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ICO or initial coin offering is the 2017 version of crowdfunding mixed with investing for cryptocurrencies.
Developing an alt coin from the ground up is a massive task and requires vast resources and capital to make it successful. Whether a creator chooses to make their own currency coin to run on the blockchain, or develops it as an asset being part of the ethereum blockchain, there is huge investment needed to complete.
Enter the ICO.
Initial coin offerings allow regular everyday crypto currency holders to in essence, invest into these new startup companies' platforms by sending their bitcoin/ethereum/ERC20 (ex. Doge, Augur, Golem etc) to a collection address or smart contract address in return for that new coin in differing amounts. Usually handsome quantities!
These new coins once launched, have the potential to double, triple, quadruple or even in some cases 1000x your initial investment capital depending on how they are received as a product in and of themselves, and also once they become tradable on crypto currency exchanges (poloniex, bitfinex, etc).
2 STAGES OF ICOs
- The first stage of an ico is the PRESALE. This is the luckiest chance for a small investor to get their best bang for buck on the investment. Often though, there are minimum contribution thresholds that exceed the limits of many average person holdings and more of the Whales type investors take those offerings.
Whales as they are called, are investors with large holdings who buy massive sometimes into the millions of coin offerings to make money off of.
- The CROWDSALE
Usually, after the inital presale closes, there is a free-for-all carefully timed, limited time frame sale of the rest of the available coins being offered before the official opening of a new coin.
This part is where the little guy can usually profit because there are no lower limits to how much can be invested in most cases.
Here's a quick guide to maximize your chances of getting into a crowdsale successfully because I have definitely failed at this due to just not having the knowledge and tricks to do it right!
!!!PAY ATTENTION HERE AS THIS IS THE SINGLE MOST IMPORTANT TAKEAWAY FROM THIS ENTIRE GUIDE!!!
When an ico crowdsale becomes available, it is popular for the odfering company to have a website with a countdown timer to when the sale will open. This is the beginning of a sliver of time with which you have to send your payments to the sale address.
Step 1. Make sure you have your payment ready to send. If it is bitcoin you are sending, you can use your wallet to make the transaction. Ie. Jaxx, exodus, coinomi, etc...
If you are sending to a smart contract,
USE MYETHERWALLET.COM !!!
You need to use a wallet that you have the private keys for in order to sign the transaction or else it will not be accepted. This means NO USING EXCHANGE WALLETS LIKE POLONIEX, COINBASE, BITFINEX, ETC...
****As I recently found out, you will likely fail at sending your funds if you use the regular everyday ether node that your wallet defaults to when you open it.
There are actually 3 different nodes that you can use on myetherwallet. The problem is, the servers bog down during icos because so many people are trying to send woth the default one on top of millions of people doing transactions outside of the ico worldwide. Use the 2nd or 3rd node.****
Step 2.
Dont listen to the company's suggested gas price of 30-50gwei crank that baby all the way up to the max. It might cost you in mining fees, but your transaction will move faster than others with lower limits
Step 3.
Timing is everything!!!
Some ico hosts tell you to wait a minute afyer the countdown timer hits 0:0:0 but DO NOT
time it so that you click your send transaction button and the page loads right when the timer hits 0.
This means have your address your are sending to filled in before the release, have your amounts filled in, generate the transaction with signing and be ready to click send transaction ahead of time.
If you are successful, you will be awarded with tokens for the new coin and hopefully profit from it!
There is no guarantee that you will profit but your chances are very high if you get into an ICO that has a meaningful use and is run by a real professional business leader!
It has become popular recently for new ico's to offer a percentage bonus ongoing for holding their tokens after they launch. This means for example if we take the recent tenx ico, they offered a 1% return on every transaction that takes place with their crypto visa once it is launched in proportion to how many tokens you hold. There are long term rewards in other words for having your piece of these icos and holding them.
$CAM ALERT!?!?!
There are fake coin ico's happening all the time that steal your crypto currency. Make sure to do your own research on the company you are about to send your coins to.
This means find out who the ceo/vice ceo is, ask yourself if the product they are creating is actually useful because the real ones are creating them to add value to the crypto world, not just to profit.
Check facebook, reddit and other social media to find out about updates on the offering and other people's views on it. Often people will use these channels to "Burn" it if it is fake.
How To Know About New Icos coming up!
Well, right now, you can take part in thesuperiorcoin.com presale and get yourself 8000+ superiorcoins for 1 ethereum! Hurry as it will end soon!
Otherwise, there is an app for android and iphone called ico alert that you can download and it will give you a list of upcoming icos to research and get ready for.
What Happens To Ethereum When A Crowdsale Happens??
Im sure if you watch the crypto markets, you notice ethereum going up and down massively. This is due to huge amounts of ethereum being used in crowdsales. Huge 100k eth amounts are transferred to the ico. Then whe. The new coin launches and the people gain their profits, they sell out of their hdings back into dollars or a fiat currency and the ethereum value drops massively as a result.
You can use the larger icos to make money off of trading your ethereum when they happen. Sell or exchange the ethereum just before the ico crowdsale, let it drop, amd buy it back!!
As always, i hope this information has been helpful and i encourage you to take the plunge into the world of icos because they will only be a thing for so long and you might as well!
Have thick skin if you fail a couple times trying because once youre in, the grass is greener.
If you have any questions or comments feel free to comment below!
Cheers,
Chris