LIST: How to evaluate ICO opportunities

[DarkSi]

Let me shake your hand, you're awesome! Let's call it "Colwell test"

Great job mate, very helpful list. I really don't know what to add, but I have many questions.

Please explain, what do you mean by questions:

• Who will support the token?
• What are the possibilities past the first use case?
• Is it impossible to substitute the use of the token for another? It's always possible to switch the project to another blockchain by issuing the same amount of tokens.
• How will the team continue to communicate their progress?
• What is the team's timescale for implementing their proposals? I understand the question, but I don't see how to interpret the answer. Let's say, it's around 7 years. Is it good or bad? What if it's about 1 year?
• What rights does the token provide the investor? — which options are available on the market today?
• Is there a Reddit community? — why it's crucial? what if it's Telegram public chat and a blog on Medium only?
• How often has the project been mentioned in the press? — any numbers to compare?
• In what jurisdiction is the company incorporated? — what if Estonia? What if Singapore? What if Russia? What if some offshore islands? What if Switzerland or Luxembourg?
• What legal structures are being disclosed? — which should be disclosed in case of a perfectly organised ICO?

Also I think it would be better to use "Yes, No, Not Available format". For example, the question "Does the project benefit from being on the blockchain? Should it be on the blockchain?" can be modified in a more specific and simple way "Blockchain is necessary to run the project or not?".

The answer to the question "What blockchain is it running on?" is often will be "Ethereum". How should we consider it? As good, bad, or just normal? I think this question also needs to be improved. How about "Is it running on the fastest of existing blockchains?"

The question "Can the team be found on LinkedIn and Github?" represents 2 questions actually.

The question "Has the founding team demonstrated the characteristics (inclusive, transparent, objective, etc.) necessary to build a healthy community?" is actually at least 3 questions according to "inclusive, transparent, objective". What other characteristics are necessary to build a healthy community?

The same about "How are developers compensated? By donation? Or some formal commitment?". Any other ways of compensation are being used during tokensales?

What should I do with the numbers of tokens are being created and circulating supply? are there any guidelines for these numbers?

What is price per token? — the same. What if it's below 10 US cents? what if it's around $1? what if $10?

Many thanks again!

Thanks SO much! I am looking at your post now and wishing I could work on THE LIST this very moment. I'll be back... hopefully later today. Lots to think about here.  THE LIST is ready for it's next big level-up.

Many gratitudes flying your way...

Crypto-Kristen

LOL... the Colwell Test... my husband Brian will be interested in this concept.  

"Is the token distribution coming directly from a smart contract?" Is it possible to do another way?
Is there a cap on funds raised per person? — just don't understand the question

[Kristen_Colwell]

Hi all,

I'm making some big changes to the list per @DarkSi's suggestion:

Also I think it would be better to use "Yes, No, Not Available format". For example, the question "Does the project benefit from being on the blockchain? Should it be on the blockchain?" can be modified in a more specific and simple way "Blockchain is necessary to run the project or not?".

This will take some time and I'll definitely need help along the way to properly rephrase.

@DarkSi shared other insights to help us tighten up the purpose of each question. I'll begin integrating these thoughts after putting some time into the "Yes, No, Not Available" format for existing questions.

We are making progress folks!

Best,

Crypto-Kristen

[DRVX]

Nothing is possible if you do not look through the ICO’s whitepaper. Spend MUCH time to learn it, try to understand if the project can interest really many people. Here there is also a video about how to find the good ICO and evaluate it: https://www.youtube.com/watch?v=PLoDoZI6wcQ

[MichaelMeu]

Hi all,

I'm making some big changes to the list per @DarkSi's suggestion:

Also I think it would be better to use "Yes, No, Not Available format". For example, the question "Does the project benefit from being on the blockchain? Should it be on the blockchain?" can be modified in a more specific and simple way "Blockchain is necessary to run the project or not?".

This will take some time and I'll definitely need help along the way to properly rephrase.

@DarkSi shared other insights to help us tighten up the purpose of each question. I'll begin integrating these thoughts after putting some time into the "Yes, No, Not Available" format for existing questions.

We are making progress folks!

Best,

Crypto-Kristen

Imho, I'd have two lists. A 'Yes/no/not available list' to introduce people to the concepts behind evaluating an ico, and then a more advanced list similar to what is already there once people are a little more comfortable with evaluating the criteria from a so-called 'noob' perspective. I personally feel that most of what is already present in the list is too complex to be condensed into simple 'Yes/no' questions.

I'll get round to responding to your other replies tomorrow as I don't have enough time at the minute. Just got one extra criteria you could add to the current list before I forget. Do private pre-sale investors receive a bonus % of tokens? Most do, and anything > 10% concerns me for private sale bonus as the potential for whales to dump their bonus tokens post-ico is very real. This is really just an arbitrary number however, I could invest in a public ico with a private bonus of say 30% (Eth founder Vitalik recommends >20% is worrying). I draw the line at 40% ico bonus, anything hitting that threshold  a gets a pass from me. No private sale bonus gets me excited as it means everyone's on a level playing field.

[MichaelMeu]

Riddle me this....

What is your BIGGEST ICO investment DEAL-BREAKER?

Interested!

Crypto-Kristen

I really couldn't settle on on so I thought I'd go for this.

The thing I'm most excited about for an ICO - if it's an infrastructure project. Look at NEO, look at QTUM, look at IOTA (not shilling, I have 0 bags in any of those).

Deal breakers - in order of importance:
#1 Is the team anonymous (the irony as we still don't know who satoshi is...) ? If so, no go
#2 Is there a whitepaper? If not, you know the answer.
#3 Does the project have a functional use with little/no competition?
#4 Does that project have a functioning prototype? No proto, no invest.
#5 Is their roadmap detailed and, just as important, realistic?
#6 Does it have a reasonable hardcap (<$50m)? Tick
#7 Is there an individual limit on how many tokens people can buy? Massive tick, (minimises the likelihood of whales forming, and if they do, they can only form post-ICO after you've invested and the coin is listed on exchanges which means you are in the money.
#8 Are bonus token offerings to the likes of pre-sale investors and even public sale ones capped at 25% of their total buy? Huge tick (Stops whales dumping short term but if there's enough longevity in project (12 months + hold) then this can be handled with bonus sales of up to 40%).

Totally not the answer you were looking for but just my thoughts.

Love the detail! Thank you.

I imagine there is some variety in what ICO investors would say is the biggest deal-breaker, but bet most or all responses would fall into your responses above... SO, is it possible to develop a sub-LIST of DEAL-BREAKERS? Or would this be taking things a bit too far?

Curious...

Crypto-Kristen

If crypto's taught us anything, it's that nothing is 'too far' I personally don't think a sub-list of deal breakers is viable however for two reasons. 1) Deal-breakers all depend on the individual's investment goals - short, medium, or long term - and will vary according to such goals. 2) We(you)'re providing a list that people can utilise to evaluate icos. IT advises people of what to look for with regards to evaluating an icos potential but the list is not providing a set of right or wrong answers from which one can deduce - 'oh , okay then, I have w, x and y ticked, and a cross for z so I guess that means i'm good to go to invest in icos'. The list provides a valuable resource upon which the individual evaluates how they rate certain criteria for an ico offering, it doesn't spoon-feed them and give them the answer as to whether or not to invest

[MichaelMeu]

V. close:

"Are token burn actions and bounties paid according to sold tokens or according to the token reserve regardless of how many tokens were sold?"

@MichaelMeu,

I added this, but am intrigued... my newbie-ness is showing. 

Can you explain the impact to the investor if burn action and bounties are not paid according to sold tokens? If burned/bounty paid according to token reserve regardless of tokens sold, does that mean that a disproportionate share of funds are going to non-investors? Did I get that right?

Thank you!

Crypto-Kristen

Ahaaa, newbieness is not a problem, acting irresponsibly is (hence why I love your list!). I'm a relative newbie myself to the crypto world - a few months - but I have a v. strong computer science background so I get that not everything might be clear to new members immediately. What helps me sometimes when I'm confused about something in crypto is that I try and use a real world analogy to help me understand it at a basic level first (like I will do in my next post).

But yes, you've got that right. We'll do this from a theoretical standpoint just so we're clear:

Imagine all tokens for sale = 100% of all tokens that can possibly be generated and say the bounty is set at 10% of all tokens.
Now, if only 40% of all those tokens are sold, and 10% remain for bounty, then bounty tokens = 1/5 of all tokens,
So if all bounty tokens are dumped (which are presumably held by non-investors), that drives down the price dramatically.

But

If the same scenario occurred but 100% of all tokens were sold, then bounty tokens = 1/10 of all tokens,
So if all bounty tokens are dumped that drives down the price less dramatically as the extent of the bounty dump is 50% less when 100% of tokens are sold; alternatively put, the impact on token price when the bounty dump occurs when only 50% of all tokens are sold is a 2x (200%) increase in magnitude - as 1x increase = 1 (1x1=1) when contrasted with the same situation if 100% of all tokens were sold.

Hope that makes sense. It's not a practical ex. as most icos sell out - the legit ones anyway - and I'd personally avoid any ico with bounty > 10%.

[MichaelMeu]

Step 10: If it has the name Polymath, stay away!

That is a good one. I would also say "stay away if the name of the coin is Bitcoin + a colour, Ethereum + a colour, Bitcoin + anything in general, etc... " I am sure you get the idea.

Yes. Those flags would pop up with the criteria certainly but a shortcut is just looking for those combinations. I thought it'd be obvious to most but for some it may not be so thanks.

Also, see if the website is mining from your browser. I've noted this on a few icos recently.

Let's take an example.

Open your task manager on your computer.

Click the Processes tab and monitor the % of CPU being used for a second or so. What percentage is it hovering around?
Mines typically between 14-17% (can spike to 30%, rarely 40-50% but it is possible, would only happen for a moment however).

Now, when you go to ICO site that is using in-broswer mining (likely Monero) that CPU % will spike up in seconds. No way am I investing in an ICO that's slyly stealing my CPU resources. Why would I trust them? Just completely dodgy.

Here's an example which I took from: https://coincodex.com/article/1198/top-5-icos-of-early-2018/ - the spam link someone just posted.

I googled the 'Scorum' ICO (last on the top 5 list) and went to their site for their token sale.

Here's the url:

https://scorumcoins.com/

Have to wait for a few seconds for the webpage to load and then, BOOM! CPU spike + fan will probably start going like crazy also. Yup. Mining from your browser. Want to make sure there's not an error with your browser? Close the tab, watch the spike disappear. Double-check with different browser just to be sure (Chrome + IE I checked with) and voila. Pure scam Scorumcoins is - might as well be called Scrotumcoins, about as attractive as one. Stay away (but quickly do the demonstration for yourself to spot this red flag in the future)

  WOW!!!!!!

Still digesting this piece of info. I knew there were malware and CPU-jacking issues in the cryptosphere, but had not connected the dots between that behavior and ICO investing. With more newbies like myself stepping into the arena, scammers are banking on the fact that most are completely unaware of the risks.

So, @MichaelMeu, is there a question or series of questions I can add to get this point across? I hate to keep talking about identifying scams.... BUT wonder if there is a new section dedicated to "Is this a Scam" and points such as this would go there...

Thoughts?

 
Crypto-Kristen

I'm not personally aware of many outright methods to avoid scams besides what we've already mentioned. Not all are going to mine from your CPU but it's the #1 most obvious indicator that it's a scam if they do. Perhaps this is not what you meant but just in case it was, your CPU usage in this instance is not being hijacked, it's resources are being siphoned off.

What's the difference you ask? (here's how using real-world examples can make things clearer in computer science.

Well, if someone hijacks your car, you are no longer in control of said car. They've stolen it, it's gone, and you (presumably) cannot get it back.
This is not what is happening with your CPU when someone mines from it.
Your CPU is not hijacked, they are merely siphoning off it's extra resources.
Hijack = no control over circumstance; siphon = full control over circumstance but you may or may not be aware that it's occurring - obviously once you realise that it is you take steps to rectify it.

So when you go to that site (I hope you did the test so you know what to look out for) they siphon resources off of your CPU, they do not hijack it because you remain in full control - once you leave the site, the siphoning stops; if you left the site and the 'siphoning' didn't stop, then this would be hijacking your CPU (as you are no longer n control of it).
But rather than hijacking, in computer science we have our own word for this: hacking.

Make sense?

[MichaelMeu]

This ICO evaluation methodology by ICORating is nicely outlined. 
https://icorating.com/methodology/

I'm especially interested in their hype-score and the description of quantitative vs. qualitative factors.

Any other pieces of this jump out as concepts I need to include in THE LIST?

Thanks!
Crypto-Kristen 

Beside of qulitative factors i usually talk with team members. If the team does not believe the project and cannot understand the cons and problems i stay away from them.
you will spot the Well driven ponzi schemes like bitconnect with talking to the team.

Intriguing!!! You talk with the team member. I love it. 

Can you give us a little detail about your process? Do you reach out to team members via LinkedIn? Do you find that team members are generally responsive? If not responsive, is that a sign?

Looking forward to your response,

Crypto-Kristen

I do this too, although I don't think you're going to get much contact on LinkedIn as it's more a networking platform than somewhere one can chat and have conversations

Best way is to join the telegram/discord chat if available and ask questions there - I really prefer Discord as telegram is far too difficult to keep track of everything and I find Discord chat just much more manageable (just my personal opinion) but not everyone has a Discord chat. Obviously find out whom the devs are for a project and direct your questions to them/forum moderators rather than randomers who are shilling or whom are being paid bounties. You can also post questions for the devs on the bitcointalk ANN threads as well as privately message devs about issues that are of specific interest.

[MichaelMeu]

Oh, and here's a Github ico checker to use. Here's the link: https://github.com/ico-check/ico-check/issues

They are a due diligence checker. And they're pretty good at it too. They don't have a huge list of icos at the minute but the one's they do have are analysed thoroughly. Be aware though, there's no central github authority so a new ico topic can be started and analysed by anyone (if you register with a new username you could even do it) so make sure to double-check the information you see but it's a pretty swell resource I think.

Mind and click the 'open' and 'closed' tabs at the top for past and current/upcoming icos.

[Kristen_Colwell]

Sorry for the looooong delay in getting back to everyone! I'm working on the list now. Missed y'all! Let's do this.

 
Crypto-Kristen

[Kristen_Colwell]

Hi all,

I'm making some big changes to the list per @DarkSi's suggestion:

Also I think it would be better to use "Yes, No, Not Available format". For example, the question "Does the project benefit from being on the blockchain? Should it be on the blockchain?" can be modified in a more specific and simple way "Blockchain is necessary to run the project or not?".

This will take some time and I'll definitely need help along the way to properly rephrase.

@DarkSi shared other insights to help us tighten up the purpose of each question. I'll begin integrating these thoughts after putting some time into the "Yes, No, Not Available" format for existing questions.

We are making progress folks!

Best,

Crypto-Kristen

Imho, I'd have two lists. A 'Yes/no/not available list' to introduce people to the concepts behind evaluating an ico, and then a more advanced list similar to what is already there once people are a little more comfortable with evaluating the criteria from a so-called 'noob' perspective. I personally feel that most of what is already present in the list is too complex to be condensed into simple 'Yes/no' questions.

I'll get round to responding to your other replies tomorrow as I don't have enough time at the minute. Just got one extra criteria you could add to the current list before I forget. Do private pre-sale investors receive a bonus % of tokens? Most do, and anything > 10% concerns me for private sale bonus as the potential for whales to dump their bonus tokens post-ico is very real. This is really just an arbitrary number however, I could invest in a public ico with a private bonus of say 30% (Eth founder Vitalik recommends >20% is worrying). I draw the line at 40% ico bonus, anything hitting that threshold  a gets a pass from me. No private sale bonus gets me excited as it means everyone's on a level playing field.

So, here's how I'm going about it... open to suggestions as always!

I'll separate each section into two sub-sections, one for fundamental questions (y/n/na answer), the other for proof points (deeper, sometimes philosophical, questions lol).

Edits in process now.

 

Crypto-Kristen

[Kristen_Colwell]

Revision in progress... here is the first section so far. PLEASE SHARE your input on this section now if possible. I can integrate your thoughts in real-time. LOL  I am also reviewing this thread to make sure I've captured all the existing comments on this section.

Thanks,

Crypto-Kristen 

1. Token Purpose: what need does the token address?

FUNDAMENTALS

• Is the token tied to a product usage, i.e. does it give the user exclusive access to it, or provide interaction rights to the product?
• Does the token grant a governance action, like voting on a consensus related or other decision-making factor?
• Is the token the project's principal payment unit, essentially functioning as an internal currency?
• Does the token provide return to token holders?
• Does the token reward users for contributing resources towards the creation of a shared service that will benefit all users?
• Can the resources contributed by users be verified by anyone?

PROOF POINTS

• Is the token new and no other token offers the same service?
• Does the token have a clear purpose?
• How broad or narrowly defined are the use cases for this blockchain?
• Does the token align incentives to simultaneously accelerate growth and token value?
• Who will support the token?
• Is the token structured with centralized control or a decentralized governance?
• Is the token a utility token (usage token or work token) a security token, or a combination?
• For usage tokens: is the digital service being offered useful and does the network underlying the digital service aggregate resources (hashing power, file storage, etc.) that will differentiate the service in the long-term?
• For work tokens: is there a strong network emerging that wants to contribute and is the UX well thought through? And is the service offered useful to people?
• For security tokens: is there some technology underlying the security that gives the token a long-term competitive advantage?

[Kristen_Colwell]

Help! Let's provide some direction on the Yes/No/Not Applicable questions. For example, if the answer is YES, then what is the conclusion?


1. Token Purpose: what need does the token address?

FUNDAMENTALS

• Is the token tied to a product usage, i.e. does it give the user exclusive access to it, or provide interaction rights to the product? If YES, then ___
• Does the token grant a governance action, like voting on a consensus related or other decision-making factor? If YES, then ___
• Is the token the project's principal payment unit, essentially functioning as an internal currency? If YES, then ___
• Does the token provide return to token holders? If YES, then ___
• Does the token reward users for contributing resources towards the creation of a shared service that will benefit all users? If YES, then ___
• Can the resources contributed by users be verified by anyone? If YES, then ___

Thanks in advance,

Crypto-Kristen . 

[Kristen_Colwell]

Step 10: If it has the name Polymath, stay away!

That is a good one. I would also say "stay away if the name of the coin is Bitcoin + a colour, Ethereum + a colour, Bitcoin + anything in general, etc... " I am sure you get the idea.

Yes. Those flags would pop up with the criteria certainly but a shortcut is just looking for those combinations. I thought it'd be obvious to most but for some it may not be so thanks.

Also, see if the website is mining from your browser. I've noted this on a few icos recently.

Let's take an example.

Open your task manager on your computer.

Click the Processes tab and monitor the % of CPU being used for a second or so. What percentage is it hovering around?
Mines typically between 14-17% (can spike to 30%, rarely 40-50% but it is possible, would only happen for a moment however).

Now, when you go to ICO site that is using in-broswer mining (likely Monero) that CPU % will spike up in seconds. No way am I investing in an ICO that's slyly stealing my CPU resources. Why would I trust them? Just completely dodgy.

Here's an example which I took from: https://coincodex.com/article/1198/top-5-icos-of-early-2018/ - the spam link someone just posted.

I googled the 'Scorum' ICO (last on the top 5 list) and went to their site for their token sale.

Here's the url:

https://scorumcoins.com/

Have to wait for a few seconds for the webpage to load and then, BOOM! CPU spike + fan will probably start going like crazy also. Yup. Mining from your browser. Want to make sure there's not an error with your browser? Close the tab, watch the spike disappear. Double-check with different browser just to be sure (Chrome + IE I checked with) and voila. Pure scam Scorumcoins is - might as well be called Scrotumcoins, about as attractive as one. Stay away (but quickly do the demonstration for yourself to spot this red flag in the future)

  WOW!!!!!!

Still digesting this piece of info. I knew there were malware and CPU-jacking issues in the cryptosphere, but had not connected the dots between that behavior and ICO investing. With more newbies like myself stepping into the arena, scammers are banking on the fact that most are completely unaware of the risks.

So, @MichaelMeu, is there a question or series of questions I can add to get this point across? I hate to keep talking about identifying scams.... BUT wonder if there is a new section dedicated to "Is this a Scam" and points such as this would go there...

Thoughts?

 
Crypto-Kristen

I'm not personally aware of many outright methods to avoid scams besides what we've already mentioned. Not all are going to mine from your CPU but it's the #1 most obvious indicator that it's a scam if they do. Perhaps this is not what you meant but just in case it was, your CPU usage in this instance is not being hijacked, it's resources are being siphoned off.

What's the difference you ask? (here's how using real-world examples can make things clearer in computer science.

Well, if someone hijacks your car, you are no longer in control of said car. They've stolen it, it's gone, and you (presumably) cannot get it back.
This is not what is happening with your CPU when someone mines from it.
Your CPU is not hijacked, they are merely siphoning off it's extra resources.
Hijack = no control over circumstance; siphon = full control over circumstance but you may or may not be aware that it's occurring - obviously once you realise that it is you take steps to rectify it.

So when you go to that site (I hope you did the test so you know what to look out for) they siphon resources off of your CPU, they do not hijack it because you remain in full control - once you leave the site, the siphoning stops; if you left the site and the 'siphoning' didn't stop, then this would be hijacking your CPU (as you are no longer n control of it).
But rather than hijacking, in computer science we have our own word for this: hacking.

Make sense?

Thanks for this detail! Yes, make sense to me. Scary AF. LOL

[Kristen_Colwell]

I sort of messed up the order of questions earlier. Here is the new grouping:

1. Token Purpose: what need does the token address?

FUNDAMENTALS

• Is the token a utility token (usage token or work token) a security token, or a combination?
• For usage tokens: is the digital service being offered useful and does the network underlying the digital service aggregate resources (hashing power, file storage, etc.) that will differentiate the service in the long-term?
• For work tokens: is there a strong network emerging that wants to contribute and is the UX well thought through? And is the service offered useful to people?
• For security tokens: is there some technology underlying the security that gives the token a long-term competitive advantage?
• Does the token grant a governance action, like voting on a consensus related or other decision-making factor?
• Is the token the project's principal payment unit, essentially functioning as an internal currency?
• Does the token provide return to token holders?
• Does the token reward users for contributing resources towards the creation of a shared service that will benefit all users?
• Can the resources contributed by users be verified by anyone?

PROOF POINTS

• Is the token new and no other token offers the same service?
• Does the token have a clear purpose?
• How broad or narrowly defined are the use cases for this blockchain?
• Does the token align incentives to simultaneously accelerate growth and token value?
• Who will support the token?
• Is the token structured with centralized control or a decentralized governance?

 
Crypto-Kristen

[Kristen_Colwell]

Another version is live now.

Now adding some qualifiers, such as "YES is preferred" to help with the fundamental analysis. I really need help on these. Please share your opinions.

Thanks,

Crypto-Kristen
 


FUNDAMENTALS

• Is the token a utility token (usage token or work token) a security token, or a combination?
• For utility tokens: is the token an integral component of the application ecosystem? YES is preferred
• For security tokens: is there some underlying technology that represents a competitive advantage? YES is preferred
• Is the token the project's principal payment unit, essentially functioning as an internal currency?
• Does the token provide return to token holders? YES is preferred
• Is the token new and no other token offers the same service? YES is preferred
• Does the token have a clear purpose? YES is preferred

PROOF POINTS

• How broad or narrowly defined are the use cases for this blockchain?
• Does the token align incentives to simultaneously accelerate growth and token value?
• Who will support the token?
• Is the token structured with centralized control or a decentralized governance?
• Can the resources contributed by users be verified by anyone?
• Does the token reward users for contributing resources towards the creation of a shared service that will benefit all users?
• Does the token grant a governance action, like voting on a consensus related or other decision-making factor?
• For usage tokens: is the digital service useful and does the network underlying the digital service aggregate resources (hashing power, file storage, etc.) that will differentiate the service in the long-term?
• For work tokens: is there a strong network emerging that wants to contribute and is the UX well thought through? And is the service offered useful to people?
• For security tokens: is there some technology underlying the security that gives the token a long-term competitive advantage?

[Kristen_Colwell]

Came across this post and had to share:

I haven't seen anybody post about what would be my biggest worry if I were trying out alternative block chains. I realize this may be perceived as "Gavin is FUD'ding anything that isn't bitcoin!"  (FUD == Fear, Uncertainty and Doubt)  But I think some of you might be forgetting some basic computer security fundamentals in the excitement to be early adopters.

When I first heard about bitcoin, my questions were:

1) Can it possibly work (do the ideas for how it works make sense)?
2) Is it a scam?
3) If it is not a scam, could it open my computer up to viruses/trojans if I run it?

I answered those questions by:

1) Reading and understanding Satoshi's whitepaper.  Then thinking about it for a day or two and reading it again.
2) Finding out everything I could about the project.  I read every forum thread here (there were probably under a hundred threads back then) and read Satoshi's initial postings on the crypto mailing list.
3) Downloaded and skimmed the source code to see if it looked vulnerable to buffer overflow or other remotely exploitable attacks.

If I were going to experiment with an alternative block-chain, I'd go through the same process again. But I'm an old conservative fuddy-duddy.

If you want to take a risk on a brand-new alternative block-chain, I'd strongly suggest that you:

1) Run the software in a virtual machine or on a machine that doesn't contain anything valuable.
2) Don't invest more money or time than you can afford to lose.
3) Use a different passphrase at every exchange site.

[Kristen_Colwell]

Just added to The List with some help from the author of a different, but similar topic ==>

Great topic!

I've been working with some BitcoinTalk folks on a master list of ICO evaluation questions and would appreciate your input. We've played with the idea of creating a "Deal-Breakers" list like your Red Flags, but haven't formalized anything. The big question with red flags or deal-breakers is how the individual investor views the information. A red flag in some cases may not be a deal-breaker. And a red flag for one person may not be for another, based on opinion and or access to information.

How do you plan to address the issue of gray areas with respect to red flags?

Best,

Crypto-Kristen  

You got an exhaustive list of questions to be asked before investing into an ICO. That is a great job done!

We believe in the technology and think that any team should have a chance if it is openminded and full of enthusiasm. Nobody knows the future and a small team can make a big difference. However we need to take into consideration risks connected to project.

3. Technology: what is the tech?

    What type of technology is it? (DApp? Infrastructure? Currency?)
    What blockchain is it running on?
    Are they developing their own infrastructure instead? If so, why?
    Is the token mineable?

Things that could be added here:
- Is the technology proposed by the team making any difference and helps blockchains to evolve? (Close to this question: Are they developing their own infrastructure instead? If so, why?)
- What problem does this technology solve that is not solved before?
- Does the technology depend on other projects?

4. Minimum Viable Product: how solid is the product?

    Is there a working prototype?
    Is there a working prototype code working on a testnet?
    Do they have prototype code at all (even if its not currently executed)?
    Is the code a copycat that implemented no new features?
    Does the code have commentary?
    Does the commentary explain clearly the purpose of the function?
    Are the functions a reasonable length? i.e. are they less than 50 lines?
    Does the code allow for rapid expansion of user base and network interactions?
    Are there any external audits of the code?
    Is the product's technical specification thorough and does it demonstrate mastery of the subject matter?
    Are there people out there who want and need this product right now?
    Does the product benefit from network effects?

Things to add:
- Were there any public tests of the product performance? Number of transactions per second, potential vulnerabilities, etc.
- Do they have a wallet to store coins/tokens saved offline or is it supported by any working wallets that can be used offline?

Another section that is almost every project is weak at is Business Model.

[Genovese]

This is probably the most informative thread on the whole issue of ICOs, thank you very much for having taken the time to render such a good service to the community. This actually should be a pinned thread which people could be able to access any time.

[Kristen_Colwell]

This is probably the most informative thread on the whole issue of ICOs, thank you very much for having taken the time to render such a good service to the community. This actually should be a pinned thread which people could be able to access any time.

Dang, thanks for the support! I see this as a topic that I'll be updating indefinitely... things will constantly change. It'll be interesting to see how our opinions shift over time and as more ICO regulation comes into play.

 

Thanks,

Crypto-Kristen