By Jessica Smith

You all know about Bitcoin and the boom that it created. Well, it turned out to be highly profitable for some, and not so much for others. While some lost their minds discovering it, others lost their money, and many ended up discarding their driver and others were stunned after finding forgotten wallets full of so much money that they could easily buy apartments with it! Now, the next big thing in the world of cryptocurrency is initial coin offerings or ICO. According to experts, ICOs are here not only to stay but also to generate millions of pounds and dollars. Of course, as it is with any other financial trend, so it is with ICOs too. Only a few people who are brave enough to invest, smart enough to deal, and fortunate enough to win will eventually benefit from the ICO.

How did ICO come into being?

If you have been a regular at cryptocurrency circles, chances are you have heard numerous statements being thrown around as conventional wisdom. People must have asked whether it was wise enough to invest in Bitcoin and cryptocurrency in general. Moreover, you may have seen that while the concern behind those questions cannot be discarded, there are also much possibility that the investors will make massive profits from their endeavors. You should note that the cryptocurrency sector was born out of a notion that conventional economics is outdated and overrated. The only way to go from that point is forward.

It is a well-known fact that Initial Public Offerings (IPO) are being seriously questioned time and again. Besides being too tangled in regulations, and of course, coming in too late in a business’ life cycle, they are also quite expensive to produce any significant benefit. Companies, especially startups do not see much profit in investing in Initial Public Offerings. They might come in handy when you have to repay your investors with their capital, but they do very little to fund your business idea.

That is where the initial coin offerings become useful. Simply put, they work as the crowdfunding provision for cryptocurrency startups, which nowadays are posing as threats to the concept of money itself. Most of these businesses are based on Ethereum these days, which is a platform much similar to Bitcoin. This platform enables users to build distributed businesses all connected to a single blockchain.

How does ICO work?

In the initial coin offering system, there is usually a specific goal. You can also refer to it as the limit for project funding. It means that each token invested has a pre-determined price which is not subject to change during the initial coin offering period. That also makes it clear that the token supply is usually static.

What is interesting here is that it is possible to get a static supply which has a dynamic goal as far as funding is concerned. In that case, the tokens are distributed as and when the funds are received. It translates a project gaining higher token price depending on the increasing amount of funds it receives.

At other times, the dynamic token supply depends on the number of funds that are received and the price allocated for each token is static. For example, one Ether equals to one token. Every time an ether is sent, the creation of a new token begins. Of course, one can set the goal or time frame can be defined as per needs and preferences.

What is an ICO list?

The examples of associated ICOs can be analyzed to find out the main factors that influence ICO and what its key features are. The ICO list contains:
– Nxt ICO
– Ethereum ICO
– Lisk ICO
– DAO Creation Period
– Waves ICO
– Stratis ICO

As per experts, those who invest in initial coin offering stand to gain more from smaller ICOs as they have more scope to grow. However, Ethereum has also proven that the underlying technology is the factor of most import here.

Are there risks involved?

As stated above, the ICO boom does pose as much risk as there are promises of profit. What you need to remember here is that you must not invest more than you can afford to lose. One wise way to go about it would be to spend some time in researching. Before you make the investment decision, try to know as much as you can about the startup you are considering, the people involved and the technology that they use. This way, you will have a fair idea about the prospects of the business and can maintain realistic expectations about return on investment.
There is no denying that the risk involved for investors is quite a bit. Many are currently making the switch from IPO to ICO. What is a reason for concern is that ICO does not share many similarities with IPO. So, many investors are not aware of the rules and regulations they need to abide by. There is much confusion about whether ICO is strictly legal or not. So, if you are a business thinking about dealing with ICO, note that financial markets are subjected to heavy scrutiny by concerned authorities.

Well, by now you are already aware that the ICO has quite a bit of gamble attached to it. However, with careful thinking, you will understand that the cryptocurrency boom has always been about taking risks and making the most of it by turning the tide in your favor. If a person has bought a Bitcoin every time somebody thought it was silly to buy them, you can well make out which one had the last laugh. Yes, there is some risk, and quite a bit of it. However, it is, as they say, no risk no gain.

Author Bio: Jessica Smith is a financial adviser who has been helping clients generate desired ROI for many years now. She often blogs about financial investments, Bitcoin, mutual funds and more. Her articles on the initial coin offerings and benefits of ICO list have gained much popularity over the last few months.

Leave a Reply

You must be logged in to post a comment.