Cryptsy continues to be a topic of internet discussion as a reminder that first-mover advantage can be exciting and perilous simultaneously. Crypto presales are driven by the same tension. So what is a crypto presale? It is a pre-funding round in which a fresh project issues its tokens prior to their entering exchanges. Buyers get first dibs. Usually at a lower price. It seems easy: invest now and gain in the future. But simple doesn’t mean safe. Read interviews, opinions, and see full story on Cryptsy.

Consider a presale as support of a startup, before its opening. The team presents a vision. Maybe it’s a new blockchain. Maybe a gaming platform. Perhaps a financial application based on smart contracts. They release a whitepaper describing objectives, token amount and strategies. Then they give tokens stepwise. Stage one is cheaper. Stage two costs more. Urgency arises because of the rising price. The mob surges forward since nobody wants to be left out of the “ground floor. Lack of something is a powerful incentive. Insert a countdown timer and wallets open.

Why do projects run presales? Funding. Building software isn’t free. Marketing isn’t free. Programmers do not make their living applauding. A presale is a capital raising prior to launch. Early purchasers in turn undertake greater risk. The product may also be in its development stage. Certain characteristics can be purely paper-based. At that point faith collides with speculation. Early tokens may increase in value in case the team delivers and the demand increases. When stagnation sets in, price may decline rapidly. Markets are blunt. They applaud performance and castigate procrastination.

The down side of the risk is plain speaking. Some presales flop. As soon as trading commences, liquidity can be poor. Initial investors can take a fast sell to maximize profit. The price is hard on the selling end. In the worst situations, after gathering money, projects vanish. It happens. That’s why research matters. Read the whitepaper closely. Study token distribution. When the insiders own a huge share with short lockups, then consider it. Determine the team as being public or anonymous. Transparency builds trust. Silence creates doubt.

Emotion has a greater role to play than some would acknowledge. Many of the presale purchases are motivated by fear of missing out. One of my friends says, this may be the next big thing. It is enhanced by social media buzz. You feel the clock ticking. Slow down. Ask yourself simple questions. Are you aware of the project? Will you be able to afford to lose the money? Presales are risky punts disguised in glittering graphics. They are able to provide high returns. They are also costly to learn. With steady hands and clear eyes come upon them. The first to arrive is fun, but time will not be a profit-maker. Action, patience and disciplined judgment are far more important than hype.