An ICO, otherwise known as an “initial coin offering” is a crowd fundraising campaign that offers future discounted cryptocurrency coins in exchange for current on the market cryptocurrencies which hold value. Most ICO’s will trade Bitcoin or Ethereum, both of which are ranked 1 & 2 in the cryptocurrency market, for the new future digital currency being offered by the ICO.
ICO funding campaigns last for a set period of time and have a financial target to reach before the ICO can be deemed successful. If the company offering the ICO reaches and surpasses its funding target, those who invested will receive their new coins in the emerging cryptocurrency. If an ICO fails to reach its funding goal then all investors will receive their initial investment back and the ICO is deemed unsuccessful.
The cryptocurrency market took off in late 2017 which in-turn saw a large increase in the amount of ICO’s being offered by tech start-ups and companies. Most ICO’s are offered by tech companies looking to build applications or software businesses around the emerging blockchain technology.
Investing in an ICO carries as much risk as any other investment you may make in a future business. It’s important to understand that ICO’s are classed as “unregulated”. This means you should be extra careful and do your proper research before investing large sums of money into a future crypto project. Unfortunately there have been a few ICO’s which are nothing more than scams.
The Team - Researching the team and people behind the company is especially important. Most ICO’s will have a website which lists the names of those working for the project, their professional titles, a profile picture, and some brief detail about their past achievements, skills, and work experience. This information can easily be double checked by doing an online search for the individuals.
The White Paper - All ICO’s will have a white paper which outlines the company’s business goals, business model, project timeline, and other important investment information. Most people looking to invest in an ICO will be particularly interested in the timeline and development side of the new future cryptocurrency firm.
If a project doesn’t expect to be fully launched for 5 years, then you might decide it’s an investment you don’t need to worry about for now. The main goal when investing in an ICO is to see the new cryptocurrency being traded on the exchanges and doing well. Developments in the technical and business aspects of the company will add value to the new cryptocurrency.
The Idea - There are many types of crypto businesses emerging on the market as of now. Some of them are very good ideas and some, well, not so good. The crypto market is in its infancy which makes it very difficult to predict how a coin will perform on the market regardless of the technology, business idea, or problem it solves.
Technically, everything that already exists online and in our current global markets can be transferred to blockchain technology. Social media websites like Facebook, messaging apps similar to Line or Whatsapp, these are already up and running on blockchain technology and have their own cryptocurrency and value associated with them. As more industries look to move into blockchain technology, there is huge potential and scope for some smart investments.
If you’re unsure if an ICO is a good idea, then you’re best to take your time and do some more research before jumping in. Perhaps talk to a few people on some crypto forums, or see what others say about the ICO on social media or in news articles to get a better understanding.
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