All an investor looking to take part in an ICO through using a quality Cryptocurrency exchange needs to do is to send Ether to the wallet listed on the website of the ICO in question during the period when the crowd sale is open.
To do this, of course, you will need Ether, so let’s talk about how to pick some up for yourself.
Ether is, of course, different to bitcoin in the sense that it is a different cryptocurrency and it’s resting on a separate blockchain. From a transaction standpoint, however, it is remarkably similar. To store bitcoin, you need a bitcoin wallet. The same is true of Ether but, in this instance, it’s an Ether wallet you need. Similarly, just as you can open an account with an exchange like Coinbase and by bitcoin, you can open an account with Coinbase and buy Ether.
Coinbase also offer Ether wallets, which is one of the reasons that the platform has become so popular over the last few years – it makes everything incredibly easy for beginners to the space and does so in a (relatively) secure fashion while offering clean and straightforward access to the ICO boom.
So, let’s break this down in a simple, easy to understand transaction flow.
Head over to an exchange like Coinbase, open an account, create an Ether wallet and use either bitcoin that you already hold or fiat currency (either in your online wallet or through credit card or bank account linked to the account in question) to buy Ether over the exchange.
You’ve now got a bunch of Ether sitting in your Ether wallet.
The next step is to head on over to the website of the ICO that you are looking to take part in and to find out the Ether address that is linked to the crowd sale. More often than not, there will be a page dedicated to taking part that will offer either an address in the form of letters and numbers or in the form of a QR code.
Once you have the address or the QR code, you can use the Coinbase platform (or the exchange/wallet of your choosing) to send Ether to the crowd sale wallet and the wallet, in return (and as dictated by the smart contract that’s governing the issue) will send you tokens in return.
Where do I store these tokens, we hear you say?
Remember we mentioned earlier that the company doing the issuing needs to create ERC20 standard tokens? There’s a good reason for this. ERC20 standard tokens are tokens that are designed to be compliant with Ether wallets and – by proxy – can be stored in any Ether wallet.
In other words, if you’ve got an Ether wallet (the assumption is that you have since you needed one to send the Ether to the crowd sale wallet in the first place), then you’ve got somewhere to store your tokens.
Before we go on, let’s take stock of what’s happened so far.
- You started off by getting hold of an Ether wallet and topping it up with some Ether, either by using bitcoin in an existing wallet or by using fiat currency to buy Ether outright.
- You then sent some of your Ether to the wallet that’s associated with the crowd sale, the address for which you found on the website of the ICO that you are seeking to take part in.
- When the sending had been verified by the Ether blockchain (i.e., when the block that included your transaction had been mined), the smart contract was executed, and ICO tokens were sent automatically and autonomously to your Ether wallet.
Now, what happens?
Well, now you wait.
Just as with trading or investing in the stock market, the idea is to buy these ICO tokens low and sell them once they’ve risen in value. Then, of course, the value gained is rooted in just how much prospective buyers are willing to buy these for a while, at the same time, how much eager sellers would be willing to sell these for on an exchange. Some ICO tokens can take a while to even list on a Cryptocurrency trades (generally exchanges only contain the ones that are attracting some attention) so you may have to wait a while (say, a few weeks) before an open market price is even established.