10 DOs and DON’Ts for ICO Investors
Investing in ICOs is often considered risky. Let’s discuss the main crypto-trade tendencies and the drawbacks of investing in cryptocurrency to find solutions to these issues.
The Necessity of Token Usage for Community PurposesThe Main Tendencies of Crypto TradingRisks of Using Centralized ExchangesPros of Using Decentralized Exchange PlatformsWhat Is the BDAQ ICOPlatform, and Why Use It?How Does the Current System Work?What Is the Solution? Reasons to Use ICOPlatformIs ICOPlatform for You? Check Out Its Specific Characteristics10 DOs and DON’Ts When Choosing the Right ICO to Invest InThe Necessity of Token Usage for Community PurposesWith the current boom of ICO activity, many entrepreneurs are running ICO campaigns to raise capital for their startups in order to fund their projects and promote their products on the global market.
The main goal of any ICO is to deliver a final product. The project idea, however, isn’t limited to just this. The ICO provides a certain number of functions and specific features. Hence, it also aims to deliver a post-ICO coin/token that investors can sell or exchange after crowdfunding. Cryptocurrency tokens are used to participate in token sales, for investment and exchange purposes for profit, and to increase the value of investments. The more suitable the token is for community usage, the higher the value it obtains. Therefore, cryptocurrency must provide the possibility not only to be used within the project, but also the ability to conduct exchanges, make deposits, process payments, and serve as a means of rewarding investors.
The Main Tendencies of Crypto TradingAs cryptocurrencies have become an essential channel for funding business projects, entrepreneurs primarily trade their tokens on particular crypto-exchanges. It is generally assumed that cryptocurrency is volatile; therefore, it is important to emphasize that this isn’t the most important threat. Instead, the fact that 99% of all tokens are traded on centralized exchanges provides more possible risks!
With that said, you may be wondering — Why is that? Considering that centralized exchanges are the most common means of token trade, investors are still hampered by a list of serious issues.
Risks of Using Centralized ExchangesLet’s take a closer look at the main problems of using a centralized exchange platform:
no reliable safeguards for investors’ fundslack of established institutions behind listing exchangeslack of mature accomplishment and transparency of the listing processlack of credibility and regulations in auditsfraud and security incidents due to increased hacker attackslong delays due to the fact of being listedAs the featured exchange is managed by an entity representing a single point of failure, investors are not responsible for matching their trade orders. Though it provides high performance, the exchange brings down the power of decentralized technology.
When issuing digital tokens through an ICO campaign, startups provide their investors with prior access to their technology. If the product or service is promising and creates much hype around itself, token demand increases. Therefore, the importance of token trading on secondary markets before the end of the ICO phase arises. Hence, delays in listing are one of the major issues.
A solution to the above-mentioned problems exists: considering the use of decentralized exchange platforms!
Pros of Using Decentralized Exchange PlatformsThe main advantage of a decentralized exchange (DEX) is that it allows the investor to be the custodian of his or her own funds by providing control over personal funds without third-party involvement.
Img: Benefits of DEXs.
In addition, DEXs prove anonymity, thereby eliminating personal-data theft. They also mediate trades via smart contracts based in the blockchain, increasing the efficiency of keeping up with high-volume order books. Other pros of DEX include:
catalyzation of cryptocurrency adoptionallowing crypto-prosperityindependence from governmental controluser privacyelimination of downtimesliquidity and the ability to list ICOs that were not able to get listed because of centralized rules or regulationsWe have to admit that certain cons in decentralized exchanges exist, too. Difficulty of usage, a lack of advanced trading functions, and certain problems of liquidity are among them. And that is why we are going to overview the BDAQ ICO, as it offers a new ICO exchange platform that has investigated the current drawbacks and offers new solutions to investors. They will trade their ERC20 tokens safely and securely before listing via off-chain match and on-chain transactions.
Let’s take a quick look at the architecture of the decentralized trading platform offered by BDAQ:
The featured platform allows a user who wants to buy or sell his/her tokens to place an order with the help of a web or mobile application. Further, requests are collected by an off-chain matching service and an order book is made, which will be further maintained in the database.
Interested in finding out more details? Keep reading about the BDAQ platform!
What Is the BDAQ ICOPlatform, and Why Use It?BDAQ offers ICOPlatform, which is a decentralized exchange platform meant for investors who are whitelisted but face challenges in participating in the crowd sale. It allows the buying and selling of tokens before the actual initial coin offering ends.
Additionally, ICOPlatform is positioned as the platform of choice for startups that want to raise funds via ICO, but don’t have enough experience in the spheres of marketing, law, technology, or communications. By providing full-cycle support, the platform will provide complete information on various ICOs, specifying whether or not they are whitelisted and have KYC approval. This is especially beneficial, as social pages have recently banned ICO advertising.
How Does the Current System Work?With a market cap of $29 billion, ERC20 tokens have become very popular on the Ethereum blockchain. Investors usually receive ERC20 tokens in return for their digital currency investments. It is possible to trade and liquidate these investments as soon as the tokens are listed on currency exchanges. The problem is that this period can last up to 60 days or even more, as the token audit and listing procedures take some time. Further, tokens get listed on exchanges in such regulatory-friendly countries as Switzerland, Singapore, and New Zealand.
Today, there are many investors willing to exit their investments before the ICO ends and trade their tokens before listing. Unfortunately, this is not always possible, as there is no way of allowing them to exit such a position. If investors wait the required period of time and get the chance to receive returns on their investments, another issue can arise: centralized exchanges can undergo the risk of personal data theft, and are open to fraudulent activities.
What Is the Solution? Reasons to Use ICOPlatformIn order to help investors and founders sell or buy tokens before the listing procedure, BDAQ has launched ICOPlatform, which enables free-flow liquidity without delays.
The platform allows investors to place sell/buy requests as soon as an ICO is concluded. Therefore, investors who were added to the whitelist (or any others) but didn’t get a chance to invest in the ICO in which they were interested can use ICOPlatform and participate in all ICOs.
As many founders currently face difficulties related to investment credibility, opportunity, and technical due diligence, ICOPlatform offers systematic investment management. In the process, a bank of whitelisted, KYC-approved investors will be created to make eligible investment deals successful.
Take a closer look at ICOPlatform’s objectives:
Are you eager to invest in promising deals with high liquidity, or looking for an end-to-end solution for running your startup? Here’s a checklist for you!
Since you have considered all the pros of using a decentralized exchange system and evaluated the beneficial criteria of ICOPlatform, you are ready to invest in the ICOs of your interest, or trade tokens before the ICO ends. Therefore, it is important to take note of which projects are worth attention, and how to choose them in order to make the right investment.
What are the essential dos and don’ts the investor has to consider?
DOs:
Choose ICOs that have a strong concept or idea. The ICOs most likely to succeed really need to run a launch campaign in order to release a final product or service. Check whether the project presents the actual product or has a proof of concept.Make sure the ICO provides transparency in all aspects to prove honesty and integrity. Research the founder’s experience and history. Questioning background is crucial, as it shows the success or failure of the founder’s previous projects.Check the legal status of the campaign. A startup must be registered and comply with the rules of the country where the ICO is launched. Compliance with all legal aspects provides better security and keeps investors safe.Find out everything about team members. Professional performance is another strong feature of any ICO. Developers have to be competent in informational technologies, and advisors need to be experts in the subject with previous successful experience. Evaluate the company’s white paper and roadmap. These documents are to be clear and comprehensive. The goals have to be set explicitly, and step-by-step milestones need to have specified timelines. Check ICO rating sites to find out more expert opinions, details on investment credibility, KYC approval status, and/or whitelisting status. Though KYC approval and whitelisting aren’t the main features of a successful ICO, they are highly beneficial. Just keep that in mind. Find out details about the company’s token. As mentioned above, a strong token isn’t just used within the system, but can also be used to process payments or make deposits, and can be exchanged for any other cryptocurrency.DON’Ts:
Don’t choose an ICO that does not provide full information about the product or service. If there are too many words but you haven’t, in fact, learned anything and haven’t received specific goals or a precise plan of development, an ICO can be considered a scam conducted just to raise money. Don’t believe in ICOs that promise high profitability over the short term. It is impossible to know this in advance. Only work, strong accordance to the plan, precise documentation, and product development guarantee future success, which is possible to see only in the working process.In conclusion, it should be emphasized that though investing in ICOs can be risky, there are many ways to avoid it. Ensure that the ICO campaign is strong enough to compete in the global market and that it meets all the requirements we’ve mentioned above. As long as you evaluate all the pros and cons of the projects you’re interested in, you’re more than likely to profit from your investments! More discussions on the topic in our telegram chat.