Is It Wise To Invest In Initial Coin Offering?

You have to be from Mars to not know anything about Initial Coin Offering (ICO). The first ever coin offered was priced just at $0.007 and now costs around $5.60.  Don’t confuse ICO with initial public offerings. The cryptocurrency market costs a total of $35 billion today and that is a lot of money in just eight years (bitcoins came into existence in 2009).

The Unibitcoinss of America and Singapore are the biggest ICO markets with Hong Kong catching up with them slowly.

So what is an ICO?

Every new company in the market sells bitcoins to raise money for their venture. Usually, the company publicly announces that it is looking to a particular sum of money and continues the fundraising until the amount is achieved. Bitcoins are purchased either in US dollar or cryptocurrencies like bitcoins to pay for new coins.

Startups that offer ICO are usually those that use blockchain technology in their business to provide a service or product. Blockchain technology is used to distribute coins to buyers but maintained through a network of computers on peer-to-peer basis. Purchasing ICO is similar to owning a part of the company and just like shares, you are completely unsure of what returns you will get.

Things to consider while buying Initial Coin Offering

  1. Company partners of the firm you wish to invest in is associated with

    The government has enforced several laws to protect investors from bogus companies but these laws are useless when it comes to cryptocurrencies. All information will be available on the company’s website and in the newsletter. The more money you invest, the more blindly you are trusting the company.

  2. Check for an SSL certificate

    When you visit the firm’s website you should be able to find a green padlock on the left side of the address bar. This means that the company is safe for investments. If you don’t see any padlock, you should not invest in such company and if you see a red padlock immediately leave the website. When you open the security tab in the debug consult, an SSL certificate with the company’s name will appear on your computer screen. If there is some other company’s name, you should be concerned and investigate more about it.

  3. Understand the company you are buying from

    It doesn’t matter how much money you are investing in the company, but you should know everything about before investing. It is your money and it is your right to know. You should know the token you are buying is linked with. If it an electronic company, you should know what kind of products it sells. There is no particular mechanism in cryptocurrency.

  4. Transaction number

    Every time you make a transaction make sure it is the same transaction number as the earlier ones. This one step will save you from hackers.

Ask yourself these questions before investing in an ICO

  1. Is ICO safe?

    The ICO you are investing in should have SEC (security offering) or meet an exemption from registration. Those exempted from registration require any buyer to meet certain income threshold. Example, if you have a yearly income of $1 million, you have to buy a certain number of bitcoins.

  2. Is the person I am investing through a certified financial advisor?

    It is simple. If the person isn’t registered you are sure to lose all your money. Check the broker’s professional authenticity and background on Broker Check.

  3. What rights and benefits I will have on the purchase of ICOs?

    Carefully go through the terms and conditions of the company and white paper and business plans published by the company offering ICOs. If the coins you purchase do not give you ownership rights, you will not have any influence when there is any voting to do. Remember, cryptocurrencies have liquidity issues because not everyone is ready to buy or exchange coins.

  4. How will I get your money back?

    Whenever you want to cash your coins, you will have to ask the cryptocurrency broker to refund the money you paid. Since ICOs are securities they should be registered as a national securities exchange.

Be alerted to fraud

ICOs is an exciting way to enter the cryptocurrency world, but don’t get too excited. Most of the initial coin offerings are done by fraudsters to loot all your money. You will be drawn into a scam and there’s nothing more horrible than that. Any cryptocurrency investment is a risk but that doesn’t mean you don’t invest at all. Look for legitimate financial brokers that guide you through the entire process. The kind of risks and whether you will lose or gain money from it.  No company will clearly tell you how it is going to perform and what kind of returns you can expect through it. If someone mentions this on their website, the company is surely a fraud and better stay away from it.

The kind of risks and whether you will lose or gain money from it.  No company will clearly tell you how it is going to perform and what kind of returns you can expect through it. If someone mentions this on their website, the company is surely a fraud and better stay away from it.

The Final Verdict?

Back in January 2009, there was very little information about bitcoins and people didn’t know whether it is the right option to invest in. Those who invested got as much as 15,000 times return, which is shocking in a certain way. Even though the cryptocurrency market can never be fully understood is well documented in all these years and there are enough data and research for everyone to read and understand.

It is not a safe bet but at least it will give you some experience. The market has stabilized over the years giving consistent returns. Now you don’t how much you will earn through an initial coin offering, but it definitely deserves a chance.

Initial coin offerings are a long-term investment if you want higher returns. You can sell it immediately as well, but it rarely gets sold at such an early stage. Whatever you invest in cryptocurrencies should be the extra money you have and don’t know what to do with it. Invest it for more than two to five years and then see the returns. If the company does well, you’ll be nothing less than a millionaire, but if you lose it, then there is nothing that can be done.

If it is wise or not to invest in initial coin offerings is a personal question. If the money you are investing is extra, then it is a wise decision, because it is definitely worth the risk. So go ahead, study the market and the companies offering ICOs and earn some money.

This article was written by our in-house forex traders with a combined 20+ years of experience in trading the financial markets.