Documents ICO Investors Often Overlook

 In Exchanges, Governments and Regulations

All of these are vital to a potential user or investor’s evaluation. A white paper should provide information on the token economy, the business model, and the team of a blockchain startup. Accordingly, the one pager should be a short “elevator pitch” that summarizes all the important aspects that the white paper covers at-length. Then we have a presentation, which is somewhere in between the two. This should provide investors, funds, and final token holders with an overview of the startup’s business and how the token is connected to it.

However, there are other aspects to take into consideration before making any ICO investment that are easy to forget. Perhaps the first of these is the legal opinion, which should be provided by the lawyers who have counseled the startup. They should inform potential investors on the token’s compliance with all the relevant regulations.

It doesn’t matter if it’s a utility token, or a security token, it’s important to have a document that confirms the legal stability of the business and the ICO itself. Besides investors, this legal opinion will also be requested by blockchain exchanges prior to any token listing.

Documentation on where the issuer of the token is registered is also necessary. This should be requested from the startup and analyzed carefully. For instance, if a token issuer is registered in the Singapore jurisdiction, it’s wise to check the registration numbers and make sure that the project is actually on this registry. It’s a good way to confirm the startup’s transparency and make sure it’s not a scam or a fraud.

Another thing to search for is if a startup has signed agreements with funds for token sales. These might indicate that its business model is in good standing. A deal with a fund is particularly positive because they buy tokens in bulk and then participate in the life of a startup, helping to sell tokens and increase the user base.

Then, there is the technical aspect. The code of a startup’s is usually published on GitHub, along with a description and other accompanying documents. It’s good to have access to these links and review them with an expert if possible. This is a sign of transparency from a startup.

ICO

Finally, a startup should provoke enough social media activity, especially during the ICO. Checking up on a project’s Telegram, Twitter, Facebook, or other communities gives investors information on what is happening with the startup’s team. Ideally, they should be engaging constantly through these platforms, answering questions and providing any extra information. Also, their accounts should have a healthy number of subscribers and followers.

These are all things any blockchain investor should look into instead of just skimming through a white paper. Any responsible startup would happily provide all this information to potential token holders and users, so nobody should hesitate to ask. One should always be thorough when doing research in the blockchain market.

Nick Evdokimov is a serial entrepreneur who first achieved success through his contributions to search engine optimization. Further accomplishments followed him as an investor, token designer, blockchain evangelist, fintech leader, and author of seven marketing books, including a textbook on contextual advertising for MBA students.

He is now a leading expert in the field of blockchain technology and Initial Coin Offerings (ICOs). After becoming involved with cryptocurrency mining, Nick went on to develop more than 40 tokens as an engineer. He has also invented a model for conducting mixed deals in which investors buy equity and conduct hedging transactions.

Nick is the founder of ICOBox, the world’s largest service provider for ICO solutions. With a total capitalization above $500 million, the company has attracted more than $1 billion in ICO investments for its customers as of 2018.

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