Pros: Maybe you will get rich. Cons: Maybe you won’t.
ICO. Nowadays you see these three letters everywhere. When first wave of universal admiration for initial coin offering has subsided, thousands of people were left on the shore running back and forth and screaming “Where is my money?”. Those who multiplied their investments thanks to an ICO, were meanwhile sailing away from that same shore on the yacht, happily calculating their profit and drinking Pina Colada. If you are going to invest in ICO, and you want to join the second group, not the first, you should be aware of all advantages and disadvantages of such crowdsale.
News are full of reports about extremely successful ICOs, during which millions of dollars were raised in minutes. Young enthusiasts with burning eyes are convincing people that their idea will change the world more than the discovery of electricity did. Projects are drawing long-term roadmaps explaining how exactly they will be able to improve their product after funding through the ICO. Everything is so great and promising. But there is a flip side of the coin.
While few months ago the number of successful ICOs was about 30–40% of the total, now it equals 10%. A lot of projects have nothing but idea and beautifully written whitepaper — without any live product, without investing, without team, they hope to raise enough money to carry out their promises.There wouldn’t be any problem if they surely implement their ideas in life in case of a successful ICO — but many startup founders, dizzy from large sums of money, completely forget about their promises and go to Seychelles right after receiving last coin from the ICO. So, is it better to refrain from investing in such risky ventures or use a chance and multiply your capital?
There are so many reasons why ICO can be bad for investing:
1. Scams
In most cases investors are buying coins for a project that doesn’t even fully exist yet. No one can guarantee that the project will be completed. You never know if funds raised during ICO will be used for development of product or ticket to Seychelles for founders. Of course there are teams of experienced professionals who need funding to make really useful service, but many ICOs are conducted by enthusiasts without any expertise. Don’t get involved in “ICO shopping spree” and partake in every crowdfunding you see — you will just sponsor other people’s dreams. Remember that you are paying for someone’s idea and that person must be convincing and trustworthy enough to assure you that they will fulfill all their promises.
2. Hacker attacks
Sometimes projects are hacked during ICO (CoinDash — $7 million was stolen by replacing legitimate address for buying tokens with fraudulent), sometimes — after (The DAO — hacker exploited vulnerability in code and siphoned off 3.6 million ethers), and sometimes — even before (Enigma — some inventive fraud managed to compromise enterprise’s social accounts, started to send emails and post messages, urging people to send funds to his Ethereum address claiming Enigma opened its pre-ICO). There are always fraudsters near successful and perspective ICOs looking for every possibility to steal as much as they can and go to Seychelles (to join there founders of scam-ICOs). You can’t insure yourself on 100% against losses due to hacker attack, but at least check if company’s security is reliable enough before investing. Also you have to be sure that in case of attack, unpredictable bug or any emergency, company has enough expertise to react immediately and do everything to save investors’ funds.
3. High volatility
Prices of tokens may change instantly and drastically, leaving you at a loss. All forecasts in cryptoworld mean nothing, because value can change unpredictably due to a huge number of different factors. But remember that same volatility works both ways, and thanks to that price can go high unexpectedly and you may get rich in few minutes.
But there are even more reasons why ICOs are great for investing:
1. Capital gain
ICO gives you opportunity to invest in perspective enterprises at early stage with minimal investment and get a good revenue when stakes are going up. ICO is a modern version of time-tested ways to become a millionaire — stock trading and investing in company’s shares. If you don’t invest in every project that claims to make revolution in digital world, but look through all information thoroughly, compare it with similar startups and choose those in which bright future you truly believe — there are more chances that you will be a winner in this game.
Look for companies that offer working product, not just sell an “idea”. Projects that are effective not only in cryptoworld, but that have practical use in the real world. You must take considerable care before buying a token. Not all the projects are trustworthy and successful, but those who are, can make you rich if you are perceptive enough to invest in them.
2. Accessibility
While it’s rather difficult for people who don’t belong to business world to invest in big companies, there is an equal opportunity and ease of access for everyone in investing through ICO. You don’t have to “know that guy”, who thanks to his acquaintances will help you to invest in successful startup. It’s just you and your money — nothing else is necessary. All information is opened for public, you can learn everything you need, and you don’t even have to leave your room.
3. Low entry threshold
Until “invention” of ICO investments to successful promising enterprises were accessible only for limited circle of people due to its high entry threshold — only those who were ready to invest certain amount of money (and not small amount, to admit) were allowed to participate. In ICO there are no such restriction. You can buy tokens for 10 dollars and proudly call yourself an investor. ICO is great way that gives equal opportunity for everyone to become part of a project and get benefits from investment.
4. No country barriers
It doesn’t matter where you are and where the project in which you want to invest locates — ICO demonstrates globalization in action. It destroys obstacles that prevented people before from investing in promising startups. Guy from Kenia may invest in new cryptocurrency service based in London, while businesswoman from Italy, fascinated by blockchain technology, send her funds to promising project in Japan.
5. No commission, no taxes
ICOs are not controlled by government, so you don’t have to pay any commission when you invest and any taxes when you get profit. Nobody takes away part of your funds. ICO has two key features — anonymity and independence.
By participating in ICO you can discover whether you have the talent to entrepreneurship and business or not. People, who have the ability to recognize a successful idea at the initial stage, multiply their funds thanks to investing in young startups. ICOs are a great opportunity, and as every great opportunity, it has its own risks and vulnerabilities. But if you are perceptive and thoughtful enough, you definitely will get benefits from this investment.
There is literally an ocean of ICOs now, and you have to be extremely careful not to succumb to beautiful stories of future success, but see and truly believe in perspective of the project. Find everything you can about the development team, read the whitepaper thoroughly and be cautious.
ICOs seem to be a tool for many corrupt individuals, but that mustn’t prevent you from participating. Of course, you can’t just invest your money in first-caught project without previous research and be sure that you get profit. You have to learn the subject and follow news and tendencies of the market — by that you will diminish the risk of losing money. If you are cautious and perceptive enough, you will definitely get benefits from investment in ICO.
ICOs are beneficial not only for participants, but also for enterprises. It gives opportunity for startups to raise funds for implementing their ideas into life or improving the existing service. That’s why we at Bonpay, cryptocurrency service, decided to start token sale, that will last till November, 28. We already have live product — prepaid card that converts cryptocurrency into fiat instantly at lowest rates and may be used everywhere. In our plans are launching Android and iOS apps and setting partnerships with leading card issuers to make our cards available not only in EU, but everywhere in the world. We have team of experienced developers and crypto-professionals — you can read interview with Bonpay CEO. Learn more about key features of our product in whitepaper and participate in Bonpay Token Sale. There is little time left!
