For many, cryptocurrency is synonymous with financial freedom. Besides being a form of currency that exists outside of the current financial system, the returns on cryptocurrency investments are near impossible in legacy finance. It’s normal for a crypto to jump by double digit percentages in a day or even a single hour. Now, while Bitcoin does see this sort of price action from time to time, many of you all know that these impressive gains are much more commonly seen in altcoins with much smaller market caps. However, the holy grail of cryptocurrency investing is finding that hot altcoin well before it makes it to market. Returns on newly listed cryptocurrencies can easily be 100 X or more, with the highest recorded return on investment for a cryptocurrency ICO sitting at around 1.3 million. Finding the right early stage project is no easy task, but by the end of this article, you will have everything you need to find the projects that may change your life forever. Before I begin the banter, I need to come clean now. I hate to disappoint you, but I am not a financial adviser. And so nothing in this video should be considered financial or investment advice. Consider this video to be a valuable resource you can use to further refine your understanding of the cryptocurrency space.
With that said, Let’s get started, shall we?
There are Two Types of Up Coming Cryptocurrency ( Presale)
Fair Launched Cryptocurrency (Presale)
There are two terms you always need to keep in mind when it comes to evaluating an upcoming cryptocurrency. These are fair launch and pre mine.
Fair Launch cryptocurrencies are those that do not have any specific allocations and are earned by the people who actively participate on tha Cryptocurrency’s Blockchain. The most famous fair launch cryptocurrency is, of course, Bitcoin. Bitcoin began when its Genesis block was mined in 2009. This created the first 50 BTC, which went directly to the person who minded most likely Bitcoin’s creator, Satoshi Nakamoto. As time went on and more people began mining Bitcoin, the distribution of BTC increased along with the decentralization and security of the Bitcoin network. No BTC was pre mined. None of it was automatically allocated to any investors in the project and 100% of the mining rewards went and continue to go to the people who participate in the Bitcoin network as miners. Other examples of fair launch cryptocurrencies include Litecoin, Dogecoin, and more recently, the FI Token, 100% of which was earned by those providing liquidity to various pools on yearn finance. This is in sharp contrast to most cryptocurrencies we see today, which has something called a pre mine.
Pre-mined Cryptocurrency (Presale)
As the name suggests, pre mined cryptocurrencies usually have a portion of their initial total and sometimes even future supply pre allocated to certain groups of people. These include investors, founders, non-profit organizations of the same name, those who participated in the public ICO and those who actively participate on that Cryptocurrency’s network, assuming it has mining or staking rewards. Now, since premiums often involve allocating a large number of tokens to a small group of individuals and entities that have the same profit motives as you and me their selling behavior can and often does suppress price action. The worst examples of this are probably XRP and stellar, neither of which have mining rewards to incentivize decentralization, and both of which held the overwhelming majority of their initial token supplies when they launched. Ripple, in particular, has come under fire many times for selling large amounts of XRP. That said, pre mined cryptocurrencies are not always bad. They just come with a higher risk of collapsing either financially or programmatically due to a higher degree of centralization and an inequitable token distribution.
Likewise, fair launch cryptocurrencies aren’t always good. If they have bad tokenomics, it can make it very hard for them to see any serious price action. Although most new cryptocurrencies you see will be pre mined. Be on the lookout for any fair launch crypto currencies, they are incredibly rare and hard to find, but will likely yield much higher rewards than pre mined cryptos. The best place to fish for fair launch cryptos are places like Twitter, Reddit and Bitcoin talk. Sometimes the crypto media will also cover a fair launch crypto if it was created by a notable personality in the space. For all the others, you’re going to have to get down and dirty and find the good pre-mined cryptos using an ICO tracking website. (The below link is a detailed article of how to find presale opportunities. )es
How To Researching Cryptocurrency/ Token on Presale
While there are many ICO tracking sites, the best is probably ICO drops. On the home page, you’ll find three columns, the two that concern you are active ICO and upcoming ICO. In ICOdrop.com you’ll be given a list of a few dozen currencies. Luckily, ICO Drops provides a short summary of each ICO when you click on them. If this summary is incredibly vague or sounds identical to cryptos like Bitcoin and Ethereum, you’re probably dealing with a grade a shitcoin.
By contrast, projects which have an explicit use case that has not yet been addressed by an existing crypto or even seek to add value to blockchains like Bitcoin or Ethereum can have serious potential. To be sure, there are a few more things to check. If you scroll down just a bit, you’ll see a few critical details about the actual token sale. The first thing you need to do is make sure that you’re actually allowed to participate in the token sale at all.
A list of exempt countries is usually given on the right hand side. I would also encourage you to study the local laws in your country that pertain to investing in these projects. Just because they’re accepting your investment does not mean that they are legally allowed
Anyways, the second thing is to take note of the price per token at ICO. The lower the price, the bigger the gain. Assuming that
everything goes according to plan, of course. The third thing to check is whether the tokens being sold are ERC 20 tokens or tokens issued on the project’s native blockchain. You can consider this to be a dichotomy similar to pre mine and fair launch. If you see an ICO that’s distributing native tokens, this is generally a good sign because it suggests that the project has already put in the work to create a functioning product or platform.
By contrast, it takes very little effort to create an ERC 20 token, and it only costs a few thousand dollars to build a cheap website. Hire someone to write a whitepaper filled with buzzwords and buy some publicity in pay to
play news outlets. The result is a cryptocurrency project that looks promising on paper but has no actual potential and perhaps even
no true intention of delivering on the promises made at the outset. This happened hundreds of times during the ICO boom of 2017 to
2018 and unfortunately continues to happen to this day. There is one exception to this, though, and that is when evaluating some promising defi launches.
These projects generally have to issue ERC 20 tokens, especially if they want to interact with the Ethereum blockchain and its smart contracts. If you continue scrolling down the page of the ICO you’ve selected, you’ll see that ICO Drops has conveniently taken a few screenshots, which will show you things like the token allocation, any large investors in the project, any notable partnerships, and
sometimes even a roadmap. The images on ICO drops can also be really useful when evaluating a cryptocurrency that is already on the market, because in many cases the information in those images is no longer available on the website of that cryptocurrency. I personally do this as part of my research into existing cryptocurrency projects.
When analyzing any partnership claims made by a cryptocurrency project is to assume that most of them are weak or entirely nonexistent until proven otherwise. Sometimes a partnership with Google just means that the people working on that crypto company use Gmail. The easiest way to fact check these partnerships is to go and poke around that cryptocurrency project’s blog or medium page. If you cannot find a blog post that details the specific nature of the partnership, consider that a red flag.
Similarly, any claims of being featured in reputable news outlets like Forbes or CNN are usually nothing more than paid promotions. Thankfully, some cryptocurrency news sites like Cointelegraph clearly label these sponsored posts, others not so much.
Verify whether a reputable venture capital firm has invested in the project, is likewise important but can be a bit more difficult to do. You can again check that ICO’s blog or medium to try and find details, but you’ll probably have more luck checking a website like Crunchbase. Most cryptocurrency projects are listed on Crunchbase in some manner, and you’re often able to see how much seed money was raised by that crypto project and where it came from. Crunchbase also usually provides sources for the demands.
Here’s where things get a bit tricky. While it’s always nice to see that a crypto project got millions of dollars in funding from reputable venture capital
firms, that money will have some strings attached to it. Exactly how many strings are attached to that?
Capital is partially revealed
through an initial token distribution of the project. More often than not, ICO drops will provide images detailing token allocations and distribution for past, present and future cryptocurrency ICOs. Ideally, a majority of the initial token supply should be sold during the ICO, but this is almost never the case. It’s more common to see ICO token allocations of anywhere between 15 to 50% of the initial token supply. If less than 15% of the initial token supply is going to be publicly sold, I would think twice about investing in this ICO. That said, this will all depend on whether or not these tokens will have lock ups or vesting schedules. In other words, whether the tokens allocated to founders, investors and other non ICO purposes will be immediately available, or if they will be gradually released over a fixed period of time.
Unfortunately, the images that ICO drops provides do not always contain details about these vesting schedules. If this is the case, you’re going to have to do some digging. To kill two birds with one stone.
Also be on the lookout for any
details relating to token supply, token inflation or token burning, which are also not always provided by ICO drops. The first resource you should check is the Cryptocurrency Project’s website. If you’re lucky, they’ll have a page dedicated to their token, which details
any lock up periods or vesting schedules.
The second resources are there blogs or medium pages? And what you’re looking for is a post which goes into detail about the token. The third resource you should consult is that project’s white paper, which should also be somewhere on their site. You can either scroll to the section which details the token or search the document using keywords like allocation, vesting, lock, mining, reward, inflation, supply, burn and mint. The ideal tokenomics would be a gradual unlock for all non ICO tokens that lasts at least two years or more and a maximum supply or very low annual inflation with bonus points if the token is deflationary. Most importantly, a token must provide robust economic incentives for participation either due to its use case or staking or mining rewards. If you’ve gotten this far and still don’t have a clear picture of this ICOs, token lock ups, vesting schedules or inflation, I would
personally call it quits when an upcoming cryptocurrency does not provide these details upfront to investors. To me, that’s a deal breaker.
However, if you are convinced there could still be an investment opportunity here, your last course of action should be to
reach out to the team directly using that crypto project’s GitHub or Telegram channel. Again, you’ll usually find the links to these somewhere on that project’s website. Assuming you’ve made it this far and everything checks out, you now need to evaluate the hype around the project. In addition to strong fundamentals, partnerships and Tokenomics, an upcoming cryptocurrency project must
be able to generate the hype that’s needed to get people interested and engaged. This is because at the end of the day, the thing
that’s going to propel the price of any given asset is high demand. There are many ways you can measure the demand for a cryptocurrency in its ICO stage. If the ICO you’re interested in is currently underway, you can easily see if demand is high by how much money the project has raised relative to how long the ICO has been active. If it’s only been a day and the project is already 50% funded, you might have a winner on your hands.
However, the real moonshot ICOs tend to sell out within hours or even within minutes. Meaning you’re going to have to measure demand well before the money starts flying. If the ICO you’re interested in has yet to occur, go to the website of the project and open up all of their social channels Twitter, Telegram, Facebook, medium, you name it. If they already have thousands of followers and
have a high amount of engagement, you can be pretty confident that their ICO is going to do quite well.
The real combo breaker is if this cryptocurrency project also has some amount of star power. This includes things like having a reputable or popular founder
having any significant partnerships, or if the project is working closely with a current leader in the cryptocurrency space. This is important because as the ICO date approaches, explaining the objective value of a cryptocurrency is going to become less and less important.
Picture this you have to cryptocurrency projects in their ICO stage. Let’s call them A and B. Both have good fundamentals
tokenomics use cases, the whole shebang. However, A has starpower, whereas B does not. It’s hours before the ICO for crypto project B and last minute investors flocked to the project to see if they’re going to invest. Since they didn’t do any actual research, the
information they’re going off is what they see on B’s social media. So they see a whole bunch of cool but complicated infographic statistics and a bunch of other stuff that seems logical.
And a few of them invest in the ICO. It’s hours before the ICO for crypto project A and last minute investors once again flocked to the project since they once again did not do any actual research. They’re going to make a decision based on what they see on that
crypto project. Social media. They see names of companies like Google and Microsoft. They see pictures flaunting some handsome,bHarvard educated blockchain wizard with a solid name like, I don’t know guy and perhaps even a photo of said handsome guynshaking hands with Elon Musk, almost every single last minute investor instantly decides to participate in as ICO and some evennbroadcast this amazing investment opportunity on their own social media channels, bringing even more investors into the project.
Now that these irrational investors have bought in, it’s only a matter of time before they become opium addicts, and their irrationality is what will ultimately guarantee incredible returns for the more levelheaded investors who actually did their research and made the
project relevant in the first place.
Using an ICO tracking site like ICO drops is a good place to scout out current and future ICOs. These sites tend to provide short and concise definitions of what the project is all about and let you know whether or not you’re eligible to participate. They’ll also tell you whether the tokens being sold are native tokens on a new cryptocurrency blockchain or ERC 20 that are sometimes backed by nothing more than promises.
Figuring out whether a crypto project will keep its promises partially depends on who’s backing it. Seed money from reputable venture capital firms and tangible partnerships with big names inside and outside of the crypto space are signs that you’re dealing with a promising project. But it also means that you aren’t going to be the only investor with their hand in the honeypot. Token allocations tend to skew towards a project’s founders, team investors and various other purposes, leaving a small piece of the pie for those who actually participate in the ICO. Whether or not this is a bad thing depends on if there is a lock up period or vesting schedule for all those non ICO tokens. This can be easily checked using images provided by ICO drops along with the cryptocurrency project’s blog and documentation. This documentation can also be used to answer any questions relating to inflation, deflation, supply caps and other economic factors that could influence the price of the token in the future.
Once you’ve confirmed an ICO meets your standards on these various metrics, estimating the demand for that ICO by checking social media activity and any star power will give you the final confirmation on whether or not it’s worth investing in. And finally, be aware of the different price trends typically experienced by tokens sold in ICOs, ICOs and IDEX offerings. While these are generally more important in the short term, their effects can be enough to make or break a crypto project during this bull run. That’s it, folks.