To give you an idea of how fast this space is moving, I started this article a few weeks ago and have had to revise it three times. The landscape has gone through unbelievable changes in just the last month alone. With a flood of people entering the space, a great number of ICOs selling out before crowdsales, and a host of other factors, we hope this can be of some value before it is possibly outdated by this time next week.— Craig Ritchie, Hash Rush Director of Marketing, 8 February 2018.
Estimated reading time: 8 minutes
In this article:
Rather, in this article we focus on people who want to participate in ICOs — giving a few pointers and suggestions to help you on your way, and providing a brief introduction to the regulatory framework currently in the works.
Regardless of your opinion of him, it's worth following Balina’s on Twitter — not the least because his tweets can make or break a crowdsale. It’s not uncommon to see him tweet positively about an upcoming project, increasing the project's Telegram subscriber count by tens of thousands overnight. He also reviews ICOs on his YouTube channel. His method, while a little conservative for some, clearly works.
If you want to broaden your landscape, also check out these other prominent ICO-focused YouTubers:
There are numerous groups on Discord discussing and reviewing ICOs, and they make for a great place to start — if you can get in. Google for some possible groups, or watch videos from the above posters for openings or waitlists. Many also have publicly viewable spreadsheets of their ICO ratings.
Again, Balina is a frontrunner here with a very detailed sheet you can view here. OhHeyMatty is also very active in updating his spreadsheet, which he often does during his ICO review videos. And a good resource for an overview of the sentiments of some of the key influencers in the space can be found in this spreadsheet, maintained by Top 7 ICO.
While this is of course far from any objective measure of quality (if there even is such a thing), it definitely is a measure of hype and attention. That alone can be very telling of a project’s future. ICOWhitelists is a great place to have a quick glance at the largest groups, as well as those who have seen spikes in membership.
Almost every ICO now has a Telegram channel — it’s an important place to check in, and sometimes ICOs are only open to people who whitelist via their Telegram channels. But as always, watch out for scammers. They’re everywhere, and never trust a PM from someone claiming to be a moderator or a team member; verify their identity with a confirmation message in the project’s channel (where they will have ‘admin’ next to their name).
And just as a final note on this topic: bear in mind that many of the huge Telegram groups have reached these high figures either because they have a referral program incentivising participants to invite others, or are promising a token airdrop to Telegram members. So it's not a pure, cut-and-dry indicator of the long-term success of the project by any means.
But as mentioned above, easy money does not stay easy. Whales — those with hundreds or even thousands of ETH to throw at projects — are getting in on ICOs in the private or pre-sale stages, buying up huge allocations early. This means that by the time the crowdsale begins, there’s less to go around. The squeeze is felt even more on the really hyped projects, so that by the time the public sale starts, there are only very small pieces of the pie left. Some examples are BeeToken, WePower and Fortuna, which only managed a 0.2 ETH allocation per person when their crowdsales opened. It’s great for these projects to get such amazing support, but definitely left some would-be investors wishing they could have acquired more tokens.
As we’ve seen, there are a lot of people making a lot of money right now, but as there’s always risk involved, many people are likely to lose out too. This is where regulators step in. Depending on one’s cynicism, regulators can be seen as either here to protect people from being scammed and losing money — or here to prevent the democratisation of ownership of these projects, thus slowing the redistribution of wealth from the few to the many. There’s probably a bit of both going on.
There’s some speculation that the Chinese ban on ICOs may well be temporary, but just this week we’ve seen more news of China proposing an all-out ban on foreign cryptocurrency exchanges. Let’s hope this is not permanent, as the same money that’s now being prevented from moving across borders could be used to support innovative projects and startups taking advantage of the ICO rage.
Our American friends are already under harsh regulations and are largely excluded from any ICO participation. On 4 January, the North American Securities Administrators Association (NASAA) also joined the fray issuing a statement warning investors to go beyond hype and look seriously at the risks involved. Decent advice no matter what you’re thinking of putting your money into — crypto or otherwise.
Another potential stumbling block is the step taken by JP Morgan Chase & Co and Citigroup to ban the use of credit cards for cryptocurrency purchases. Following suit just hours later, in what seemed far too coordinated to be pure coincidence, Lloyds Banking Group banned its customers from using credit cards to buy cryptocurrencies.
While we can understand the sense in preventing clients from borrowing money to make speculative investments, credit cards are not only a means of easy lending. For some who may well have the necessary capital, they’re simply a convenient method of payment. Note that debit cards and bank transfers seem unhindered, from what we’ve been able to tell. This is going to be an interesting story to watch unfold.
On the other hand, Australia is an example of a country controlling what it can within its own borders, but ultimately leaving the risk up to the investor if they want to participate in internationally run ICOs. ICOs operated from within Australia will have to comply to strong regulatory guidelines, and while the general public is free to risk their money as they see fit, they are warned that “if the company is not registered and does not have a licence in Australia, investors will have little protection if things go wrong” (read this article from The Conversation or ASIC’s own page to learn more). There’s currently no word on whether or not Australian banks plan on also halting crypto purchases using credit cards, but we’re watching it closely.
And of course, on top of regulatory and legal considerations, general security should always be front of mind as there’s a growing number of scammers moving in to the space as well. Just this weekend the ICO for the highly-hyped project ‘Seele’ encountered a massive setback when scammers impersonating Seele staff made off with almost $2 million in Ethereum. This shows again how important it is to protect your funds (for tips, check out the Beginner's Guide to Staying Safe in the World of Crypto).
If this opens the floodgates to millions of US-based investors, it will be fantastic for the crypto economy, but will likely make the good ICOs even harder to secure a place on those coveted whitelists. And, expect more stories of people being scammed out of their money, unfortunately.
In conclusion, it’s a great time to be involved in this space, but it’s far from easy, safe money.
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