In times like this
Where there are few ico’s in a week
And almost every week in the past months
This article has become a good read.
10 Steps for Evaluating Digital Asset Crowdsales
The fundamentals of Bitcoin created a framework to create decentralized networks with provably fair consensus. Since it’s inception many projects have come to fruition in the space, some successes and some not. We are entering an age of financially backing decentralized protocols and decentralized applications built on top of protocols. One common decentralized network is Ethereum, used by many projects as a base to build on top of. Ethereum offers a smart contract language which facilitates new creative uses and applications with native tokens.
It’s important to understand what codebase a project has, or is built on top of. The major distinction is if the project has it’s own Blockchain, or is built on top of another. Smart contracts, or decentralized apps are often built on top of an existing Blockchain. Decentralized Apps, also include DAO’s or Decentralized Autonomous Organizations. While the level of human interaction varies between Decentralized Apps the goal is generally to create as much autonomous functionality as possible, which is sometimes supplemented with human interaction.
Many new cryptocurrencies are referred to as altcoins, or basically alternatives to Bitcoin as it’s still the largest mover in the space. Altcoins generally have their own blockchain. While tokenized assets, and cryptocurrencies have attempted to move beyond this definition nothing yet has reached critical mass, to where it competes in a significant way with Bitcoin. As such the value of most projects is denominated in terms of Bitcoin on the markets. Bitcoin is simply the most liquid and easy to utilize cryptocurrency in current times, so you’ll generally end up realizing profits at some point in Bitcoin.
The analysis here generally applies to projects with perceived long-term value. There are many new altcoins that are launched that have short lived profit opportunities. It’s a more risky and time sensitive endeavour, but to be transparent some people really do well with these opportunities, whether through manipulation, or pure speculation. Profit is profit, and while we won’t be focusing on these opportunities they exist and we can’t write a complete guide while ignoring them.
Here’s our list of 10 things to start your analysis process for crowd sales’s:
The bottom line here is read, and research. You won’t find the best information from the project’s marketing, or from singular forum comments. You have to take the time to do your research, dig in and make decisions from an informed base. The following list is a guide to what you might start with when doing your own due diligence on a potential opportunity.
1. Do they a have codebase?
Basically every project, including Bitcoin at this point uses http://github.com. It’s important for projects to be transparent with their progress, and even if you aren’t a coder, looking at the commits, issues, and relative accomplishments can give you an idea of their current state. If you need, consult someone, or ask somewhere, for basic review of the code. If a project posts their code, and shows progress, especially beyond just forking another code base, that’s a huge plus.
2. Do they have previous experience?
It’s always good to see that the team has had previous successes. It may not be directly related to the current project, but good work ethic and previous accomplishments show the individual holds themselves to high standards, and is probably not going to just drop the project. You can generally find information about the team by googling their name + linkedin. Many projects list an impressive list of advisors, and attempt to stake their reputation on their success. Advisors are not really as involved as it appears. Generally advisors will jump on a call, or answer email for some small compensation, but don’t actually develop on the project, or make core decisions. Keep in mind that Satoshi Nakamoto was a pseudonym, and look where Bitcoin went. Sometimes creators prefer to remain anonymous, but after the many bad experiences participants have faced from following anonymous developers it places more emphasis on the other questions.
3. Is there a market for this?
Full article: TokenMarket.com, 10 Steps for Evaluating Digital Asset Crowdsales