To seamlessly determine the tradable value of any ICO token is no doubt a big part of what makes you a smart crypto investor. In the last little while, it’s no longer news that Initial Coin Offerings (ICOs) have made some impressive progress on crowdfunding, and have been used to successfully raise over a billion dollars for early-stage startups.
ICOs are an astounding innovation that has positively affected established businesses, startups, and investors as well. In fact, most startups use ICOs to bypass the regulated capital-raising process required by venture capitalists.
Although most of us find ourselves constantly seeking answers about ICOs — especially those ones with great potential, we aren’t super conscious about the importance of investigating on the tradable value of its tokens.
Meanwhile, as an investor in the pursuit of a personal pot of gold at the end of the crypto rainbow, determining the tradable value of an ICO token before investing in it should be your number one priority. Here are five unconventional factors that can enable you to determine the tradable value of any ICO token you come across.
#1 The Investors and Users Perceived Value:
Crypto investors’ and users’ perceived value of an ICO is one of the factors that strongly determine the tradable value of the ICO token. Obviously, ICOs are extremely risky and highly speculative; and if it has no intrinsic value, investors’ perceived value towards it will be affected.
“Perceived value” is simply the worth or merit an investor ascribes to an ICO.
Apparently, if investors’ perceived value towards an ICO is very high, the token’s demand will increase and consequently, the tradable value of the token will also increase. But if their perceived value towards the ICO is weak, this will negatively affect the tradable price-value of the token.
Note: People’s sentiments about an ICO are one of the key driving factors that determine the tradable value of the token. Therefore, it’s very important that ICO organizers keep this in mind while working towards it.
#2 The Utility of the Token:
The utility of the token is another key factor that determines the tradable value of the ICO token. The better the utility of an ICO token, the greater the demand for the coin.
For instance, if the utility of the ICO token is limited such that you can’t use it for the following: payments, investments, exchange to other cryptocurrencies or fiat etc, smart investors will perceive the token to be of little or no value, and this will negatively affect its price value.
On the other hand, if the token can be widely used as means of payment, exchange to other cryptocurrencies etc there will be a surge in demand, and as a result, the tradable value of the coin will soar.
#3 The Rate of the Token’s Demand and Supply:
Based on the simple economic factor that controls the prices of many things, the demand and supply rate of an ICO token are also factors that determine its tradable value.
If the rate of demand for the ICO token is very high such that it has sold over 50% of the total supply token before the ‘main sales’ then, such an ICO has attributes of both ‘utility and scarcity.’ Consequently, the price-value of such a token will soar with time. On the other hand, if the situation is reversed, such that the rate of demand is pretty low; clearly, the token’s price value will either remain at its set price or drop further.
Let’s take for example RYFTS, a decentralized raffle platform. It has a total supply of 33,000,000 tokens for sale at $0.50 per token. In a situation where the demand for RYFTS token is pretty high before its main sales; the token’s value has a higher tendency to rise further i.e $0.50 + X( where X represents the increase in price value of the token). On the other hand, if the situation is reversed, the value of the token price will either remain at its set price or decrease further $0.50-Y (where Y represents the decrease in price value of the token).
#4 The Uniqueness of the ICO in Solving a Real-World Problem:
The ability of an ICO to uniquely solve a real problem is another key factor that can regulate a token’s tradable value. Solving difficulties like mining, transaction speed, security, exchange to other cryptocurrencies and real-world money, transparency, democracy and so on can largely affect the price-value of an ICO token.
Let’s take the game industry as a case study. According to the 2013 State of Online Gaming Report, it was revealed that over 1.2 billion people are playing games worldwide; and over 700 million play online. So, if an ICO is on a mission to solve a real-world problem in this industry, let’s say to convert in-game tokens to real-world money, there will probably be a surge in such an ICO. Consequently, its perceived and price values will be positively affected. BGX, and RYFTS are good examples of startups working towards solving real problems.
#5 The ICO Marketing Efforts:
When it comes to ICO marketing, reaching out to large numbers of investors and convincing them that your brand is reliable requires a lot of team effort and experience.
Unfortunately, the team’s inability to reach out to a large number of potential investors and convince them to invest can negatively influence the price-value of an ICO token. This is simply because several potential investors who would have invested heavily in the ICO won’t be able to due to the poor marketing effort. Contrarily, if the team were able to create a viral awareness campaign about an ICO, they’ll be able to reach out to a large number of potential investors. and as a result, the demand will be more and the token’s value will soar.
Featured Image: DepositPhotos/ peshkova