If you are involved in the cryptocurrency space, or you are looking to get involved, there’s no getting away from the trend of Initial Coin Offerings (ICOs). Often lambasted in the mainstream media, the ICO has become the mainstay vehicle for blockchain projects to raise initial investment for their development. This post gives an overview of ICOS – the risk, the reward, and why you should be interested in this space.
What is an ICO?
An ICO is an investment vehicle for a cryptocurrency (blockchain company) to raise starting capital for their project. Typically, investors buy units of the new cryptocurrency or token with a more established crypto coin such as Bitcoin, Ethereum or Litecoin.
Once the new cryptocurrency is released on an exchange the investor can sell, hopefully for a higher price as the project gains momentum or hold for the longer term to secure a greater rise in value.
The history of the ICO
Mastercoin held the first ICO in 2013 and was quickly followed by Ethereum in 2014 which raised 3,700 Bitcoin in the first few hours. This was equivalent to approximately $2.3 million dollars at the time, and over $31 million dollars at today’s rates. By 2017, there were tens of sites tracking ICOs.
Notable examples of ICOs include the web browser Brave which generated $35 million dollars in under 30 seconds and Filecoin which raised $257 million (and $200 million of that within the first hour of their token sale).
The ICO has become a tool that has revolutionised the financial system: barriers to participation are low, and the rewards can be staggering.
Risk versus reward
With any investment, there is always risk versus reward. The adage springs to mind that you can only lose 100% of your initial investment, but you can make 1000s % profit. This is even more so in the largely unregulated space of the ICO.
Take some of the popular cryptos of today and their return on investment (ROI):
NXT (1 million per cent + ROI)
IOTA (300,000 per cent + ROI)
Ethereum (150,000 +per cent ROI)
Stratis (80,000 per cent + ROI)
NEO (formerly AntShares) (100,000 per cent + ROI)
However, the flip side of the coin is that ICO tokens can launch and trade well below their issue price. This can continue for months after the ICO, or indefinitely if the platform is poorly received which can be for several reasons.
Additionally, the space is unregulated so you have to extra vigilant in how you participate. If you send your funds to the wrong receiving address, then you have no recourse. If you’re hacked, then bad luck.
Buying new digital currencies at the ICO stage is a very risky investment, much riskier than buying bitcoin or investing in established altcoins such as Litecoin (LTC), Ripple (XRP), or DASH. But, in my opinion, without risk there’s no reward.
How to maximise the chance of ICO success
I, for one, am huge fan of the ICO and I understand the risk and reward that comes attached with this tool. To maximise your chances of success there are a number for steps that can be taken. First, do your research and vet the blockchain play. Second, get involved in the crypto community and learn the ropes.
A wonderful place to start is bitcointalk.com. Finally, invest only what you can afford to lose, so start small and build up.
ICOs that are available today
Today is a great time to get involved in the ICO space. Blockchain has the potential to rewrite the delivery of some of our largest economic sectors: banking, gaming, and social media. The technology is proving to have the potential to be quicker, cheaper and more transparent than what is currently available. An ICO gives access to the earliest stage of a project and there, without doubt, will be the next Google or Apple at some point. Check out some ICOs here which I think could hit the mark
If you want to get involved in the crypto space, then it maybe could be the best decision that you will make. Feel free to share this post on your preferred social media channel using the buttons below.