Some crypto projects offer their tokens to interested investors even when they are still under development. This is known as a presale because it occurs before the Initial Coin Offering (ICO). This is also why presale tokens are available at much lower prices. An ICO is like the initial public offering of crypto tokens. It has received a lot of criticism lately, as people tend to take advantage of the ICO by accumulating a large number of coins and becoming market manipulators.

Presales are beneficial for both investors and developers, especially if the project performs well and is quickly adopted. Crypto presales act as crowdfunding vehicles; they provide the developers with the necessary funds to carry out the project. For investors, it is an opportunity to get into a cryptocurrency before it hits the market and appreciates.

Pre-sales also help developers spread the word about their projects and get more attention from a marketing perspective. The event plays a crucial role in attracting investors when the ICO goes live.

Presales have been around since 2009, when Bitcoin, the world’s first and oldest cryptocurrency, was launched. It was a golden egg for investors who entered back then and held their coin for over a decade. Most of them have made it to the millionaires list.

There are two types of pre-sale:

Presale only for investors: These are open only to wealthy investors willing to pump a lot of money into the project. While the amount invested can be substantial, investors can reap the benefits of price appreciation once the tokens hit the open market.

Presale open for all: Such pre-sales allow retail investors to access a project’s token before its public launch. However, most of the tokens remain unsold due to limited faith in projects that are still in development.

Pre-sale is like entering the ground floor of a building that is still under construction. Until it is fully developed, there is no way of knowing if it will attract investors in the future. While there are several advantages to acquiring crypto tokens during a presale, such as a lower barrier to entry and speculated future appreciation, there are also some disadvantages:

-Unknown Territory: Presales could simply be the predecessor to giveaways and other scams. It is risky to park your money in something that has not been tried or tested. Not all coins turn out to be successful like Bitcoin and Ethereum.

-High volatility: Although presale prices are much lower than ICO prices, they can plummet after the ICO is over, especially if people don’t see the underlying blockchain as adding value or solving real-world problems. In this case, you could end up losing your hard-earned money.

-Cyber-Vulnerability: Since most crypto wallets are custodial (maintained by the exchange), there is nothing aside from the security protocols of the exchange that will protect your assets from hackers. Hackers are siphoning hundreds of millions of dollars worth of crypto from online platforms even today.

How do you enter a cryptocurrency presale?

You can enter a crypto presale with 3 easy steps:

-Identify a presale: Browse the pages of CoinMarketCap or CryptoTotem and find out which projects offer a pre-sale. Before you decide to invest, we recommend that you do your due diligence and be fully aware of the project offerings.

–Choose an exchange: Before you create your account with an exchange platform and add funds, be sure to do your research and make sure it is a trustworthy service provider. Choose globally acclaimed crypto exchanges to ensure your assets are handled by a proven third party.

–Buy: Once your account and wallet are created, all that’s left to do is search for the presale on your exchange’s website and purchase your tokens.

3 pre-sales that became mega projects:

-Tezos (XTZ): This is one of the best known examples of a successful presale. It opened at a presale price of $0.47 and raised over $200 million in the ICO. XTZ is currently trading at $3.05, up 549 percent from its presale price.

-Filecoin (FIL): FIL launched at a preorder price of $5 and has currently touched $18.96. It hit the markets at $11.5 in 2017 and has grown 279 percent over its pre-sale price.

–Calyx (CLX) – Coming soon: This project has made a name for itself by creating a liquidity sourcing pool that allows it to supply liquidity from multiple sources, making it easy to trade cryptocurrencies. It is causing a sensation, as CLX holders will be entitled to receive a percentage of the fees paid by the transactors, allowing them to have a secondary source of income.

(Edited by : Shloka Badkar)