Have you too been hearing all about the latest blockchain company to raise 100+ million USD in an ICO or Initial Coin Offering? These novel fundraising mechanisms have been gaining a lot of attention over the past few months. If you are interested in how you can participate in the next one you deem worthy here’s how.
Step 1 — Obtain Ether
You’ll need some cryptocurrency in order to participate in an ICO or crowdsale because these crowdsales don’t typically accept USD or other fiat currencies. Most are designed to have a smart contract accept peoples contributions and then automatically return to them the new token.
In order to do this you’ll need one of the more popular cryptocurrencies. Most crowdsales these days have been running on top of the Ethereum network and so obtaining some ether is your best bet. Bitcoin and some other alt-coins may be accepted also depending on the ICO but you can’t go wrong with ether.
The safest way to obtain ether is to go through a company like Coinbase. Be sure to sign-up for an account at least a week before the crowdsale so you can be sure that your account will be set-up and you’ll have a chance to purchase the ether and have it ready to go.
Step 2 — Move Your Ether to a User Controlled Wallet
In order to receive the token that the ICO is selling you need to send the money from a wallet where you have control over the private key. If you send ether from your Coinbase account to an ICO address all that will happen is you’ll make Coinbase richer. Nobody wants that.
Instead once you’ve purchased ether or whatever cryptocurrency you’ve chosen from Coinbase move the money to a user controlled wallet like My Ether Wallet or Parity. The Parity wallet actually has a feature where you can set it to make a payment at an exact time which is useful if the ICO you’d like to participate in will be beginning while you are still asleep. With the speed in which these ICOs have been selling out this makes Parity a great option.
Step 3 — Contribute to the ICO
Okay, you’ve obtained your ether, you’ve moved the ether to a user controlled wallet like Parity and you are ready to be a first mover in the hot new token that is about to be launched. The next and final step is to send your cryptocurrency to the ICO address in order to receive the new token.
Now there are scams a plenty going around where people try to give you the wrong address to send your ether to, telling you that this is the ICO address when in reality it is their personal address. There are no chargebacks in cryptocurrency so you must be sure that you are sending your hard earned crypto to the right address. The best way to do this is to check the company website which should have the details posted. Going to the company Slack channel for instance is the wrong way. In many cases people will join a team’s Slack channel and start pretending to be a community manager and give out the incorrect address for the token sale. Although you can never be 100% sure that a companies site has not been hacked, it is your best source.
Once you have the right address to send your cryptocurrency to and the sale has started, go ahead and send that crypto over and you will receive the newly launched token back. Since most of these crowdsale tokens are designed on the ERC-20 standard the wallet you used to send the ether to the ICO should be able to support the new token the ICO sends you back. If for some reason this is not the case, the company issuing the new token should have directions on how to secure your new token on their website. For everyone else, I would suggest moving the new token off of the wallet service you used to participate in the ICO and secure your new token in a cold wallet storage device such as Trezor.
About the author
Sean T. McKeough is an educator and contributor in the emerging technology space with a focus on blockchain and its disintermediation of legacy systems. He recently served as technical editor for the book, Blockchain: A Practical Guide to Developing Business, Law, and Technology Solutions. Before starting Blockmatics, Sean worked for major production houses in film and television, leading varying size teams in daily operations strategy.