Cryptsy continues to haunt the online discussion as a reminder that pre-launch access can be both exciting and dangerous simultaneously. Crypto presales are driven by the same tension. So what is a crypto presale? It is a pre-eminent investment round in which a new project sells its tokens prior to entering public markets. Buyers get first dibs. Usually at a lower price. The concept is straightforward: early investment, later pay off. But simple doesn’t mean safe. Track daily market movers and explore here on Cryptsy.

Consider a pre sale as supporting a startup prior to its opening. The team presents a vision. Maybe it’s a new blockchain. Maybe a gaming platform. Perhaps a financial application that uses smart contracts. They release a whitepaper outlining objectives, token issuance and intentions. Then they give out tokens in portions. Stage one is cheaper. Stage two costs more. The increased price is an urgency. People stampede as no one wishes to be left behind on the first floor. Lack is a great driving force. Fire off a countdown clock and wallets open.

Why do projects run presales? Funding. Building software isn’t free. Marketing isn’t free. Developers do not work to get clapped. A pre-sale is a capital raise prior to start. Early buyers, in turn, take more risk. It could be a product that is not yet fully developed. There are features that can be on paper. Faith and speculation bang together there. Early tokens may appreciate in value, in case the team delivers and demand increases. Should stagnation set in, price may fall rapidly. Markets are blunt. They reward performance and chastise delay.

The side of risk is to be plain talked. Some presales flop. Once trading takes place, liquidity may be thin. Early investors can sell early in order to lock in profits. The strain of selling can drive the prices down. In the worst scenarios, projects vanish after gathering funds. It happens. That’s why research matters. Read the whitepaper closely. Study token distribution. In case insiders have a huge share and short lockups, be cautious. Determine whether the team is open or secret. Transparency builds trust. Silence creates doubt.

Emotion has a larger part than most would acknowledge. Presale purchases are motivated by the fear of missing out. One of my friends says, “This may be the next big thing. It is boosted by social media buzz. You feel the clock ticking. Slow down. Ask yourself simple questions. Are you familiar with the project? Are you able to lose the money? Presales are high risk bets shrouded in glossy graphics. They are able to provide high returns. They are also costly to learn. Meet them with business eyes and steady hands. First mover is a thrilling business, yet timing is not enough to make money. Action, patience, and disciplined decision making are much more important than hype.