If you think an ICO can be a profitable investment you are understating the potential returns and the risk. If you don’t want to get burned buying an ICO, this is a must-read.
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How to Buy an ICO; Things You Need To Know
How to invest in ICOs? is a question on the minds of traders, investors, and speculators the world over. It is also, fortunately, or not, answered on websites from here to eternity.
The problem is that there is a lot of information, very little regulation, a propensity for fraud and a wide margin of error that make finding the right ICO to invest in very hard indeed.
Negatives aside, ICO token exchanges and other forms of initial coin offerings provide investors and businesses the safest, easiest to use financial-system the world has ever seen. Cryptocurrency and ICO’s are going through some growing pangs but likely here to stay.
What is an ICO? ICO stands for Initial Coin Offering. It is an application of blockchain technology used to raise money and fund projects. Very similar to an IPO or Initial Public Offering it is the first offering of new altcoins to the market.
- Cryptocurrencies are blockchains, blockchain is a technology. The blockchain technology is powered by tokens, the altcoins, and are what you buy in an ICO; If the technology or application is accepted by the market the tokens gain value and can be bought, sold or traded like other cryptocurrencies.
Unlike IPO’s, where stock ownership is an equity holding of a company, most ICO’s give the holder no rights other than ownership of the token. The goal of an ICO investor, therefore, is to buy coins at a low price in the hopes of selling them at a higher rate.
The Best ICO To Buy Now; Know What You Are Buying
Not all ICO’s are the same. What I mean is, they are all new digital currencies, but they don’t all come from the same sources. In some cases, the new coin is an entirely new blockchain. When new chains like Ripple form they need liquidity to make the system work, and that is done by pre-sale of tokens, an ICO type event.
Any new blockchain will need to be funded to work for without funding there is no liquidity and with no liquidity, there will be no traders or investors. The early adopters, those who bought in at the ICO level or during the early rollout, are usually rewarded with higher prices for taking the risk and providing liquidity. Litecoin, Bitcoin Cash, and Bitcoin Gold did not need to have ICO’s because they came into existence a different way called a hardfork.
Coins like Ripple and Ethereum are also unique blockchains and as such had ICO type roll-out events. Other new blockchains are coming to market all the time providing an opportunity for investors. Unlike Bitcoin which server only one purpose, value exchange, Ethereum can power new blockchains and blockchain applications called smart-contracts. When it launched, it opened a new avenue for businesses to harness blockchain. Investors are now able to use Bitcoin and other cryptocurrencies to buy the ICO’s of new blockchains.
Instead of launching an entire new blockchain network, a costly and time-consuming task, businesses can build new blockchains or blockchain-based applications on top of the existing Ethereum network. Like the original, these newly spun networks need funding, and that is done through ICO. There can be more risk with this type of ICO because many of the businesses are not yet operational, the tokens you buy may never get launched.
Omisego and the Basic Attention Token are examples of businesses built on the Ethereum platform. Omisego is a decentralized platform for cross-border, cross-currency value exchange in the greater Asian economic arena. It would allow users, consumers, and businesses, to conduct transactions seamlessly across the region. The Basic Attention Token powers the Brave network, an anonymized web-browser that pays users to view ads. Users are paid with the BAT, Basic Attention Token, which can be re-used on the platform, traded for other currencies or exchanged for fiat money. You can follow this link to read more about the best cryptocurrency to invest in for 2018.
Another new and lesser used application of the ICO is to digitize business. What I mean is this, companies can log their value onto a blockchain such as Ethereum using a smart contract. The smart contract is powered by tokens based on one of the Ethereum protocols; the company uses it to issue tokens as if they were stock. As crazy as it may sound it has been done and is one of the many applications regulators around the world are debating. One example is the Binary.com ICO.
Binary.com is a European based digital option and forex broker who has decided to list itself as an ICO. The company has a stable history of earnings growth and dividend payments; a right conferred to owners of the tokens. This is how it works. The company held an ICO auction in which the public could purchase Binary.com tokens for cryptocurrency.
When the auction was over tokens were distributed to the winners. Holders of the tokens could then do 1 of 3 things; exchange the tokens for shares and get dividends, sell the tokens to someone else or hold the tokens and receive dividend payments in kind. This ICO is over, but more are sure to come. Regardless, the tokens will be available on the open market and can be purchased just like a stock.
ICO Can Be a Profitable Investment: Do It Right
Another common question these days is, how to buy Initial Coin Offerings without getting scammed? Not surprisingly, the global and largely unregulated digital currency and ICO world are rife with fraud. This is something that may not be easy to avoid.
It is all too easy for a talented web designer, a slick SEO specialist, and a cryptocurrency wallet address to make you think they are a real ICO. Think about it, without the proper vetting anyone can set up a website, say they are offering a new token and to get one first all you have to do is send your BTC, ETH, and LTC to our address. I mean, if they have a white paper and other documentation it has to be legit, right?
ICO’s are really where the crackdown on cryptocurrency regulation began. Sure, regulators had been eyeing the market for some time, but they hadn’t made any real attempts at curbing cryptocurrency until the ICO’s got out of hand. The number one place to find ICO’s was in Asia, and more specifically China, which led to the September 2017 ban. Before the ban, new ICO’s were hitting the market like crazy, and most were known to be frauds.
Since then other regulators, specifically South Korea, another haven for blockchain business, have cracked down in an attempt to curb fraud. These actions can pose several risks for new investors. The first is fraud. Without proper vetting, the opportunity for fraud is too great, the chance for loss enormous. The second is regulatory if regulators crack down on a new business or ICO’s or cryptocurrency in general value could be lost in the process.
- How to buy ICO coin? Successful investors say, “very carefully.”
The US has not enacted much in the way of regulation yet, but that is likely to change soon. Regulators are meeting now to discuss the nature of cryptocurrency; it’s role in the financial system and possible regulations for it and new business. Until a globally accepted method of regulating cryptocurrencies emerges investing in ICO’s will be like investing in penny stocks; a crap shoot, but a crap shoot with a million dollar payout if you win.
Where And How To Buy An ICO
Buying an ICO is as easy as sending some cryptocurrency to an address.The tricky part is setting up your exchange account, verifying your ID, buying some BTC and choosing the ICO you want to buy. That being said the best place to find news about upcoming offerings is from sources like the how to invest in ICO Reddit feed, news sites like Coinmarketcap and Cointelegraph or an ICO investors list you may find along the way.
- Be careful of ICO advertising. Facebook made it clear that so many ICO ads were frauds it was easiest for them to ban all ICO related advertising. Not all websites have done the same. Google for one has made no comment on the nature of their advertisers and is known to permit binary options financial frauds to operate through the Adsense system.
In some cases, the initial coin offering will be hosted directly by the underlying business through their website. This is most often how to buy pre-ICO coin as well, these tokens are usually not listed on an exchange yet and can be acquired in no other way. These coins are purchased by sending cryptocurrency to a wallet specified in the ICO prospectus, each is a little different, and can be done from any wallet.
- US traders should be aware that current investment laws only allow accredited investors to participate in the type of funding-round investment an ICO represents. While most ICO’s will make this clear on their websites, it is also true that most won’t vet your BTC’s or ETH on the way into their wallet either.
Other coins may be listed on an exchange if they can find one. Not all exchanges are set up to do more than host services for a few coins, the ones that are usually don’t provide connection to a bank so it can be a complicated process. A safe way to buy ICO tokens is to wait for them to list on a major exchange like Shapeshift and buy at first sale. This strategy may not provide the same gains as a pre-ICO investment; it does mitigate some of the risks while still providing plenty of potential rewards.
To be honest, the best ICO to buy now is one that has already happened. Sure, you could have made millions as an initial investor, but the risks of fraud are too great and the chances of making a million too slim. There are thousands of cryptocurrencies on the market, and only a few have made people rich. The good news is that there are still plenty of opportunities for reward in the post-ICO market. Why? These businesses are vetted, have raised their capital and are ready to enter the operational and growth phases of their lifespans.
Filecoin – Filecoin is a decentralized storage system that pays miners to host data on their machines and networks. The Filecoin is mined using downloadable software and exchangeable for BTC, ETH, and other cryptocurrencies. Businesses with data storage needs can satisfy them using the Filecoin network. They bid on storage based on their needs and, when filled, pay with Filecoins. The location of the data gets logged on the blockchain for later retrieval. Regarding funding it is the number one ICO of 2017 raising more than $250 million.
Tezos – Tezos was the second most successful ICO of 2017 and expected to go live very soon. It is a truly decentralized cryptocurrency application that raises the bar regarding security. It establishes a true digital commonwealth facilitating formal verification of transactions, an important leap in the realm of smart contracts.
EOS – EOS is the third most successful ICO of 2017 and perhaps the most exciting. It is a scalable smart contracts platform powered by the Ethereum network. At last report, the EOS 2.0 testnet was live for developers and the public to build and launch smart contract applications. The platform provides accounts, authentication, databases and communication across a network of CPU’s that can handle millions of transactions per second.
How to buy an ICO? Carefully. The best ICO to buy now? One that is already over. An ICO can be a profitable investment, but you have to do it right.