How to Invest in ICOs – A Step by Step Guide

Anyone not living under a rock has heard about the huge gains and exciting new ICO investment opportunities of cryptocurrencies but hearing about them and knowing how to invest in ICOs are two different things. It’s not a promise of fast, huge profits and you always need to do your research when investing in up and coming cryptocurrencies. At this time there are thousands of cryptocurrencies, and there are new ones coming out on the market every day. Any startup can develop their own coin. They are serious opportunities for new startups to get their funding and finding investors outside of the more traditional realm of banking or VCs.

ICO offerings have exceeded $4 billion through 2017, with just a small portion of that total ($225 million) having been raised in 2016. But even greater than the chance for riches and the explosion of options, the greatest part about ICO investments is the way they have allowed small investors to get in on the opportunities that were previously only available to multi-millionaire venture capitalists. However, because the arena of cryptocurrency investing is so new, most individuals have no idea how to find an ICO, how to participate in ICO offers, where to buy ICO coins or how to purchase an ICO.

How to Buy ICO Tokens

First things first, the first step an investor needs to take in finding out where to buy ICO coins is to register on a project. Every project will have its own website. That is where they provide all of the information a contributor needs to determine the desirability of the product, the risk involved, and get information on how to participate in the ICO. On the projects website, investors can find out how long the offering will be, how much money is required to participate in the ICO, etc. Please note, that most legitimate projects will require a registration. While a lack of registration does not necessarily mean the project isn’t above board, anyone looking for a solid investment should beware of one that doesn’t.

How to Buy Tokens During an ICO

On a projects website, it will state what type of cryptocurrencies are accepted to buy in. In most cases accepted cryptocurrencies will be either Bitcoin or Ether. While Bitcoin is still the dominant form of cryptocurrency at the moment, there are several types that may be accepted, and often an ICO will list more than one that gives investors a little flexibility. Ether is a close competitor to Bitcoin, growing in popularity due to its stable and easy to use Blockchain platform known as Ethereum, and startups are beginning to favor Ethereum ICOs more and more often.

As new investors learn more about how to invest in ICOs, they see that each new project will also list a minimum investment for a project. That minimum is typically between $10 and $100, which converts to 0.02 to 1 ETH (Ether). Investors can find the minimum and all of the pertinent information on an offering in the project’s white paper posted on its website.

Who Can Participate in ICOs?

Here’s the beauty – almost anyone! Almost any investor, once they learn how to participate in an ICO, can take part. It should be noted that there may be regulations for certain areas, and investors should make sure that ICO investments are legal in their jurisdiction. The U.S. has a freeze involving ICO token trading. Patience will be required for U.S. investors.

For everyone else, there may also be regulations to consider, and it should always be researched before purchases. Some other countries have an outright ban on ICOs such as South Korea and China. Russia has a cap on how much an investor can put into ICO investment types. In Russia, there are also caps to how much any particular company can receive in an ICO investment. So, while ICOs are a great way for companies to get funding, and for all types of investors to get involved, there may be other roadblocks when investing.

Once it is clear that buying into an ICO is legal in your location, take the proper steps to get started. Registration on the ICO’s website is first, that gets you all of the information and begins the preparation to join the offering.

In order to actually purchase a coin or token in the ICO, the buyer will likely need to fill out a KYC (Know Your Customer) sheet or something very similar. This basically verifies the individual’s identity, which is accomplished by uploading a recognized form of ID.

At this time, if the investor hasn’t already, it is a good idea to get a cryptocurrency wallet. A cryptocurrency wallet can be used to store, spend, receive and sometime even trade your cryptocurrencies. The wallet is also where participants can store their new ICO tokens and pay for the ICO tokens. It is a good idea to have a wallet separate from any exchanges that is used only for your payments and deposits, such as a cold storage wallet. When looking for a wallet, make sure that it handles the current industry standard ERC20 that is the official token of Ethereum, the cryptocurrency you will need to pay for the ICO investment, and one that allows you to accept the ICO tokens. This is important, exchanges and some wallets will not accept ICO tokens and if you transfer your tokens to that address, they may be lost forever. Be sure you always have your own private keys to your wallet so that you have full control over your crypto.

Learn What Currencies ICOs Accept and Buy Some

How to Participate in an ICO

Once the KYC form is complete and accepted, and a wallet is established, investors need to check on the type of cryptocurrency the particular ICO accepts for purchasing into the offer. Most ICOs accept Bitcoin and Ethereum. Some other that they may also accept are:

  • Ethereum Classic
  • Cardano
  • NEM
  • Otum
  • Waves
  • Stellar
  • NEO

Keep in mind, there may be others as well, if the ICO accepts Bitcoin or Ethereum, it may be wise to buy those since they are the most widely used, tested and trusted cryptocurrencies. You can buy and trade the most popular cryptocurrencies here.

Move Your Bitcoin or Ethereum to a Wallet You Control

Ledger Nano S

After buying the Bitcoin or Ethereum, it is very important to keep your Bitcoin or Ether tokens in a wallet that is separate from any exchange platform as you learn how to buy an ICO. Having a wallet that only you control keeps your cryptocurrency safer and gives you the maximum amount of flexibility. We recommend the Ledger Nano S hardware wallet.

Sending Crypto to the ICO’s Address to Buy ICO Tokens

Investing carries risk, but that risk should not be a part of the actual method of buying into an investment. Any company offering an ICO is going to make the process for purchasing an investment as easy as possible. It is to their benefit, since the entire idea behind an Initial Coin Offering is to obtain funding from investors. Still, as transparent as the process is, making an investment into an ICO is still an online money exchange, and there is the chance for error. There are two times during the actual investment that contributors should be extra careful.

The first is when starting the transaction on the ICOs website. Investor’s should always check the ICO’s website address carefully. It’s a sad fact that there are many fraudulent websites out there. Most of those take perfectly legitimate websites and make their own versions that look identical, or close, to the original, and then create a URL that resembles it, but in some way differs from the real site’s URL. They trick investors into thinking they are the correct ICO website and once the money is transfer to the fraudulent site, it’s gone forever. One way to be reasonably comfortable about an ICO’s legitimacy is to make sure to invest through a reputable exchange, but this is only available for a handful of ICOs. Even so, don’t skip your own personal check.

The second point of issue is usually an error on the part of the sender when typing or copy and pasting, the ICO’s address into the wallet when sending the cryptocurrency. Check, check and triple check the ICO’s wallet address to be sure it is typed in correctly when sending from your wallet. Also, double check that you are sending the correct type of cryptocurrency to the correct address. Only send Bitcoin to a Bitcoin address, Ethereum to an Ethereum address, and so on. No investor wants to find out after-the-fact that they sent cryptocurrency to the wrong address. The ICO will provide complete instructions on properly investing in the offer, but it is vital to be careful anyway. Mistakes happen, but no one wants it to be with their money.

Don’t be concerned if the transaction takes a little time. Popular offers have thousands of investors making transactions, often during the same time period. That can cause a heavy load on the network and cause a lag. A simple trick many experienced investors use is to increase the transaction fee associated with the sending of your cryptocurrency. For example, increasing the GAS limit when sending Ether. That extra fee will cover the fees of the network, and act like a propellent, giving the transaction extra incentive to pass quickly.

Receiving ICO Tokens

Within your account on the ICO website, investors will also be asked to input the address they wish to receive their tokens. Be sure you input the correct address and that the address you are giving them is capable of accepting the tokens.  Not all wallets can and most exchanges will not accept ICO tokens to be transferred from an ICO.

It will take time to get the ICO tokens added to your wallet. Avoid being impatient. In some cases, you may get lucky, but you will discover as you learn how to buy an ICO, that while some do pay out immediately, many will wait until all transactions are complete. It may take days, weeks or months for the payouts to arrive. There are many possibilities during the busy days of an ICO that may cause delays and even cause deadlines to move. The best way to combat the nerves of waiting is to keep up to date on the ICO’s telegram, slack or another messaging platform. Most will provide investors with updates on when to expect the token transfer to begin and new exciting updates like being listed on exchanges.

It may come as a mild shock to new investors just beginning to understand how to invest in an ICO that tokens may not be liquid the moment they arrive or even be locked (unable to transfer from your wallet). Any time period required will be laid out in the ICO’s outline, so make sure you read it thoroughly to understand what will happen upon payout. Locked tokens are usually intended to protect the investor by giving everyone the opportunity to trade the ICO token at the same time after all tokens have been transferred to investors.

How to Store ICO Tokens

Having learned where to buy ICO coins, and how to create a transaction, it is also important to understand how to safely store the ICO tokens you have bought. You can choose to place your new ICO tokens into a trusted online wallet website or application where it is safe and secure, or you can even buy a hardware wallet for even more safety. Make sure the wallet you choose can accept the ICO tokens you are buying, and that the hardware device you are buying has programmers and manufacturers who regularly update their systems.

Can I Still Buy the ICO Token After the ICO?

The good news is… yes. In some cases, it will still be possible to buy ICO tokens once the initial offering is over. The less good news is that those tokens operate much the same as a stock on the stock market, going up or down according to the success of the company.

Once an ICO is closed, successful ones will appear on an exchange. Investors can keep updated on the availability on the project’s website or by looking on the Bitcoin forum, or one of the other big cryptocurrency forums such as CoinMarketCap.com, covering a particular token. These resources will show which tokens are currently available and where they are being traded.

When Can I Trade or Sell My ICO Tokens?

How to Buy ICO

Once the tokens for the project are distributed, investors must decide what to do with them. There are basically two options, the first is to hold on to them in the chosen wallet location with the hope that the tokens value increases. The other is to trade or sell the tokens. This is a decision every investor needs to make on their own.

The most successful ICOs have generated millions of dollars of profit for their investors. Many ICOs offer bonuses to initial investors of their ICOs that provide larger profits or other rewards for the early funding.

Another consideration is that ICO participants may receive voting rights on exchanges they are members of that can help the tokens to be listed on that exchange. It can be exciting to have a voice in the direction of a company or how the business is organized.

Final Thought on How to Invest in ICOs

The bottom line is, there is no one answer that will be best for all individuals. The attractions, bonusses, and perks may be exciting for one investor, but not for another. Some, especially while learning how to invest in an ICO will be happy to watch the fluctuation, and be patient, while others have a lower tolerance to the ups and downs, and will want to trade out quickly.

Like all investments, it takes time to learn how to participate in an ICO, and there is risk involved. However, the opportunities are exciting. For example, when Ethereum, now an industry standard, first debuted, it entered at $0.30 per token and at this time, in just four years, it is valued at $940 each. It doesn’t take any imagination to see what a great payout that made for early investors.

Now that you know all of the basics involved in how to invest in an ICO, it’s time to actually take the real steps. You can find a lot of great Initial Coin Offerings on ICO Spotter. No amount of study will take the place of the real experience in participating in an ICO. Good luck!

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