The business of rating ICOs
The dream of every investor is to multiply their profits. The less money you invest and the more money you make, the better. To increase the likelihood of this happening, people who are dedicated to this type of business seek to know the potential that a product or company has to increase its value, and then they can decide whether invest their money or not.
In the emerging business of ICOs (Initial Coin Offering), in which companies seek funding through the sale of tokens, investors try to find out the probability that a company grows and, as a consequence, also the value of the tokens and their investment. One way to do this is through the rating that certain companies give to different ICOs. This rating goes from 0 to 10 — 0 means few possibilities for the company to prosper, and 10 means very high chances for the company to grow.
Today there are many companies dedicated to qualify the ICOs, such as ICOrating, ICObench, Supposedly, these companies take into account different factors to determine the potential that different ICOs has to succeed. Investors take them into account when betting on one or the order, however, is this classification always reliable?
Some of the rating agencies offer ICOs the choice between the free version or the Premium version. When the ICO decides to pay for the Premium version, it receives multiple benefits, which vary depending on the raring company, such as obtaining a higher rating, increasing visibility in competitors’ profiles, being mentioned in the weekly bulletins that potential investors might see, etc. There are rating companies that can also ask for money to speed up the process. This means that not always the rating given to an ICO is a reliable reflection of the company’s potential to succeed, since some rating companies are doing a great business in exchange for losing their objectivity.
However, people who want to make a safe investment can evaluate an ICO by themselves. It is also interesting for the creators of an ICO to analyze some ICOs that have triumphed, in order to be inspired by them and analyze what drove them to success. To be able to do this, we must pay attention to some aspects. First, you must read the “White Paper” of de ICO, which must be available on its website. It should show the name and price of the token, the team that is part of the project and the exchange offices where the token can be exchanged for real money. In addition, the project must have well-defined goals, the product must be well described and there must be a sales plan.
Second, we have to look of whether the business model proposed by the ICO is really viable or not, and whether it is possible for other large investors to support it or not. Third, we must the product or study if the product or service offered is going to be easy to receive. In order to do this, we must ask ourselves if it is something that the market needs and therefore will be sure or not. We must also pay attention to the existence of other companies that offer the same product or service.
Fourth, it’s also essential to pay attention to the team behind the ICO. We must investigate if they have previous experience in the Blockchain world and cryptocurrencies, if they have already developed other similar projects before and if they have necessary skills to drive their projects toward success. To build trust, it is good that team members’ photos appear on the ICO website, as well as links to their Linkedin or other website where information about their professional career can be found.
Finally, it is also important to inquire about what media say about the ICO, or if some expert in cryptocurrencies has analyzed it before us and what is his or her opinion about it. However, at this point we have to be careful, because as we have said before, an ICO can pay to talk about it, and this does not mean that the ICO will succeed.
To sum up, there are ICOs that have triumphed and others that have not even been able to take off. Therefore, before investing money buying tokens of an ICO, it is advisable to also invest a considerable amount of time in learning more about their characteristics and their probabilities of success, and not just a number given by a rating company.