ICOs are really hot among the crypto investors. Recently, Hdac and Filecoin collected respectively astonishing amounts of $258 and $275 million. The success of an ICO is influenced by many aspects. Investors should bear in mind following key elements discussed in this article.

At this point it is right to mention less successful stories like the Mycelium ICO. Its team members just disappeared after raising the money, and later it was reported they used the funds to pay for their own vacation. The lack of regulation might be one of the reasons it happened. Just days ago, $7 millions were stolen as CoinDash’s ICO started. Right before the start of the token sale, their website was hacked and the ICO wallet address was changed to the hacker’s address.

This article will discuss the main keys to pay focus on when evaluating an ICO investment.

* Important warning before we start: ICOs are a high-risk way of fundraising. Never invest anything you can’t completely afford to lose. Keep in mind that due to a lack of regulation, you will have difficulty getting back your lost money in case of any failures.

1 – Team Composition

Find out everything you can about the team, especially the development team and the advisory board. Look up each team member for relevant experience. Google their names. Visit their LinkedIn profiles. Look for famous  names among the advisory board of the project. Find out if the team has any crypto experience and more importantly – in which projects, or ICOs, they were involved with and the impact they had. 

2 – Bitcointalk.org Thread

A good starting point is the project’s announcement (ANN) thread on BitcoinTalk.org, as Bitcointalk is the biggest forum for Bitcoin and crypto related issues. It is strongly recommended that you read the messages carefully. Investor’s concerns will be answered (or may be unanswered) in this thread. It is a bad sign when the developers avoid answering certain questions or aren’t collaborating. Sending devs a personal message to see how responsive they are is also a good idea.

Each message on Bitcointalk contains the rank and activity degree (number of past messages) of the sender. Be aware of newbies and low-ranking writers. Reputation has become very important and significant.

Be aware of experienced writers comments, and also look for negative messages, sometimes it could be a warning sign. Use Select [All] to see all comments in the thread and use CTRL + F (Windows) to search for red flag words like ‘scam’, ‘con’, ‘MLM’. See the relation between the search results and the total number of replies as can be seen in the following live example:

3 – Stage of the project and VC investments

Evaluate the stage of the project. Does it only have  a whitepaper? A beta version? Is there a launched product with limited functionality? Prefer projects which have “some lines” of working code, however, many ICOs have proven they can become success stories without any code written.

VCs (venture capital) tend to invest and support projects from early stages. Look for this information usually on the main page of the project’s website. It’s likely to be considerable if a well-known crypto VC is involved, like Blockchain Capital or Fenbushi (belongs to Vitalik Buterin – founder of Ethereum).

4 – Community and Media

It is crucial to have a wide open supporting community like a public Slack for all investors. Openness is as crucial in gaining our trust as the Github code. Try to grasp the atmosphere within the community. Look at the size of the community and its activity.

Source: Slack community QRL – #trading channel

Other sources like Reddit, Twitter or Facebook can be relevant when evaluating the project. Be aware of bounty posts. It is a common practice to launch a bounty thread to reward users for spreading positive information about the project to increase media coverage, or to help out with translations. These bounty threads can stimulate the hype around the project but they are not very objective. On the other hand some investors participate only for some tokens.

5 – What do they need the token for? Is the blockchain necessary?

ICOs mean the creation of a new dedicated token for the project. One of the most important questions each project needs to answer is what is the token for? Why isn’t Bitcoin or Ethereum enough to serve as the project’s token? Yes, many projects just make up a scammy story. Hey, an ICO can’t be an ICO without a dedicated token. The same question needs to be asked regarding the use of the blockchain technology behind the project.

6 – Unlimited / Hard cap

In the early days of crypto ICOs, the difference between open and hard cap didn’t have the same impact as today’s ICOs. An open cap allows investors to send unlimited funding to the project’s ICO wallet. The more coins are circulating, the less unique your tokens become for the trading afterwards – through less demand.

As ICOs become mainstream within crypto land, enormous amounts are collected. Take a look at Bancor, this project raised an astonishing $150 million in just three hours. This resulted in no percentage gain for the investors. Keep that in mind when participating in ICOs with no cap.

On the other hand, you don’t want to be the only one investing in the project. Exchange’s have much less interest in projects that raise very little, which makes it harder to sell these tokens after release.

7 – Token distribution – when and how

Greed can be defined by a high token distribution to the team members, let’s say, more than 50% of the tokens is suspicious. A good project will link its token distribution to the roadmap. Because each phase or milestone of the project requires a certain amount of funding.

Watch for the token distribution stage. Some projects just release their tokens hours after the ICO has ended. Some projects need to develop a beta version before sending out the tokens. If you look at the percentage gain of Etherium (one year between ICO and token distribution, around 500% gain), Augur (1+ years, 1500%) and Decent (8 month, 350%), sometimes this break creates a very positive hype around the project.

8 – Evaluating the Whitepaper

Most typical investors actually don’t read through the whitepaper, even though it contains all the necessary information about the upcoming project and the ICO.

Don’t hesitate to read it, or at least the majority of it. Note the strong and negative aspects and add in some of your own research. In the end, the whitepaper is the silver platter to potential investors. After reading it you should be able to answer a simple question – what kind of value does this project bring to our world? You’ll also learn what you’re investing in.

9 – Quality of the code – Meet Github

If you have a little bit of programming experience, you should be using it here. The quality of a developer can be understood by analyzing some of their code. As a non-techie, it is still possible to evaluate their quality by looking at the consistency of the code. Another good indicator, is the usage of proper commenting. Avoid messy developers. A piece of code reflects the attitude of a developer.

Next, the length of a function is another indicator. A function containing more than 50 lines of code should raise a red flag. Modularity is important and makes the code more readable and maintainable.

Crypto projects tend to have open-source code. This creates trust among the project’s community, encouraging devs from the community to make suggestions or improvements. An open-source project provides the opportunity to look at the commit logs. A commit is essentially developer slang for pushing a piece of code to the Github code repository.

 You can see each commit by clicking on the text saying “366 commits”. This allows you to investigate each change. The “Insights” tab gives you a more general summary of the developers activity. This tab shows a graph with the amount of commits daily. Beneath the graph, you can see the activity of each developer individually. This information is key for investigating the development team.

It is even possible to see how popular the project is by looking at the amount of stars it receives.

Bonus: Ask yourself why the project chose to run on the specific blockchain. Whether it’s on the Bitcoin’s blockchain, Ethereum’s (smart contract), Waves, and more. Recent months have shown the rising popularity among the ERC-20 Ethereum based smart-contract’s ICOs. These tokens can be stored easily on Ether’s based wallets (like MEW – Myetherwallet), sometimes they don’t require exchanges to be traded, and they usually have high liquidity.

10 – The Bottom Line

ICOs will become more and more ‘mainstream’ as a method for raising funds. There will be plenty of projects to choose from, hence it will become even harder to assess these projects.

It is key to investigate and read as much information as possible and write down all the important aspects, positive and negative, before making an investment decision.

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Let’s start: What is Margin Trading?

Margin trading allows a trader to open a position with leverage. For example – we opened a margin position with 2X leverage. Our base assets had increased by 10%. Our position yielded 20% because of the 2X leverage. Standard trades are traded with leverage of 1:1.

Margin trading is possible due to the existence of the lending market. Lenders provide loans to traders so they can invest in larger amounts of coins, and lenders benefit from interest on the loans. In some exchanges, like Poloniex, users provide the loans for the margin markets and in others the exchange itself provides them. For example, in the Poloniex exchange anyone can lend their bitcoins or altcoins and benefit from interest on the loan. The main disadvantage is that the coins need to be in the exchange’s wallet, which is a lot less secure than a cold wallet.

Costs and risks of margin trading

As mentioned above, the cost of the margin position includes paying the interest for the borrowed coins (whether to the exchange or to other users), and fees for opening a position with the exchange. As the chance to earn more increases, so does the risk to lose more. The maximum we can lose is the amount we invested in order to open the position. This level is called the liquidation value. The liquidation value is the value where the exchange would automatically close our position so we won’t lose any of the loaned money, and only lose our own money.

Example: if we are talking about standard trading, leverage 1:1, the liquidation value is when the position reaches a value of zero. As the leverage increases, the liquidation value will get closer to our buying price. For example, Bitcoin value is $1,000, we bought one Bitcoin (long) with leverage of 2:1. The cost of our position is 1000 USD, in addition we borrowed 1000 more USD. The liquidation value of our position will be a little over 500 USD – because at that level we lose exactly our initial 1000 USD plus interest and fees. Margin trading can also be against the market, we can also short position with leverage.

Margin trading tips

Risk Management – When trading on margin it is important that there are clear rules of risk management, beware of excessive greed. Take into account the amount you are willing to risk, keeping in mind it can be lost completely. Set clear levels for closing positions, taking profit or a stop loss.

Watch closely – Crypto coins are considered assets with excessive volatility. Margin trading of crypto currencies doubles the risk. Therefore try to make short-term trading leveraged positions. Moreover, although the daily fees or margin position is negligible, in the long term the fees can amount to a significant sum.

Extreme movements – Crypto trading sometimes has extreme fluctuations that occur in both directions (“Deep”). The risk in this case is that the deep will touch our liquidation value. It could happen where the leverage is relatively high so the liquidation value is relatively close. In fact you can take advantage of these deeps and try to set closing target positions, hoping the deep will run over them, leaving you with a decent profit and then going back to the previous price. Additional tips for trading Bitcoin and Altcoins – can be read here and here.

Exchanges which enable margin trading

It is now possible to trade margin on most exchanges. The advantages of leveraged trading are very clear and another important advantage is the security aspect. Crypto traders should strive to minimize the amount of coins they hold on exchanges. Exchanges are considered hot targets for hackers and in recent years there have been several hackings of exchanges, the last major break was the Bitfinix hack in 2016 when a third of the exchange’s Bitcoins were stolen.

Trading on margin allows us to open increased positions with no need to provide the Bitcoin required, that way we can hold less coins on the exchange account. For example, if our portfolio consists of five Bitcoin and we want to hedge against the risk of Bitcoin’s decline, 10X leveraged short position could be open and it will be equivalent to 40% of our Bitcoin portfolio. To open the position the amount required is only a tenth of it (10 times leverage). That means that we need to only hold 0.2 Bitcoin. So our Bitcoins are stored securely in cold wallets.

Bitmex – Bitmex has gained a great reputation in a short while and many traders use it frequently (like our team). Leading the margin trading, the exchange offers up to 100X leverage margin trading, both long and short. It’s very easy to operate and has good support. With our link you can receive a 10% for first six months discount on the trading fees, upon registration. Click here for BitMEX trading video tutorial.

Plus500  – Plus500 is a worldwide fully-regulated company. A trader with a Plus500 account can trade CFDs on Forex, Stocks, Commodities, Options and Indices. In the field of crypto margin trading they  offer Bitcoin and all the major altcoins for margin trading (like Etherem, Ripple, Litecoin, Bitcoin Cash and more). The main advantage lies on the fact that they are fully regulated company (Plus500 UK Ltd is authorised and regulated by the Financial Conduct Authority FRN 509909), with 24-7 support and obligation to their millions of customers. You can join and immediately start margin trading using credit card deposit or bank transfer. Margin leverage can be set up to 1:300, and the start is smooth as a demo account can be opened free of charge. Click here to start trading. Keep in mind when trading, your capital is at risk.

Bitfinex – This exchange coordinates the largest trading volume of Bitcoin USD market, with margin trading up to a leverage of 3.3X. The interface is user friendly and it’s simple to carry out transactions.

Poloniex – the largest crypto exchange. Leveraged trading of 11 Altcoins, there is no BTC USD margin trading. Leverage is available only at 2.5X. Relatively high interest fees when shorting.

AVAtrade – Another world-wide well known CFD exchange that enables trading of bitcoin’s CFD as well as some major crypto currencies. The company is fully regulated, and like Plus500, there is a free demo account. Here is a video tutorial to get started with AVAtrade:

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How to Easily Keep Track of Coins

Thankfully there are services that can help you in that by giving you easy access to all the information you need regarding MasterNode coins and one such is the MasterNodesOnline (MNO) that we like and use.

Currently the service lists 134 different MasterNode coins with details about each of the coin such as its price, volume, market capitalization, coin requirements for a MN, number of active nodes, ROI and more.

All of the information is available in an easy to use and functional clear interface, so you can quickly make check for profitability for example. So you might want to give the MNO website a go and see if you will find something useful there.

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Hydro power is generally thought to be one of the most effective and lowest-cost renewable energy resources. It is environmentally friendly, carbon-neutral and natural. Hydro power allows to manage resources sustainably and enables low-emission production and it is also simple, controllable and has an excellent track record. Using hydro power stations in the Alps region one of the lowest prices per kilo Watt in Europe can be achieved, bringing the costs for the mining operation further down. Further cost savings can be realized by using the cold water for cooling the mining equipment, so no extra electricity costs for cooling. Where possible, mining equipment is built inside standard sea freight containers. The advantage is that containers can easily be assembled in once place and then taken to the hydro power station, in addition, the container can be moved to another location very quickly if needed, sometimes depending on water levels or the need for extensive maintenance to the power station’s turbines.

As you know we are not big on ICOs, but there are some that actually do catch our attention, especially ones that are related to mining and the HydroMiner project is one of those where we see a good potential. Of course with all such projects looking for funding via ICOs there is risk, so while we can point you to check out the project in details we are not going to be giving any investment advice – it is up to you to decide. We are just sharing the information about HydroMiner as a new and promising project to bring an alternative to traditional cloud mining options already available. An alternative that tries to be more efficient and Eco-friendly and not just focusing on bringing profits to its investors, even though most miners focus on profits the most.

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Dozens of cryptocurrency specifications have been defined, most are similar to and derived from the first fully implemented cryptocurrency protocol, Bitcoin. Within cryptocurrency systems, the safety, integrity, and balance of all ledgers is ensured by a swarm of mutually distrustful parties, referred to as miners, who are, for the most part, general members of the public, actively protecting the network by maintaining a high hash-rate difficulty for their chance at receiving a randomly distributed small fee. Averting the underlying security of a cryptocurrency is mathematically possible, but the cost may be unfeasibly high. For example, against Bitcoin’s proof-of-work based system, an attacker would need computational power greater than that controlled by the entire swarm of miners in order to even have 1 / 2^(# authentication rounds for this cryptocurrency – 1) of a chance, which means directly circumventing Bitcoin’s security may be a task well beyond even a technology company the size of Google.

Most cryptocurrencies are designed to gradually introduce new units of currency, placing an ultimate cap on the total amount of currency that will ever be in circulation. This is done both to mimic the scarcity (and value) of precious metals and to avoid hyperinflation. As a result, such cryptocurrencies tend to experience hyperdeflation as they grow in popularity and the amount of the currency in circulation approaches this finite cap. Compared with ordinary currencies held by financial institutions or kept as cash on hand, cryptocurrencies are less susceptible to seizure by law enforcement. Generally cryptocurrencies are considered a pretty anonymous and untraceable means of payment.

The first cryptocurrency was Bitcoin that was created in 2009 by developer referring to himself as Satoshi Nakamoto (probably not a real person). Bitcoin uses SHA-256 as its proof-of-work scheme, later on the Litecoin appeared which uses scrypt as a proof-of-work, as well as having faster transaction confirmations. Another more notable alternative coin is the Peercoin (XPM) which uses a proof-of-work/proof-of-stake hybrid different from the other two. There are of course a lot more alternative crypto currencies available, but many of them are just clones of the major ones that add none at all or just a few innovations in order to generate a lot of user interest like the major cryptos already mentioned.

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Commercial use of Bitcoin is still very small in the form of goods or services that you can purchase for bitcoins compared to its use by speculators on exchanges, which has fueled price volatility. The fact that the exchange rate of a single BTC can greatly vary not only form day to day, but it can also change very quickly in just a minute is one of the most serious concern to merchants that are considering of accepting bitcoins as a means of payment, but still the high exchange rate that is currently over $800 USD for 1 BTC makes it attractive alternative to real money, especially when you also consider the very minor taxes you need to pay for a Bitcoin transaction as compared to credid card processing taxes for example.

Bitcoin is the biggest and most widely known crypto currency nowadays, in fact it is the crypto that started it all and since it generated so much attention many other crypto currencies have appeared. Nowadays it is hard to just mine bitcoins with your computer and in order to actually mine bitcoins at a good rate per day you need a specialized hardware called Bitcoin ASIC or Bitcoin Miner. In the earlier days you could mine with just the processor of your computer, then it was possible to use your video card, but nowadays the network difficulty has gotten so high that mining Bitcoins with your computer you would not be able to just cover the electricity bill with what you earn. Bitcoin uses SHA-256 as its proof-of-work scheme, but there are a few other major alternatives of Bitcoin that use SHA-256 and can be mined the same way as Bitcoin and with the same hardware including the specialized Bitcoin ASIC hardware miners. These are Namecoin, Devcoin, IXCoin, Freicoin, Peercoin, Terracoin, Zetacoin and others. You can mine these coins and then trade them at crypto currency exchanges for Bitcoins and sometimes mining an alternative crypto currency and then trading it for BTC can yield a better profit than mining Bitcoins directly, especially if you have dedicated powerful hardware for that. And one of the latest trends is not buying directly the hardware, but renting it instead and as you can expect it is called cloud mining.

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