What is an ICO?

An ICO, or Initial Coin Offering, is a method of crowd funding which relies on upfront crypto investment in exchange for tokens which can be exchanged for the new coin upon release, as opposed to an IPO (or Initial Public Offering) which offers shares in a company. ICO's are now extremely common and discussed regularly, however they are a relatively recent method of funding, the first one being Mastercoin in 2013.

This sounds like easy money...

Well, it can be IF everything goes well and that is a massive if. ICOs are a risk, some would say a big and unnecessary risk. Unlike IPOs they aren't regulated, while a lot of people could consider that a good thing it does mean that you can lose your money in any number of ways. It could be a straight up scam, or the company could go bust prior to launch, the coins your token get you could plummet in value as soon as they launch, as well as all manor of unfortunate things that could lead in having a face like this one:

So am I saying don't invest?

No, not necessarily. It very much depends on a multitude of factors. Are you the kind of person to jump on something before doing extensive research? Are you expecting short term profit? Are you new to crypto and blockchain technology? Do you base your opinions mostly on what you read in forums instead of data? If the answer to and of these questions if yes then stay away and save yourself the heartache. In my opinion ICO investments should only be taken by people who do extensive research on the company, the founders, the technology and have a firm knowledge of the cryptocurrency market as a whole.

Conclusion

I cannot recommend investing in an ICO as an investment strategy for a newcomer to cypto or for the advanced user who is simply too busy to research. However, if you fancy a bit of a gamble, and want to treat an ICO investment like a lottery ticket then go right ahead, as long as you aren’t going to get upset after, then it is just a bit of harmless fun.

Happy Trading,

Viking