Analysing ICOs can be advantageous for crypto investors, businessmen and business circles, crypto funds and the ICO projects themselves. There are many reasons to analyse an ICO that you are interested in. Comparing an ICO to other projects on the crypto market is very important. Businessmen and investors are interested in checking whether an ICO has a potential and future perspectives. They normally make a deep and detailed research of an ICO. In particular, they are researching a team, a White Paper, Legal grounds, technical side of the product, roadmap, etc. The aforementioned details are important for understanding whether the project that they are interested in is not a scam.
It is beneficial for the ICO projects to compare themselves to other teams, because such comparison gives them an opportunity to find those areas that they need to work on and develop.
Ordinary people also analyse and compare different ICOs in order to make the best investment decision, find a project that they would like to join or keep a track of the most popular projects on the market.
Hundreds project start an ICO every month, which amounts to hundreds of thousands every year. The number is constantly growing, because more and more projects start considering a token sale as a good way to raise funds for the development of the project. ICO very especially popular in summer 2017, when hundreds of projects raised millions of dollars for the popularisation and development of their idea. There are still many projects arising in 2018, but it is hard to attract the attention of an investor or businessmen.
Cryptocurrency was in bloom in 2017. This lead to a huge growth of startups announcing ICOs. Due to the statistics, ICO gathered over $5,6 billion in 2017. Sounds quite promising, right? But the truth is that the bigger half of the projects disappeared and couldn’t take the pressure. Let take a closer look at the current situation on the market and try to predict its behavior for 2018.
What do the statistics say?
Economists made a research and it turned out that 418 out of 909 publicly published coins (which means 46%) failed, 142 didn’t manage to finish the ICO and 276 stopped their work after the ICO. These projects couldn’t make it, but there are still 113 startups which are keeping quiet and are not responding to any media or users inquiries. Thus, the amount of unsuccessful ICO is even bigger.
It seems absolutely normal for any SME – you try, you fail, you give up. But startups that go for an ICO are failing more often. Let’s try to figure out the reason.
There are some general suspicious features which must be taken into account while estimating the potential of the crypto-related project.
Features that show that the ICO will collapse
Scientists of the University of California in Santa Barbara, the University of Michigan and Stanford University developed an algorithm of machine learning ICORATING capable to find roguish ICO.
The algorithm studied the information on 2251 ICO projects. Researchers compared life expectancy and the change in price for cryptocurrency with the use of the information on ICO, including a whitepaper, a constituent team, a GitHub repository, a website and other. As a result the system learned to identify roguish ICO projects with accuracy of 83%.
Scientists mention that their development will help investors to invest money in ICO safety and to find swindlers at an early stage.
“We hope that this work will help investors to reveal swindlers and to involve more efforts to automatic assessment and the analysis of the ICO projects.”
– the description of a research states.
How do I compare ICO projects?
Most people create an effective rating system which includes important factors that help to evaluate an ICO. Among the factors are
- team profile. It is important to check the team profile of an ICO. The team is the “face” of each project. If the project doesn’t have the names and positions of the founders and core members indicated on the official website, it is an important sign of a project being a scam. Try to find out as much as you can about professional experience, background, achievements, social status of team members. Each team member should have a profile in social networks (LinkedIn) and be open for a dialogue.
- ICO information (technical details, economic model, vision of the project, etc.).
- product presentation
In the modern world many projects make an important decision to run an ICO (Initial Coin Offering). They create a blockchain-based platform which requires a lot of funds and investor’s support. Most projects use Ethereum blockchain in order to make their plan come true – that is why Ethereum is very popular on the market not only as a token, but also as a product. Each project needs to have a well written white paper in order to raise funds and find investors. White Paper is an official document of the project, which incorporates a comprehensive description of the project, technical details of the product, judiciary aspects, team outline, etc. A good white paper should include all important information about a product so the ICO can make a decision based on the info found in it.