Register
A password will be e-mailed to you.

At some point in cryptocoin investing, you may want to participate in an ICO (Initial Coin Offering). Akin to an IPO, an ICO is where a company seeks funding to help launch a new service or product. They offer a percentage of tokens (a digital asset) to investors which may increase in value if the project does well.

It is always risky to buy into an unknown or early-stage project. This is especially so with cryptocurrencies, a relatively new sector with little investor protection regulations in place. It is essential that you conduct your own research and due diligence into an ICO before participating in it.

If you do decide to participate in an ICO, you’ll find that they usually require payment in cryptocoins such as BTC, ETH and NEO. If you don’t have the required cryptocoin, our guide on how to buy cryptocoins can help you obtain it.

Why use a NEP-5 Smart Contract to participate in an ICO?

Some of the most exciting ICOs launching in 2018 are based on the NEO platform. One (of the many) benefit of NEO is the ability to include a smart contract for the distribution of tokens during an ICO. A smart contract defines the rules around an agreement and will execute the agreement once all conditions are met. For example, it can ensure that an investor will receive the expected number of tokens when they pay for them. ICOs who distribute tokens based on a smart contract have some assurance that the tokens will be distributed as described, and that any conditions of those tokens will be honoured.

However, NEO smart contracts are very new and not supported by every wallet. Participation in an ICO TGE (Token Generation Event) attached to a smart contract differs from a regular distribution event.

The following information has been updated on the 20th of January 2017, following the release for Neon 0.1.0 (and will remain valid for future versions of the Neon wallet)

How do I participate in an ICO based on a NEP-5 Smart Contract?

You may need to use a temporary wallet to participate as your standard wallet address may not support smart contracts. At this point in time, only the latest versions of Neon (0.1.0 +) and NEO GUI offer full support.

This guide will create a new NEO wallet in Neon 0.1.0, which supports ICO smart contracts (required) as well as the Ledger hardware wallet (optional). This will enable you to participate in the ICO with a new wallet address, or using a temporary one if you wish to retain your old unsupported version.

Setting up a Smart Contract Compatible Wallet

The following steps will walk you through how to set up a smart contracts compatible wallet:

  1. You’ll need to download the latest version of the Neon wallet and install it on your PC (Mac, Windows and Linux supported). It MUST be at least version 0.1.0.
  2. If Windows does not recognise the application, you will need to click “More info” and then “Run Anyway”
    Important: Always ensure you have downloaded the wallet from a reliable source (https://github.com/CityOfZion/neon-wallet/releases) before running it!

    Cryptocoin ICO smartcontract
  3. If you do not have a wallet already, you can create a new temporary wallet ID by clicking on the “Create a new wallet” button.
    Create a NEO wallet for ICO Smart Contract
  4. It is recommended you create a strong password for the wallet.
  5. A confirmation screen will be shown once the wallet is created. This confirmation screen allows you to create a paper backup of your wallet (by clicking print). The information on this screen, and any print outs, is extremely sensitive, so please ensure it remains protected. Anybody with access to this (or your wallet file and password) has access to all your funds stored in the wallet! Give your wallet a memorable name so you can select it in future (useful if you use multiple wallet addresses) and click Save.
    Create Neon wallet smart contract confirmation
  6. That’s it. You have now created a wallet that can be used to participate in an ICO based on a smart contract. When it comes times to actually participate in the ICO, you will log back into your wallet and begin the participation process.

Using a supported wallet to participate in an ICO

Currently the only supported wallets to participate in an ICO with a smart contract are the latest versions of Neon and NEO-GUI.
The following steps will walk you through how to participate in an ICO with your newly created smart contract friendly Neon wallet:

  1. Login to your wallet.
    participate in an ICO smart contract cryptocoin
  2. It will ask you for the password you entered earlier, re-enter this to login to your wallet.
    Create smart contract neon wallet ICO
  3. You should then be logged into your wallet. At the bottom of your wallet, there is a button to “Participate in an ICO”. Click this
    Neon wallet ico smart contract
  4. You will then be shown the “Participate in Token Sale” page.
    Participate in an ICO cryptocoin smart contract
  5. As the token will not be known to the Neon wallet yet, you will need to click on “Add a new token to purchase”.
    Participate in an ICO cryptocoin
  6. Click on the “Add a new token” at the top of the page and paste in the script hash exactly as provided by your ICO.
    Participate in an ICO cryptocoin
  7. Once you click save, you’ll be able to return to the previous screen to complete your participation in the ICO.
    In here, select the ICO token you just created. Ensure “Pay wth NEO” is selected. Enter the Amount of NEO you’d like to contribute and ensure all other details are correct.
    Ensure you click the “I have checked – It Doesn’t Performs validation” checkbox and then “Purchase” your ICO!

    IMPORTANT
    : Ensure you get the script hash from a reliable source (hopefully it is posted in ‘Your Account’ section of the ICO website). You’ll need to put the right amount of NEO to send. If you send less than the minimum or more than the maximum you may miss out.
    Participate in an ICO smart contract cryptocoin

That’s it! You have now created a Neon (or temporary Neon) wallet in order to participate in an ICO with a smart contract. If you were using a different wallet beforehand, you will be able to transfer the distributed tokens to your usual wallet for long term storage. If you prefer to transfer your tokens to an exchange, most ICOs will list on an exchange within a month.

About The Author

Cryptocoin Investor and Blockchain Enthusiast

Ben is a cryptocoin enthusiast who began by investing and mining Litecoin in 2013. Since that time, he has evaluated hundreds of alternate coins and tokens in a never ending search for the next big thing to grow his portfolio. He has been involved with ICOs, providing guidance and assistance. He is a firm believer in searching for fundamental value and actual utility in cryptocoins. Ben sees blockchain (or a public ledger system) becoming more prevalent in society moving forward, where it will have real utility use beyond that of an electronic cash system.

Related Posts