With Initial Coin Offerings attracting so much attention as of late, there are a lot of unanswered questions from novice users. One of the main points of confusion is how people can invest in these offerings in the first place. There does not appear to be a clear guide on how to do things, which raises more questions than it provides answers. Below are some basic tips on how to prepare for buying into a cryptocurrency ICO.
Partaking in a Cryptocurrency ICO Is Not Easy
A lot of people are looking to actively invest in cryptocurrency ICOs, but have no idea where to start. That is not all that surprising, unfortunately. To partake in a cryptocurrency ICO, one first needs the appropriate cryptocurrency to buy tokens. In most cases, this will be either Ethereum or Bitcoin. Fiat currencies are never directly supported by ICO projects, due to the unregulated nature of these crowdsales.
It is important to note users will need an actual wallet client for the support cryptocurrency to buy into an ICO. More specifically, ICO projects accepting Ethereum require investors to have a mobile or desktop Ethereum wallet. In these cases, the ICO tokens you purchase are sent to the Ethereum wallet used to make an investment. However, web wallets and exchange wallets rarely support all of these different tokens. That means users who rely on online wallets send Ether funds to a crowdsale address and not get their tokens in return due to a lack of compatibility.
Using a proper Ethereum wallet is of the utmost importance in this regard. Even if the desktop or mobile wallet client doesn’t support the token directly, it will still be linked to that address. It also means the owner of said address – the person holding the private key – will be in control over these purchased ICO tokens. This is extremely important when partaking in a cryptocurrency ICO. Some projects still accept Bitcoin payments as well, although those are becoming far less common. Ethereum-oriented cryptocurrency ICOs seem to be the best bet, for now.
Once you have set up your Ethereum Wallet properly and decided upon which ICO to buy into, things will get really interesting. A lot of cryptocurrency ICOs sell out in minutes or hours, at best. This means you need to be on the ball when it comes to partaking in such a crowdsale. Funds must be in your wallet and ready to spend as soon a users series even send a transaction to the ICO address a few minutes before the sale starts to ensure their transfer is picked up by miners in time to purchase ICO tokens.
Once your purchase of ICO tokens is completed, the tokens in question will be sent directly to your wallet address. This process should take place automatically and immediately, unless stated otherwise in the cryptocurrency ICO’s guidelines. Always make sure to check the ICO’s terms and conditions before making an investment to avoid any confusion or questions that have already been answered.
All of the above steps are absolutely necessary to ensure you receive your ICO tokens and remain in full control of them at any given time. Using a proper desktop or mobile wallet is of the utmost importance. Most cryptocurrency ICOs will outline these steps on their project page as well, so make sure to keep an eye out for that information. In the next part of this series, we will discuss the potential gains – and losses – associated with cryptocurrency ICOs and what best practices users need to be aware of at all times.
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