ICO Due Diligence

What to look for when investing in an ICO

ICO, initial coin offering and other forms of cryptocurrency are turning into the main go to for investors worldwide as the transactions are so unregulated and that people can bypass credibility checks. But the main reason is that ICO in the market is increasing and shows no sign of dropping, making ICO a better investment than commodities or stocks.

But before you journey into initial coin offerings, make sure you understand exactly what it is. Just like Bitcoin and cryptocurrency, ICO is completely digital and although companies sell them to investors, you can never actually take ownership of your coins, (tokens).

What are ICOs

Companies are using this method of selling ICOs as a form of crowdfunding to build and grow their business. As the company’s value increases and the price of stock also gain more value so do your tokens. Meaning that your ICOs will increase in price resulting in you making a profit.

ICO Process Explained

However, it’s very important to do research and examine all aspects of a company before buying ICOs, as this is still a form of investing. Firstly you should always know who the company deals with, who are their partners, what are their future plans and what network and platforms do they use. It’s extremely important that you know where you stand with the company when it comes to selling your tokens back to the company for the profit that you have made.

This is particularly important today given the large degree of celebrities who are promoting ICOs. People could just see that someone famous has promoted a ICO company and would then just assume that this company should be invested in. You need proper due diligence.

Floyd Mayweather Promoting an ICO

Do a security check on the company that you’re about to buy from. Make sure they are registered and all legal measures are in place. Remember that since you can’t take ownership of ICOs if anything goes wrong and you lose your initial investment it’s completely gone.

Find out about the companies SSL certificate by opening the company’s website in the browser and look for a green padlock icon in the left part of the address bar. If you can’t see an icon or it’s red then avoid the company. If you do see a green icon, be sure to just double check the company’s legal standings as an extra precaution.

Have a Test Run

What many investors advice is that when you find the right opportunity and decide to invest and buy ICOs from the company, do a test buy. This means that you first buy a small number of coins to see if your investment will be at risk. If you buy a few coins and there is hacking or scams then you might lose a small amount of your money, but your large investment sum will still be safe. Think of this as a trial run for buying ICOs.

Just as stock is an investment that carries risks, so do ICOs. You can lose your money in the blink of an eye, or you can make an incredible amount of profit. No one can predict the exact outcome of any investment so if you don’t fear to lose and like the chance to reap a potential reward in the near future then investing in ICO is the ideal opportunity for you.

Celebrities and Their ICOs

Celebrities and ICO promotions

As the world is being introduced to ICO, celebrities, and other spotlight attracting people can’t help but climb aboard this opportunity train. Crypto Media Group has even been approaching celebrities to help and promote ICOs. This is a great strategy as we all know that celebrities can’t blow their noses without the majority of the world knowing. So many people that would benefit and be interested in ICOs will now also be introduced to it thanks to them following their favorite celebrity.

As social media is the leading way in marketing, companies look to celebrities to promote and drive publicity to ICOs as they have over thousands of followers and fans, making this ICO marketing strategy foolproof.

Leveraging Star Power

Floyd Mayweather was amongst the first renown names to be approached by the Crypto Media Group. Floyd Mayweather was seen tweeting and promoting the public about the upcoming Hubii ICO during his Floyd vs Conor campaign.

Logan Schauer, the CEO of Crypto Media Group even stated that “the company seeks to leverage social media influencers to promote ICOs to mainstream audiences outside of the core cryptocurrency community.” This will present the opportunities behind ICO to a wider arrange of audiences.

All through other celebrities such as Jamie Foxx and Paris Hilton are also promoting ICOs, a number of investors are against this marketing strategy. These investors believe that celebrities promoting ICOs will eventually cause a flood in the market and result in a “bubble”. Regulators would then need to be brought in to stabilize this situation.

There is also fear that all of these ICOs are now raising funds from a number of inexperienced investors as the price of Bitcoin is at all time highs. This is due to the fact that the Bitcion November hard fork seems unlikely now.

Bubble Concerns?

Investors also believe that a great number people investing in ICOs because of celebrities telling them to do so will lose a lot of their money as they would be investing because of a current trend and not of fundamental or technical reasons. Andreas Antonopoulos, an early bitcoin investor even said recently, “The worst reason to make an investment is a celebrity endorsement. Unfortunately, this tactic works, and that’s why they’re doing it.”

Although many investors are against celebrities promoting ICO, it doesn’t stop this marketing strategy as music producer DJ Khaled is the latest celebrity to join this movement. CoinDesk informs the public that in 2017 alone ICOs have raised nearly $2 billion. We don’t know how much of this was raised thanks to celebrity endorsement, we just know that $2 billion is a phenomenal number to have been raised this far.

The question that is being asked is how many of these celebrities are actually into ICOs or are just being paid to promote it? General partner at Haystack Fund, Semil Shah said that this type of “influencer marketing” isn’t illegal, but it might attract the SEC’s attention later on. (The U.S. Securities and Exchange Commission)