The information that is
available online for a potential investor who is wanting to participate in an
ICO can be hugely overwhelming. You want to know how to go about starting the
process, as well as the easiest way to purchase ICO tokens without making
unnecessary mistakes, approaching things the wrong way, and worse, losing
money. Here is a simplified step-by-step guide to take you through everything
you need to know about participating in an ICO:
Open a Local Cryptocurrency Exchange Account
As a first step, you will
need to open a cryptocurrency exchange account. There are a number of online
exchanges that you can choose from. However, not all exchanges are created
equal. Look for one that is based in your home country as regulations apply and
you will be required to submit identity proof for verification. Also, ensure
that the exchange allows you to deposit funds from your bank.
Purchase Bitcoins
Use the funds transferred
from your bank account (otherwise known as fiat currency) for purchasing
bitcoins (or ether as another alternative). Bitcoins are generally accepted for
deposit in most exchanges as opposed to most other cryptocurrencies and are
easily exchanged. The bitcoins are usually transferred to an online wallet
provided by the exchange.
Set up a user-controlled Blockchain Wallet
It is generally not
recommended to maintain money in wallets provided by the exchange given the
huge vulnerability to online hackers. Additionally, unless your exchange
specifically allows for this, your online wallet may not allow you to receive
the tokens of your choice resulting in loss of funds.
Participate in ICOs
Sign up on the ICO website and create
your user account. Once you've signed up, you will be given a unique address as
well as access to the latest statistics in terms of how the ICO is performing
on your dashboard for ICO analysis. There will be an option provided for you to
buy the ICO tokens. Send the deposit from your wallet to the unique address
specified by the ICO website. Also, set the data and gaslimit parameters as
specified by the ICO website.
Confirm Transaction and Receive Tokens
Allow for 5 to 10 minutes
to receive confirmation of the token purchase on email. You should also be able
to see the transactional information on your dashboard. Your ICO will have
already provided information on when your ICO tokens will be distributed. Sometimes you will receive the tokens
immediately after the ICO has ended. Sometimes you may have to wait longer
depending on the individual ICO or even have to manually redeem them yourself.
A Word on Cold Storage Wallets
Online storage methods
always pose inherent risks in terms of both safeties as well as security. A
more secure option for large amounts preferred by professional investors is
cold storage wallets. Bitcoin reserves are held via offline means of storage
such as USBs, paper wallets, physical bitcoins as well as hardware wallets.
Whilst there is no guarantee of fool-proof safety, the risks of using cold
storage wallets are easily mitigated.
