Evaluating New ICO
New Initial Coin Offerings (ICO) are quite complicated, because they all use innovative ideas and blockchain technology. However, it is still possible to make an educated guess as to which ICOs will likely fail, turn out to be scams, and which ones will be worth investing in. The main question you should ask about any ICO, is: does it solve a real problem? First you need to look at legacy ecommerce companies such as ebay. And at legacy banking and online money transfer service companies, such as banks, Paypal and Western Union. These legacy companies do have limitations and problems.
But what is an ICO anyway? An ICO is the way for that new company to raise capital, and investors get tokens in return. Tokens that will eventually reflect the value of that company, past the initial offering phase. It works very much like classic stock initial public offerings.
Typically, a good ICO will have a good team of people behind it, people with related formal education and some experience. A good, promising ICO will also have a good White paper explaining how they are going to implement their idea, and what the completion is. There should be no much competition. Good ICO teams are open, you can see people’s faces, education, and you can even ask them questions. Whereas scam ICOs typically have poorly designed websites, communication is poor, people don’t show their faces, and they show an urgency to sell you the newly issued token.
In my opinion you should be careful about all these factors. It’s better to invest in an innovative ICO, even if the people have had failures in the past. Previous failures in other projects, are not an indication of a scam, but rather an indication of courage and innovation. So past failures are actually good, people who failed in the past are more likely to succeed in the future! Remember is all about first impressions, good websites, good white papers, and good communications. I was able to spot various scams in the past, in stock market and green energy investments simply by asking the suspected scammers in-depth questions. They gave me the wrong answers, that’s how I knew they were scammers. The same must be applied on ICOs, targeted technical and market related questions. Only true honest people will be able to answer such questions.
Examples of Good ICO
Golem (GNT), Golem is platform where users will be able to rent out their idle computing power to other users who need it. This way many 1000s of personal computers around the world will be used to solve complex mathematical problems in fields such as artificial intelligence, chemistry, physics etc. The owners will be paid for renting out their computers, whereas the clients will also be getting all this massive computing power at relatively low cost. This is a truly innovative solution in the IT field, so Golem is expected to see mass adaption and steadily grow in the future. Which means the actual golem coin (GNT) will increase greatly in value, and today is still well below $1! The team behind Golem is an example of a good team, who know what they are doing, they are targeting a real problem, and the technology is quite proprietary and hard to copy.
Syscoin (SYS), Syscoin is another great example, not as unique as Golem, because there’s some competition. But the actual idea is quite good. Basically Syscoin attempts to offer the blockchain equivalent of ebay, where people can buy and sell actual products but without the hefty fees of ebay. Moreover, many people can’t have access to ebay because of their location. Syscoin seems to solve some key problems that ebay has, and more importantly it does this through smart contracts. So that buyer and seller can trust each other when they do business together. There’s one more good ICO in this space, Cybermiles. This ICO will also be successful and it may even offer more services than Syscoin. The market however is very large and there’s room for 2-3 such companies. I therefore would feel comfortable investing in these ICOs because there’s plenty of room to take market share from the massive ebay company, and to grow.
Syscoin together with Cybermiles can start growing significantly before they even start taking business away from ebay, because ebay cannot serve all clients even today. The trade of tobacco products alone is massive, and ebay does not allow it, even though the law does prohibit tobacco trading, it actually allows you to buy up to 2 cartons of cigarettes from other countries, and to even take them onboard flights. So, tobacco products alone, are enough to enable Syscoin and Cybermiles to grow, because they are decentralized marketplaces, where local law does not apply! And you can think of the possibilities.
Another great ICO is Gnosis (GNO). Gnosis is a company that will offer prediction markets. Users of Gnosis will be able to make educated decisions and to forecast various events, such as stock prices, investment outcomes and other specialized decisions. The very word Gnosis is of Greek origin and it literally means ‘knowledge’, hence the name of the company. Prediction markets in general are good, because knowledge comes from people who have to think hard, ad are usually experts. They have to pay to contribute their opinion, and they are getting paid if the outcome confirms their opinion. Gnosis is doing well at the moment, its coin (GNO) is already priced at over $70. There are few more competitive companies offering prediction markets, all the top ones, possibly 3-4 companies, including Gnosis are expected to be successful.
Prediction markets will be important in the future, they already are, but most people have not yet used them. Imagine how small amateur investors can improve their decisions and will be able to better manage their limited money. All through wiser decision making, provided by prediction markets. Also, people who have expertise in some field, will be able to advise others, and make some money in doing so. I can only imagine that prediction markets will evolve further, more than I can imagine.
Examples of Bad ICO
One example of a bad ICO is Electroneum (ETN). It’s a company which promises to enable smart phone users to do cryptocurrency mining right on their devices. The problem is that they have nothing proprietary to offer, and their idea can be easily emulated by anybody else. Moreover the supply of actual coins is massive. A good ICO can still be good even the actual supply of coins is so huge, but in the case of Electroneum there are indications that there’s no real value and nothing proprietary at a technical level. So you can expect the price of Electroneum coin, ETN, to never really go up. Today it stands at under 5 cents, so it looks tempting to buy, but there’s no intrinsic value. It’s definitely not a safe investment.
Suspicion has risen over Bitconnect as well, it’s mathematically certain that it’s a ponzi scheme. And that at some point it will fail, such ICOs will definitely fail at some point, even after years of apparent success. Electroneum is not a scam though, it’s simply an ICO idea that lacks innovative concepts, and anyone can launch the next type of Electroneum tomorrow, or even a better one. That’s why it’s a bad ICO. Coin price is not an indication of success! It’s simply an indication of what others think. This is where prediction markets will be useful too, because you will be able to actually use prediction markets to get expert opinion even on new ICOs!
Coin Supply and Competition
All good ICOs should have limited coin supply, it doesn’t mater if the offering offers too many coins, as long as their number is mathematically limited. When all coins go into circulation, their value will closely follow supply and demand, but investors who see value will be buying and holding. Whereas investors who already bought and want to sell, will make the price go down.
As far as future competition goes, there are ICO ideas that will remain competitive and there are some that will be crashed by competition. I do believe that most ICOs will fail for some reason or another. But I do expect at least 10 good ICOs will make investors a lot of money. And a further 30-40 ICOs will have some limited success. But that’s about it, the total ICO market will be completely serves by no more than 50 good ICOs. All the money will be in those 50, and some coins will go very high in value, higher than we can imagine.
Just like the discussions about Bitcoin and its future value, most ICOs are hard to predict. But you can be sure that there are at least 10 good ICOs that really do solve a problem. And these could easily reach $300 in value, sooner rather than later. Some very good ICO ideas will see their coins much much higher!