What is Soft Cap and Hard Cap and Why it's Essential to Understand

Cappped ICOS consist of two stages called soft cap and hard cap. Soft cap is minimum amount of contributions that an ICO needs to raise.
Soft caps are usually easy to reach and are considered successful when that amount raised. In fact, most projects reach this goal in a short time.
If an ICO is unable to raise that amount it may be cancelled and the raised funds returned to the investors.

But the process may be different in some projects. The company does not cancel the project and then enters life support mode.
At this stage, it is important for the company to share all developments with its investors in a transparent manner.

As for Hard Cap, that is the maximum amount of funds that would be raised.
Most of the projects set the hard cap very high and this is not easy to reach.
But some famous projects can create huge hype and reach it with ease in the first few hours, even minutes, just after sales started.

If an ICO reaches hard cap, project stop accepting additional funding and the sale of tokens is halted.
This is important because if the company does not return the money, the red flag situation occurs about that project.

Before investing in an ICO, it would be wise to do a thorough research on the project. Soft cap and hard cap will give us some information about the campaign conducted.
If it seems difficult to reach soft cap, it might be a good idea to wait for ICO's last days. In this way, you get much more robust data about the project.
Will it be able to continue its own path as planned or will it be a dangerous investment for you?

Remember, if something seems like a scam, it probably is.
Anyone who wants to invest in ICO, please read the whitepaper of the project before going further.
You should determine what you expect from a real ICO, step by step. How the project will go and how the technology works.
You'll get this idea by examining charts, simulations, formulas, and other important data.

There are thousands ICOs and unfortunately most of them are scams which they aim to steal our money.
Every ICO has a certain risk. If someone offers no risk then probably you should think about it carefully.

General rule:
Never invest more than you are willing to lose.