The first initial coin offering (ICO) I bought into was Status, and it was a disaster.
The idea behind Status is a decentralised messaging platform, with marketplaces, app stores and its own native currency, SNT.
Status was one of the first really high profile ICOs on the Ethereum network. It was a great idea – basically a decentralised WeChat. And as a result, it seemed that everyone wanted in.
Because it was so high profile and so popular the ICO didn’t go as planned. It clogged the whole Ethereum network for a couple of days and Status got a lot of hate.
The reason it went so wrong was that it allowed big investors to use a higher gas price than smaller ones. The gas price is basically the fee you pay to miners to put through your transaction. If you pay more your transaction will go faster.
If smaller investors sent their buy with a high gas price it would get rejected. If big investors did, theirs would get through – ahead of anyone using a normal gas price.
Because there was limit on the amount of money that could be raised by the ICO, people tried again and again to get their transactions through, and this clogged the network.
I remember finally getting my transaction through at about 11:45pm on the day of the ICO.
Our own Sam Volkering was also less than impressed about how the Status ICO went:
It was after this debacle that ICOs got smart. Public whitelists, smart queueing systems and better structures ensured they went smoothly. By late 2017 the ICO market was booming.
I guess in a weird way, we have the Status ICO shambles to thank for the better ICO formats of today. And although the Status ICO was a mess, Status itself has huge potential if it achieves what it’s set out to do.
Since that infamous ICO, Status is up 1,153%
This is why so many people were so keen to get in early. Getting into an ICO gives you the cheapest price you’re likely to see any given crypto at.
If you believe in the product, the team and the market, ICOs are where the biggest gains in crypto can be made.
For example, you’ve probably seen that Sam has a new service called Crypto Profits Extreme. It’s based on his most promising ICO picks. Since it first launched only a couple of months ago, two of his picks are up over 1,000%.
Those kind of gains are incredible. Someone coming in from any other area of investing probably wouldn’t even believe they were possible. But the evidence is there. You can see it happening live on coinmarketcap.com.
Obviously, it’s not going to last forever. And it would be stupid to put in money you don’t mind throwing away. But for now at least, this is one of the fastest ways to make money in the world.
The problem with insane profits
The only problem with making so much profit is it becomes very hard to realise the gains.
By realising a gain, I mean exchanging your profits back into fiat money – pounds, dollars, etc.
It’s very hard psychologically to cash out of an asset you’ve watched grow by over 900% in a matter of months. What if it keeps going and you miss out on another 900%?
That’s why as I said in this essay, it’s important to set targets and cash out a percentage of your profits when you hit them.
When I cashed out of that Status ICO (although only back into Ether, not fiat) I was sitting on about 130% gains. Since then it’s gone up by another 1,000%.
Would I have been better holding on? Maybe. But at the time I was happier to increase my ether stack than to keep holding Status.
If Status really does become the next WeChat, I’ll probably feel differently.
It may sound like a good problem to have. And it is. But when there’s another crypto crash – and there will be another crash – it’ll be a lot easier for you to ride it out if you know you’ve banked some real profits.
All those theoretical gains don’t mean anything if you never use them for anything real.
How to avoid the scam ICOs
Another big problem with ICOs is the scams.
It may be ICOs promising products they’ll never deliver. It may be legitimate ICOs that have been hacked. Or the ICO may have been an orchestrated scam from the start.
With this much money in the industry, it’s become riddled with scams.
Sam and I wrote a few weeks ago about how you can store your cryptos safely and avoid scams. If you missed it, you can read it here.
The main takeaways were:
- Research the ICO thoroughly.
- Always type web addresses into your browser bar and not into a search engine, to avoid phishing scams.
- On the ICO’s official website, it will list its other communication channels… Twitter, Telegram, email, Discord, etc. Check its other communication channels if it sends you a communication that seems a bit “off”.
- Don’t send any funds if the schedule for buying in suddenly speeds up or the address to send them to suddenly changes. Again, if this happens check the official channels for clarification.
That’s all for today. But look out for Exponential Investor tomorrow when I’ll be showing why Ripple – the latest crypto king – is not all that it seems. And why it could leave a lot of investors out of pocket.
Editor, Exponential Investor
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