3 Risks of Launching a Utility Token ICO
By Josiah Wilmoth
Token generation events (TGEs) — more commonly referred to as initial coin offerings (ICOs) — present startups with a host of benefits, most importantly the ability to crowdfund the development of their platforms without having to relinquish company equity. However, startups considering launching a utility token ICO need to examine the risks associated with a TGE before they decide to engage in this blockchain-based fundraising model.
Below, Strategic Coin’s utility token launch advisors explain the three primary risks associated with launching an ICO or TGE:
3 Risks of a Utility Token ICO Launch
1. Token Launch Security Breaches
A well-executed token launch has the potential to net hundreds of millions of dollars, making them a prime target for cyber attacks and exploits.
In one high-profile attack, a hacker successfully injected a fake ethereum address into a token sale website, enabling them to funnel millions of dollars away from the ICO and into his or her own pockets. In another case, a hacker infiltrated into a startup’s email and social media accounts, enabling him or her to masquerade as the official token launch organizer and convince token buyers to send $500,000 to a fake token sale address.
At the very least, falling prey to a cyber attack will delay your token launch, disrupt your project’s momentum, and result in negative press coverage. At worst, an attacker could steal millions of dollars worth of contributions. There is also a strong possibility that potential token buyers will be discouraged from contributing to your project, even if the attack was the fault of a third-party, such as your website hosting service.
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