Beginner's Guide to ICO Investing: How to Participate in ICOs

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.