ICO’s or Initial Coin Offering is a mix between IPOs and crowdfunding, which is typically for cryptocurrencies
Lets BREAK DOWN what 'Initial Coin Offerings" truly are
When a cryptocurrency startup firm wants to raise money through an Initial Coin Offering (ICO), it usually creates a plan on a whitepaper which states what the project is about
It also includes a roadmap – which includes key dates, how much money is needed to undertake the venture, the split of tokens in the team, what type of money is accepted, and how long the ICO campaign will run for.
During the ICO campaign, enthusiasts and supporters of the firm’s initiative buy some of these coins with FIAT currency or virtual currency.
While few months ago the number of successful ICOs was about 40% of the total, now it equals 10-20%.
A lot of projects have nothing but idea and beautifully written whitepaper — without any live product, without investing, without team, they hope to raise enough money to carry out their promises.
There wouldn’t be any problem if they surely implement their ideas in life in case of a successful ICO — but many startup founders, flee after getting cash rich. There are so many reasons why ICO can be bad for investing:
Lets assess the Pros and cons of investing in ICOs
CONS
Remember that you are paying for someone’s idea and that person must be convincing and trustworthy enough to assure you that they will fulfill all their promises.
Hacker attacks
Sometimes projects are hacked during ICO. Or some smart alecs, ask you for tokens in return for a very “Hyped up coin. Recently The Titanium ICO was hacked, stealing millions of dollars of tokens and derailing the project
The ico Enigma was hacked last year.
High volatility
Prices of tokens may change instantly and drastically, leaving you at a loss. All forecasts in cryptoworld mean nothing, because value can change unpredictably due to a huge number of different factors. But remember that same volatility works both ways, and thanks to that price can go high unexpectedly and you may get rich in few minutes.
But there are even more reasons why ICOs are great for investing:
PROS
Capital gain
An ICO can give you the best multipliers. If you would have invested in Ethos at the time of ICO – it was 5 cents. Today it is 3 dollar with a high of 13 dollars. That’s almost a 300X gain in less than a year company’s shares.
Look for companies that offer working product, not just sell an “idea”. Projects that are effective not just in the crypto world, but that have practical use in the real world. You must take considerable care before buying a token. Not all the projects are trustworthy and successful, but those who are, can make you rich if you are perceptive enough to invest in them.
Accessibility
While it’s rather difficult for people who don’t belong to business world to invest in big companies, there is an equal opportunity and ease of access for everyone in investing through ICO. It’s just you and your money — nothing else is necessary. All information is opened for public, you can learn everything you need, and you don’t even have to leave your room.
Low entry threshold
Generally ICOs have a low entry threshold and don’t require huge investments for retail investors. You can buy tokens for 100 dollars and proudly call yourself an investor. ICO is great way that gives equal opportunity for everyone to become part of a project and get benefits from investment.
No commission, no taxes
ICOs are not controlled by government, so you don’t have to pay any commission when you invest and any taxes when you get profit. Nobody takes away part of your funds. ICO has two key features — anonymity and independence
So all in all ICO's fall in the Typical High risk High reward category and should not be a chunk of your investment portfolio
Attaching the video for peeps who would like to view it
Cheers
Marts
