How to invest in an ICO

Investing in an ICO can be a daunting task. Our guide explains the major things to take into consideration.

Taking the plunge to invest in an ICO needs a little research. After all, blockchain technology is relatively new. It is increasingly becoming more mainstream however, and ICOs (and the opportunity to invest in an ICO) are becoming commonplace. The first one was held by Mastercoin in July 2013.

Our guide outlines the main steps you need to take to invest in an ICO. Not all ICOs are the same, but a few key preparations will have you ready for almost anything. Here are a few steps to get you started:

Do your research before you invest in an ICO

Before going through the process of signing up for an ICO, you should have a good idea of which ICO(s) you want to invest in. You will be faced with a lot of choices, so pick out a few key ICOs whose concepts interest you, and then delve into some deeper project research. If the team seems like they’re heading in a good direction, find out the ICO terms, including any dates, deadlines and costs. Once you’re confident in your investment decision(s), it’s time to invest. For nearly every ICO you will need to invest using a cryptocurrency called Ethereum.

Get Ethereum

Not all ICOs are on the Ethereum platform, but the majority are. To invest in an ICO on the Ethereum platform, you need Ether (ETH), the Ethereum network’s official token. But how do you get ETH in the first place?

While obtaining ETH used to be more difficult, easier-to-use digital exchanges, such as Coinbase and Gemini, have improved the process of converting fiat money (cash) to cryptocurrency. These services are restricted based on location, but both Coinbase and Gemini are available to users in the United Kingdom and the United States, amongst other countries. It’s important to note that Gemini users must deposit USD. Coinbase operates with EUR and USD, and will convert GBP to EUR automatically for you. There are several other exchanges that will convert fiat money to ETH so do more research if one of these more popular exchanges doesn’t fit your needs.

After selecting the digital exchange you’d like to worth with, the next step is to register with the exchange and deposit fiat currency (USD, EUR, GBP) into your account. Since most ICOs require payment in the form of ETH, you will need to select the appropriate pairing (ETH/USD, ETH/EUR, etc.) to buy the amount of ETH you would like to invest. Once you’ve bought ETH through an exchange, you are ready to move on to the next step.

Set up an Ethereum wallet

When you participate in an ICO, you will send your investment (in the form of ETH) to the respective company and/or token issuer. Once they receive your ETH, you will be sent an appropriate amount of their ICO tokens, based on a pre-determined exchange rate.  To receive these Ethereum-based ICO tokens, you need to set up an Ethereum wallet.

There are several different types and many different ways to set one up. The three most common types of Ethereum wallets are hardware wallets, software wallets and paper wallets. The nuances between these different wallet types is a little confusing, but for now, you simply need to know that you must set up some type of Ethereum wallet for your tokens.

A common Ethereum wallet solution is MyEtherWallet (MEW). MEW is an open source software wallet that will walk you through necessary setup steps and safety precautions. Upon completion, you will have a public wallet address and a private key. It is absolutely essential that you keep this private key in a secure place. I can’t emphasise this enough; secure your private key and keep your funds safe.

Sign up and send ETH

Now that you have purchased ETH and set up an Ethereum wallet, it’s time to sign up for the ICO.  You may be asked to provide information such as your name, Ethereum wallet address, location and other personal identity verification documents.

Once approved and ready, you will need to send Ethereum to the ICO’s Ethereum wallet address. To do this, you will first send ETH from your exchange wallet to your external Ethereum wallet address.  Once ETH has been received in your wallet, you will send the appropriate amount of ETH to the ICO wallet address provided. Refer to your exchange and the respective ICO for more instructions on how to complete this process.

Receive ICO tokens

Once the ICO receives and processes your ETH payment, you should expect to have ICO tokens sent to your wallet. This process isn’t instantaneous, so be patient, and expect to wait several days in many cases. The ICO will usually specify when you can expect to receive your tokens. Once the tokens are in your wallet, you are in control; congratulations on investing in your first ICO!

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