How to trust an ICO (Cryptocurrency)? The ways that we can trust an ICO?
Cryptocurrencies are all the range in the modern world. You can use it to tip a content creator, buy goods and services on e-commerce sites, as well as pay for a pizza. Since 2009 when Bitcoin came into the limelight, other cryptocurrencies have surfaced and though Bitcoin remains the most popular. With cryptocurrency startups finding it hard to get funding from traditional financing institutions such as banks, and the rigorous process of getting the capital from venture capitalists, they are turning to ICOs to fund their products and the running of corporate operations.
Initial Coin Offerings
This is an unregulated method of raising startup capital to fund, and it is one of the unconventional ways of crowdfunding. During an ICO campaign, the early backers of the project get a percentage of the cryptocurrency in exchange for a legal tender or other cryptocurrencies, though Bitcoin has become a favorite. The ICO is also referred to as the Initial Public Coin Offering (IPCO). The cryptocurrency startup companies when starting the process of issuing an ICO, they have to create a plan on a whitepaper stating in detail the following information
- What the project is about
- The needs that the project will provide solutions
- The necessary capital required
- How much tokens the investors will keep
- The type of money accepted for the ICO
- How long the ICO will run
How to Trust an ICO
There is an increase in ICOs, but the number of successful ICOs is falling significantly. Here are ways you can use to tell whether an ICO is worth trusting.
The company offering the ICO ought to be registered in the country of jurisdiction. The firm will have to submit a token sale procedure to the responsible authorities, and this makes it more trustworthy.
Legal Token Sale Procedure
You ought to research on whether the company has followed the legal procedure of offering their tokens for sale. This information is available on the platform used to offer the ICO.
A high token distribution can mean that there is greed involved more so if there are more than 50% of the tokens on offer. The company ought to offer a roadmap for the token distribution since every phase of the project requires funding.
To evaluate if you can trust the ICO, it is important to go through the white paper and get a personal evaluation. You can find the whitepaper evaluations on the internet, but it is better to evaluate person.