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The difference between price and value: how to choose ICO

These are really heady days for cryptocurrency investors, and with the luck of quickly raising money (as quickly losing them) it is easy to forget the difference between "price" and "value."

05.Nov.17 2:56 AM
By Daria Zaytseva


The difference between price and value: how to choose ICO

Many investors are focused on a short-term strategy - they buy tokens of the "very hot" ICO and hope to immediately sell them after the crowdsdale is over and make a huge profit.

In this approach, there is nothing wrong, and sometimes it became very successful. However, it is much easier and more confident to make a profit by buying and holding, and in this case, investors need to clearly distinguish the price of the token and its value.

Many tokens and currencies represent big projects that have huge potential. Some of them may violate the traditional ways of doing business, possibly, bring greater profits in the future. Investors begin to face the fact that the days of dropping ICO tokens pass. Quick profit should give way to long-term potential.

Investors should know the current and potential value of the project. The fastest way to lose money is to buy an expensive token, which has a small potential and, therefore, low value. On the other hand, investors with sufficient foresight to buy underrated Bitcoin (or quality altcoins) last year received huge profits. It is impossible to overestimate the need for analysis and proper verification of the business model of the team.

It is important to understand what will stimulate the demand for a token in the market. This requires an honest and objective evaluation of the project. For many projects, excellent work is required to succeed, and investors should consider that perfection is rare in this world.

At some point, market factors will come into play, such as increased use of cryptocurrency. However, this will happen in the future and is not reliable. Investors should not agree to a project whose value of the token is based solely on speculation. They also should not be greedy for excitement.

Investors need to go beyond the boundaries of common features and pay more attention to the unique proposal of each project. If a new project copies existing ones, investors should take a step back. Investors do not need to follow others without knowing why they invest in the project. Each investor must assess impartially the current and future value of any project in which they invest.

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