Participate or avoid masternode presales?
By Rafał - 2018-10-29
Presale is very interesting topic in cryptocurrency. It is possible that most of us have participated in at least one ICO. Most of them, in last few years were not profitable while there were others that were scams. Of course there are a lot of great projects out there but according to EY study 86% of ICO’s (which was analyzed) are now below their listing price. Only 30% have working product.
In this article we are going to look at presale not just in a general ICO sense but in masternodes. So, what about presales in masternode coins? Is it worth it to jump into a coin as soon as possible just to be a pioneer masternode owner and operator?
What is presale for?
First of all, what for is presale? If a developer has a good idea that they are confident is workable and profitable and decides to build a coin, they may not have the fund on ground for the project. This is why many decide to raise these funds through a presale.
As you may be aware, it costs a lot of money to build a cryptocurrency. There are a lot of criteria that should be put in place before a cryptocurrency can become a success and all these must be factored in before the coin is built. This is why many developers talk about cryptonomics.
Of course, you can ask someone to build your cryptocurrency for 0.1BTC but it is not just about programming but making people to use it. Even if you have nice idea and developer, you still need to pay for many aspects of the project such as listing in exchanges and masternode stats sites, marketing and bounties and every other publicity activity that would create enough buzz for the project.
All these cost money which the founder or owner of the project may not be able to fund singlehandedly. This is why cryptocurrency projects rely on presales to raise funds.
2018 was quite eventful for masternode coins. There were many new projects and opportunities to find supposedly “great” coins but many of those masternode projects turned out to be scams. Scam is not just “disappearing after presale”, it is about cheating people by not fulfilling the promises made concerning a project.
When a project lies about use case, plans, team members and other relevant information that investors should know, it is an indication that it is an unreliable investment. Many may even seem to be doing very well until they are listed on the exchange before investors realize that they are worthless. We have recently seen many coins get de-listed for several reasons from exchanges.
When a developer promises to make some great things like an app, casino, poker room, credit cards! Everyone might be excited that these are good projects and willing to back them, but in 90% of cases, they cannot fulfill these promises. This points to the fact that the purpose of the project was the funds that the owners hoped to raise from investors.
One of the “top use cases” in those days was hosting platforms and exchanges. If that sort of project is launched in 2019, we will have coins that their only use would be to pay hosting fees for other masternodes coins that will be used for paying fees on their platforms.
It got even worse in that there are so many projects that are not even promising anything and people still invest in them. This is so because there are many investors that do not know anything about masternode but think that it is a path to quick wealth.
The use case of many coins is just means of transfer of values as cryptocurrencies, nothing more. This makes no sense since there are already many cryptocurrencies that have already been built.
Why do we need the next useless coin? The biggest problem is how to find projects that actually can do what they promised. This is the reason many investors are weary of the cryptocurrency ecosystem.
Another big problem is presale price. Projects that their masternode collateral should be lower, say about 1000-2000 per masternode are demanding way too much for their coins. They overvalue own coins, whether intentionally or not, we probably will never find out.
0.5BTC+ per masternode when collateral is 1000 coins is almost standard. But this is not bad if there is only few masternodes for sale and very low premine. Unfortunately in most cases 1% premine when collateral is low is just too much, especially when ROI is crazy and most of that premine is for sale.
Too long presale
This is one of the biggest sins of all presales in masternodes. If presale last few weeks, ROI was crazy and a lot of people have bought coins already what you expect when coin hit exchange? A huge dump of course.
If 50 investors are accumulating rewards and setting up more and more masternodes they would want to get their investment back and earn some BTC. Yes, a lot of masternode investors want quick profits. In most cases when the coin finally gets on exchange, the rule is simple: First come, first served. That is why there usually is so much dumping in the first few days.
If someone bought 2 masternodes and now he has 10, he can sell one masternode per day. If the price is equal to presale price they do not need to rush but if it is lower, they need to sell more to be break even. This is how most of “ROI hunters” think. People that joined after long presale and bought one masternode would notice their error when after 2 days, they are down 90 percent.
ROI, ROi, Roi...
“5000% ROI on masternodes.online? I am in!” This is the mindset of many investors who think that this is just the way things work. As I said earlier, a lot of masternode investors do not care in what they are investing. What they simply want is huge ROI. They see few thousand percent ROI, decent volume and they fall for the trick.
Why you want participate in presale? Because you want to earn as many coins as possible at early stage when there are only few masternodes live. As more masternodes come on board, your income drops since you would be sharing with many others your piece of cake.
This is why you should first know what the project is about. Do not invest because ROI is big, that means inflation is also big. Do you want to buy Bolivar (currency in Venezuela)? Definitely no.
Be or not to be... one of the first investors?
Not all presales are bad, some of them are great. Lightpay Coin presale, Logis Coin or shitcoins like Concierge and other scams were hyped but no longer exist. If you invested in Sharingmarket for example, you probably had great profits (most of you do not even know what Sharingmarket is/was).
But there are only few projects that benefits presale investors. With most of them you will be probably lose and most masternodes are not cheap. You need to invest at least $1000 to get one.
If you can afford to lose it, be my guest and buy whatever you want but if you can’t, DO YOUR OWN RESEARCH. Be aware of the risks and ask yourself why this coin? Is it unique? What use case it has or will have in future?
So, what should you do when you find great project? Buy it if you want to. If you believe in it and you have done some research. There should be a lot of details about use case, team and everything you need to know. However, my advice is to AVOID presales. Do not participate if you are not sure. Most of the time you can wait until coin hit exchange and buy few masternodes instead of one.
The best presales
What can make presale great investment?
It should be short: Forget about presales that last 2 weeks already and exchanges are still not paid.
Only few masternodes for sale and low premine: If they are selling 100 masternodes and this is still only small percent of premine, something is not right. Presale should cover exchnages costs, sites with stats and first marketing + some bonus for the team if premine was low and they are not paid in crypto for which they are working for.
ROI should not be high at presale stage: You should be “ahead” as a presale investor but if ROI is too high one investor can cause huge dump and you can forget about profit.
Hype: It is something that can make project profitable or pump and dump. Hype is good if presale was short and only few masternodes were sold. Then you can profit very soon by selling on exchnage to take your investment back. Of course sell not dump! If you are dumping you are killing your own investment.
Research: And the most important, check what you are investing in! Do not invest because someone tells you. Do not trust great website or wallet design, it is nice but scams have beautiful websites and unique wallets design too.