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SIMPLE GUIDE TO ICO APPRAISAL.........Difference Between Price & Value Explained

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The issuance of ICO has become the most popular medium for raising money for Fintech and blockchain startups.  The success so far recorded means that new blockchain ideas can hope to obtain funding and proceed with the development of their idea into a business.

The process has witnessed huge success and today, we have about about 1,263 coins listed for trading globally, while an equally large number is yet to be listed.

The ICOs seem to be a win-win investment option where the investor do not really bother with the idea and the team of developers behind it as well as the strong points of the startup project and implementation time frame.  The reason being that most investors would just wait for the token to be listed on the digital exchange and they can sell the token at a profit and exit the investment.

That scenario is changing and will certainly change as authorities insist on some form of regulation and control of the whole ICO process.  Also, it will not easy henceforth to list tokens as those token which are seen to have little or no real value based on the services the project is established to provide may no longer be listed.  At the moment, about 30 tokens are listed weekly  across the globe,  even as more startups try to their ICOs before the end of the year.

So, its indeed an unstable times for investors in cryptocurrency, and with fortunes being made (and lost) rapidly, it’s easy to forget the difference between “price” and “value.” Many investors are focusing on the quick flip--they buy the “hottest” ICO and hope to immediately sell for huge profits once the crowdsale is over.

There’s nothing wrong with that approach, per se, and some have been highly successful. However, it’s much easier and more certain to make profits by buying and holding, and in that case, investors need to clearly differentiate between a token’s price and its value.

The truth is that ICOs are just as good as IPO, the only difference being that the ICOs are not regulated and there are no strict compliance requirements.  Also, many of the ICOs do not promise the same benefits that shares give their holders.  Rather, they are issued with a token that allow them to sell their stake if they do not want to hold

So, Investors need to know what makes a cryptocurrency strong and a good coin to hold going forward.  You need to know the services and similar projects the startup hopes to execute.  Many tokens and currencies represent great projects that have huge potential. Some of them stand to disrupt the traditional ways of doing things, possibly bringing large profits in the future. As investors begin to come to grips with the fact that the days of flipping ICO tokens are fading away. Quick profits need to give way to long term potential.

Investors need to ask themselves the current and potential value of the projects they evaluate. The quickest way to lose money is to buy an overpriced token that has little potential and therefore low value. On the other hand, investors with enough foresight to purchase the woefully underpriced Bitcoin (or quality altcoins) last year have seen massive returns. The need for research and proper vetting of a team’s business model cannot be overemphasized.  

It is important to understand what will drive demand for the token in the marketplace. This requires an honest, unbiased assessment of the project. Many projects require an idea to be perfectly executed in order to succeed, and investors should consider that perfection occurs only rarely in this world.

Market factors such as an increase in crypto adoption will come into play at some point. This remains in the future, however, and isn’t certain. Investors shouldn’t settle for a project whose token’s value is hinged purely on speculation. Neither should they be carried away by hype.

Investors a need to look beyond the commonalities of tokens and focus more on each project’s unique proposition. The moment a new project starts copying from existing ones, investors should take a step back. Investors do not need to follow other investors without knowing why they are putting their money into a project. Each investor must dispassionately assess the current and future value of any project in which they invest.

This is one of the ways to avoid future loss for those interested in investing in  cryptocurrencies. At press time, there are many moribund coins that continue to loose value without any effort to rebound, apparently because no information is forthcoming from the startup updating the market on business progress and the future prospects of the company.



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