Bitcoinist shares a few lifehacks that could help investors not to
repeat the lessons ICO and blockchain investors learned over the past
year.
Many people have begun to forget that, in the last few years,
crowdfunding has been a well-loved tool for attracting investments. In
that time, along with crowdfunding, blockchain has become the next big
thing for investors – and has garnered the most significant funds.
Crypto trading revenue may double to as much as $4 billion this year
according to the research from Sanford C. Bernstein & Co.
The excitement that surrounded Bitcoin $6755.95 -0.08% in 2017 is
comparable to the Gold Rush — but this time it was graphics card
manufacturers who earned rather than miners.
What persuaded ‘classic investors’ to put their money into
blockchain-based development so early? Despite the latest analytical
review launched in 2017, taking into account the main phases of the
initial coin offerings (ICOs), we can see from the pre-sale stage to
crypto exchange circulation, provided by the ICS Statis Group consulting
company, that more than 70% of the ICOs conducted in 2017 were
identified as scams.
CURRENT MARKET SITUATION
In 2017, hundreds of companies managed to attract more than $4 bln to
finance their projects. That is 30 times more compared to the previous
year. Obviously, investors are interested in such a rapid growth of this
promising market sector in 2018.
Many conservative investors believe that cryptocurrencies are a kind of
bubble, and that bubble’s growth puts the consistency of the entire
world financial system at risk. However, one can’t deny the fact that
this has already happened. Cryptocurrencies are now accepted by millions
of people and countless organizations, including the world’s leading
corporations.
The founder of Facebook has turned his attention to the blockсhain
market, saying that there are important counter-trends to this – like
encryption and cryptocurrency – that take power from centralized systems
and put it back into the people’s hands. He’s interested in going
deeper to study the positive and negative aspects of these technologies,
as well as how best to use them in his company’s services.
Who, if not Zuckerberg, knows the full power of social networks and the
trends of the future? Moreover, Pavel Durov, the founder of Telegram, is
obviously going to launch his own cryptocurrency by revealing the
Personal ID Verification Tool. This is a perspective shared by almost
all of the crypto community.
It’s clear that both cryptocurrency and blockchain exploded in popularity, despite existing in cyberspace.
3 LIFEHACKS FOR DUE DILIGENCE
If we focus on one key term, it must be ‘due diligence,’ and if we take
only one criterion, it’s clear that blockchain had a more-than-decent
Whitepaper or codebase (proof-of-concept on GitHub) in its makeup.
One can’t just write a Whitepaper and get a pile of cash — it does take
effort and knowledge. Is there a solid idea behind the project? What’s
the market volume? All the algorithms are put into mathematical
expressions. Within the details, there’s a need to get deeper into the
problem. Some general insights include:
1. CHOOSING THE RIGHT STAGE
2. ALTCOINS – FOR EXPERIENCED INVESTORS
Given the fact that the price of all cryptocurrencies fell in August, if
you are a beginner, then do not invest in altcoins that are not in the
Top-20 list.
As a rule, these are day-fly coins that can grow substantially in price
in a short period of time – but they can also collapse quickly, leaving
the speculators without money. The low cost of cryptocurrency is not a
reason for purchasing. Do not choose a cryptocurrency just based on its
low cost. Surely, in a case of success, an asset that costs less than a
dollar can bring higher profit than already well-known and ‘pricy’
tools, but the chance of bonanza is extremely low.
Forget about mining, too. Major and serious players have already entered
the cryptocurrency market long ago and individuals engaged in mining at
home cannot really keep up with them in the race of computing power.
Moreover, the funds that you have to spend on ‘farms’ now can be used to
create a very attractive portfolio of cryptocurrencies and make a
profit immediately, forgetting about the need to pay back the hardware
first.
3. DEEP ANALYSIS
A mathematical concept map helps with investment decisions and will
assist in seeing-to the quality of the code. One has to remember:
blockchain is mainly about cryptography. In other words, there’s
fundamental knowledge behind the code.
It’s a powerful tool for investment decision-making. If a project has a
decent Whitepaper, its potential viability is about 60 percent.
Meanwhile, in Silicon Valley, it’s a good ratio if 1 out of 10 start-ups
survives.
When investing in Blockchain-based projects, you can see mathematical
proof of how the project is going to run. No matter if it’s a gaming
platform like Dmarket or Telegram’s token sale, it can be an ultimate
scientific method for investors’ due diligence.
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