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Are ICOs Worth It?
Key Takeaways
Copy link to section- ICOs offer early investment opportunities: Early investing opportunities presented by ICOs allow one to acquire fresh crypto ventures before they ever go public.
- Potential for high returns: Successful ICOs such as Ethereum and Binance Coin have produced significant increases.
- Significant risks involved: ICOs are a high-risk investment due in great part to scams, legal problems, and market volatility.
Is It Worth Investing in an ICO?
Copy link to sectionNew cryptocurrency ventures have started using Initial Coin Offerings (ICOs) as a popular method of funding, as they provide investors early access to revolutionary ideas.
While the benefits are high, ICOs also carry great danger.
Is funding an ICO worthwhile?
Let’s go over the advantages, drawbacks, and main factors to guide your choice.
What Is an ICO?
Copy link to sectionAn ICO is a fundraising strategy whereby early investors purchase tokens of a new cryptocurrency startup.
Should the project go forward, these tokens may subsequently be sold on markets.
During the 2017 crypto frenzy, ICOs were somewhat well-known as projects like Ethereum raised millions of dollars.
For those looking to participate in upcoming projects, checking an upcoming crypto ICOs calendar can help track new investment opportunities.
Not all ICOs, however, live up to expectations; several have proven to be frauds or failed initiatives.
The Potential Rewards of Investing in ICOs
Copy link to section- Early Access to Promising Projects. Purchasing an ICO lets you participate on the ground level of a fresh enterprise. Should the initiative go forward, the value of your tokens might explode. For instance, the 2014 Ethereum ICO sold ETH tokens at 0.31 each. ETH trades now at around $2000
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www.coindesk.com
https://www.coindesk.com/price/ethereum/
. - High Returns. Effective ICOs provide large rewards. For example, during its ICO in 2017, Binance Coin (BNB) was first offered for 0.10. With an astounding 690,000% gain, BNB peaked historically at over $690,000.
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www.coindesk.com
https://www.coindesk.com/price/binance-coin/
- Supporting Innovation. Many ICOs finance creative ideas meant to address practical issues. Investing helps you to promote the creation of fresh ideas and technology.
The Risks of Investing in ICOs
Copy link to section- Scams and Fraud. The absence of control in the ICO scene makes frauds rather common. An estimated eighty percent of ICOs in 2017 were scams, with founders vanishing following cash raising.
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www.icobench.com
https://www.icobench.com/stats
Researching where to buy ICOs on reputable platforms like Binance Launchpad or CoinList can help minimize risks. - Regulatory Uncertainty. Some governments strictly control ICOs, hence engaging in an unregistered ICO could cause legal problems. For instance, some ICOs found breaking securities regulations have been shut down by the U.S. Securities and Exchange Commission (SEC)
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www.sec.gov
https://www.sec.gov/news/press-release/2017-185
- Market Volatility. Market factors or bad execution may cause even approved ICOs to fail. For example, the distributed autonomous company DAO raised $150 million in 2016 but closed owing to technical problems and a hack
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www.coindesk.com
https://www.coindesk.com/learn/2016/06/25/what-was-the-dao/
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- Liquidity Issues. ICO tokens may not be instantly marketable on markets. Low trading volumes might make selling your tokens at a reasonable price challenging even if they are.
Worth it vs Not Worth it—ICOs
Copy link to sectionYour research ability, risk tolerance, and investing objectives will all affect the response of whether investing in an ICO is worth it for you.
Here’s a quick summary:
- Worth It If: You have done extensive study on the idea and are ready to accept great risk in favor of great benefits.
- Not Worth It If: If you are new to cryptocurrency, risk-averse, or unwilling to commit time to research.
For those evaluating investment options, comparing is an ICO better than an IPO? can provide insight into the differences between cryptocurrency fundraising and traditional stock offerings.
While ICOs are open to a global audience with fewer regulations, IPOs offer more investor protections but require more capital to participate.
Final Thoughts
Copy link to sectionOne high-risk, high-reward activity is investing in an ICO.
While several successful ICOs—including Ethereum and Binance Coin—have yielded life-changing profits, many others have flopped or proven to be frauds.
Focus your time on initiatives with strong foundations, open teams, and engaged communities to help to reduce risks.
