However, the cryptocurrency market is plagued with unpredictability as the risk of losing everything invested is as high as the profits it could yield.
In light of this, a new method has sprung up, one that involves a higher risk but comes with higher profits, it's called Initial Coin Offerings (ICOs).
Only a few ICOs are profitable which leads to so many people being scammed of their money with the promise of a profitable venture eventually.
Here are five tips to help you invest profitably in ICOs:1. Research
You're trying to invest your hard earned money, so be sure you go the extra mile in finding out everything you can about the development team.
Visit their website, check out their developer page, etc. Usually, the people who develop ICOs use their real names, with a picture attached.
If you don't see any of these, that's red light. Move unto the next ICO. Investing with a developer who is anonymous is too much of a risk to take
However, if you find the names of the developers, put them up on Google search and get as much information as you can. Their school, course of study, if they've previously worked somewhere, years of experience and the likes.
One major way of recognising a good ICO is if they have a link to LinkedIn, Twitter or Facebook attached to their website. Through this, you can check up their previous posts, credentials and the likes.2. Study the whitepaper
Before any company raises money through an ICO, they create a plan which is usually done with a whitepaper.
The plans on the whitepaper will include the objectives of the project, amount of money needed to carry the project through, time frame the ICO campaign will run for, etc.
It’s essential you take your time to study every detail on the whitepaper no matter how boring it may seem to be. Inside it are the company's opportunities and risks, and every other important information.
The most important things to lookout for are the goals and vision, whether things look promising or not.3. Visit forumsInvesting in ICOs
isn’t a decision you just jump into. You have to visit forums and liaise with like minds. An example is BitcoinTalk.org. It’s a forum where people discuss the development of Bitcoin and other cryptocurrencies.
Through the various announcements on the message board, you’ll be able to find new ICOs, what the coin is all about and what is has to offer, communicate with the developers of the coin and also with forum members.
It's also important that you read every page on the (ANN) thread of the coin when researching a new ICO. Pay attention to the past questions asked and answered by the official developers. Be sure they're answering the important questions and concerns and are not acting fishy.
A simpler way to go through this medium is to search the name of any ICO you're interested in along with some words like "scam", "fake", and "MLM".
If you find any post with these words, find out why.4. Have other options
Don't put all your eggs in one basket; it's very essential you follow this rule in order to spread risk
Putting all your expectations in one coin with the hope of it rising with great profit is a disaster waiting to manifest.
Find six or seven ICOs you've done proper research on and narrow your options to two or three.5. Be guarded
It's okay to be sceptical when it comes to ICOs as it's a market usually surrounded by fear, doubts and uncertainty.
Don't just follow all the information you see on message boards blindly, have second thoughts and carry out researches. Some people spread false information about speculative investments, so beware.
The bottom line is that there are still some ICOs that should be avoided totally as most of them are junk, but with the tips above, you should be able to find good ICOs to invest profitably in.