An Initial Coin Offering, popularly known as ICO, is a fundraising mechanism according to which new projects sell a small percentage of their new cryptocurrency to early backers (or in simple words, investors who believe in the project) in exchange of legal tender or existing cryptocurrency (majorly Bitcoin and Ethereum). It is very similar and named after Initial Public Offering (IPO) where investor buy shares of a company.

When a cryptocurrency start up firm lacks money to finance its own project, it uses ICO. An ICO, under normal circumstances, starts with a plan on whitepaper. The whitepaper usually contains the following information:

What the project is about
Aim of the project
Money needed for the completion of the project
Number of virtual tokens available for early investors to keep
Type of money accepted
Duration of the ICO campaign

During the campaign, the investors buy virtual token with fiat or cryptocurrency. These virtual token are same as the shares sold during an IPO transaction. If the money raised during the campaign does not meet the amount required for the project, the ICO is said to be unsuccessful. However, if the amount raised meets the requirement, the project is initiated.

Despite several ICOs being successful investors around the world are cautioned against investing in ICOs because a huge number of ICO campaigns have turned out to be fraudulent. And since, ICO exist outside the jurisdiction of financial authorities, the investment may never be recovered.

So, how to choose which ICO to invest in?
We have prepared a checklist that you must carry while choosing an ICO


1. The team behind the project-
Search everything you can about the team behind the ICO. Make a list of every member of the team and try to dig more and more about them. Try and find about their relevant experience. Go to Google, visit LinkedIn. Search for any famous name in the team. Check how much of experience they have in the crypto-world, what projects have they worked upon, and what was the result of those projects.

2. Search on Bitcointalk.org and every other social media platform
Bitcointalk.org is the biggest forum for Bitcoin and cryptocurrencies and their issues. Go to Bitcointalk.org and search for the project and everything related to it; the announcement, comments and discussion about the project. Ask everything you want to. If the developers are reluctant to certain question, do not, we repeat, DO NOT invest with them. Read comments in the thread. See what people have to say about them. Go to Facebook, Twitter, Instagram, Reddit and other such platforms of discussion where you can find more about the project. Try and find people who have already invested in the project. Talk to them.

3. Evaluate the stage of the project:
See and confirm which stage the project is in. Is whitepaper the only thing they have? Do they have a beta version? Do they have a product with limited functionality? Try to find something which assures you that the project is real. Venture capital is another important element. If the project is backed by a well-known crypto venture capital, then it is right to move forward with the ICO.

4. Why they need token?
ICOs, usually, mean creation of new tokens for the project. Try to find the reason behind the project. What is the aim of the project? What is the token on sale for? Why Bitcoin or Ethereum enough to serve as project token? Beat around the bush and try to find as much as you can?

5. Unlimited Cap
In the initial days of ICOs, open cap and hard cap didn’t mean as much as they do to today’s ICOs. The open cap allows investor to invest unlimited amount of fund in the ICO (ICOs wallet). You don’t want to be investing in a project which is aims to circulate a very large number of coins because when it happens, there will be less number of unique token and the value of you token will simply fall. On the other hand, you also don’t want to be the alone one investing in the project.

6. Distribution of token
An ICO selling 50% of tokens in the opening phase of the project must be doubted upon. A good project will sell token after reaching certain phase because each phase require certain amount of funding. Keep a sharp eye on when are the token released. Some ICOs release token soon after ICO has ended while others take time.

7. Evaluate the Whitepaper
A big number of investors do not read the whitepaper, even when it contains all the information needed for the ICO and the project. Do not hesitate to read it. You are going to invest your money, they least you deserve is to read about the project. Ask yourself what value is the project bringing?

8. Analyse the code
The quality of a developer can be understood by analysing their codes. If the codes are messy, do not invest. Look at the length of the function. If it is more than 50 line, red flag the ICO. Just remember, a piece of code reflects the attitude and trueness of a developer. Crypto projects tend to be open. This creates a sense of trust among the community involved in the project.

9. The Bottom Line
Research. Research as much as you can. With each passing day the number of ICOs will keep on increasing and it will become harder and harder to asses each ICO with same efficiency. So, try to get as much as information you can get. Do not invest with half-baked plans.