even more secure offline wallet. The added benefit of offline wallets such as the aforementioned Trezor or Ledger ones, is that since they are stored on a USB they are not as susceptible to being hacked or affected by a virus on your computer.

Conclusion

Becoming an ICO investor is not a complicated process and anyone who wishes to will find it easy to participate in one. The upcoming LiveEdu ICO is a perfect opportunity. However, persons should be wary about regulations regarding cryptocurrencies and ICOs in their jurisdictions, as well as the threat of scams. Due diligence is important to know which ICOs to participate in. ICOs are revolutionizing the way in which companies are getting funded, and can turn out to be profitable for the savvy investor.

If you enjoyed this piece, you might also like What Wall Street Investors Should Look For Before Investing in an ICO

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