If you want to invest in ICOs, first you have to scroll through ICO listing platforms such as Smith&Crown or TokenMarket to find potentially promising projects that are in need of funding. When you have found a list of projects you could see yourself investing in, you must visit the ICO project sites to purchaise their tokens.
To participate in an ICO, you will – in most cases – need an Ethereum wallet that can store ERC20 Ethereum tokens as most ICOs issue ERC20 Ethereum tokens. MyEtherWallet is likely the most popular wallet for ICO tokens, but you can also use Mist, for example.
Then you fund your Ethereum wallet with ether (ETH) and send the amount of ether (ETH) you want to invest to the ICO’s smart contract address provided on the ICO’s website.
Some token sales support using bitcoin or other digital currencies. In this way, you simply send your digital currencies to the wallet on the ICO page for which you have set up an account under your name.
It is essential to conduct thorough due diligence on the project, before investing in an initial coin offering to make sure you are picking potential winners instead of likely losers, or worse, fall for an ICO scam.
When looking at an ICO, you need to ask yourself the following questions:
- Who is the team behind the project? Do they have sufficient experience to turn their idea into reality?
- Does their product or service have real-world applications or is the company only using the ICO to raise money without actually need a digital token or a blockchain in their business?
- Is there a market for the project’s product or service?
- Who are the project’s competitors? Can they be outcompeted?
- Has the project’s code been peer-reviewed or is it open-source so that it can be inspected?
- Does the token being issued have a utility or is it only another altcoin that is meant to replicate bitcoin?
- Has the project taken newly issued ICO regulation into consideration when structuring its token sale or could they run into legal issues in the future?
- How will the token supply be managed by the project’s operators? Is it investor-friendly or is it unclear how many new tokens will enter the market and at what pace after the token sale?
These questions will be useful for you to better understand the quality of the projects you are looking for. It is also important to check social media platforms such as Reddit and the BitcoinTalk forum to find out more about the project. These social media platforms can give a good insight into how well projects are being received, which can act as a proxy for how well its token sale and, subsequently, its tokens will perform.
Also you can use the Telegram project and Slack channels to ask questions about the project if any have come up for you that have not been addressed by the team in the whitepaper or on social media.