How to participate in the ICO whether to invest and how to earn
If investment in bitcoin is the new gold rush, ICO is a gold mine. ICO (initial coin offer) is the newest and most popular means of fundraising in 2017. In 2018, this trend will surely continue.
New cryptocurrency usually go into the digital space with ICO. The first is the primary offering of coins took place in 2013, but in 2017 this model of fundraising has gained fantastic popularity. A the ICO made early investors rich is unthinkable that only fueled interest in them. The huge popularity of this method gained after the success of the Ethereum ICO (recall, tokens, Ethereum sold for $0,31).
Fantastic result Ethereum has forced investors to look for similar opportunities and have encouraged the entrepreneurs to take risks. This led to the uncontrolled surge of ICO, and due to the lack of laws in Cryptoprotected cases of fraud.
The latter, in turn, has led to global discussion about the rules and regulations for primary offerings of coins and the regulatory authorities pay special attention to the regulations of tomenselo. From the investor’s point of view it’s not the worst thing that can happen, because the rules likely will lead to higher quality ICO, risk reduction and mass deployment of cryptocurrency.
Despite the high risk, hard to resist in order to get involved in this exciting and extremely lucrative game. In this article we will discuss all the pros and cons of ICO that you should consider before jumping in feet first and invest your money.
What is the primary offering of coins, or ICO?
Investing your savings in the initial range of coins, usually called ICO, you become an early investor in new technology — the blockchain.
You can invest in the ICO, sent to the address of his wallet, such as bitcoin, Ethereum, or NEO. Your investment will be held in the smart contract, and as soon as ICO ends, you will automatically receive a certain number of new cryptocurrency based on the amount of your investment.
ICO companies started to raise capital to develop a new blockchain or application on your current platform. The difference between these formats we will explain below. Before starting the ICO, the company behind it, as a rule, forms the actual problem and declares that it can solve it using your blockchain app.
The company creates a website where you can see the rules of the ICO, standing behind him, the team, its vision, the industry on which it focuses, partners and consultants of the project, a roadmap and, most importantly, the white paper.
In the white paper, the company describes the details of his approach and technical characteristics of the blockchain, or decentralized application. Potential investors decide whether to invest in ICO or not, based on information provided by the company.
Comparison of ICO, IPO and crowdfunding
the nature of the ICO are not much different from crowdfunding. Both attract both small and large investments from a group of people via the Internet.
The company behind the ICO, as the company behind the project of crowdfunding, selling your prospective product and tries to convince potential investors that it will be useful to industry.
It is important to realize that the majority of ICO still no working product. Investing in ICO, you are usually invested in a product that only potentially can become popular.
ICO differ substantially from initial public offerings (IPOs) is a widely used method of financing for large companies. IPOs give investors the shares of the company in exchange for capital. These shares represent a share of ownership and certain rights of shareholders such as voting rights or right to dividends. On the contrary, a new cryptocurrency that you get for investing in the ICO, does not provide ownership rights or any other rights with respect to the blockchain.
However, the cryptocurrency that you bought during the ICO, promises the potential return. Ultimately, the income depends on whether the new cryptocurrency is actually used by consumers. This is a huge difference with shares that are used only as evidence of share of ownership.
Cryptocurrencies to be taken seriously, needs to have the actual application. For example, using cryptocurrency NEO you can participate in the ICO based on the NEO and use the app on the blockchain NEO. The Civic tokens allow you to use the service of protection of personal data. Thanks to Edgeless tokens you can play in online casinos based on Ethereum, and with coins Steem is to use a decentralized platform for social media.
In the short term, profitability is determined by demand for money. Note that most new cryptocurrencies are not used and have not lived up to its concept.
Thus, investment in ICO is a game with very high risk, but high reward.
Will there be a cryptocurrency? It depends on the quality of the blockchain. Bitcoin, for example, is used on a regular basis. Yes, the network has problems with scalability, but that only points to the growing popularity of batocina.
If cryptocurrency and blockchain are unable to attract community consumers, institutions or companies that will use them for payments they will eventually become useless.
Protocols and coins
As mentioned above, the ICO can raise funds for their own blockchain and decentralized applications.
ICO for blockchain assumes that the company will create its own blockchain, which can then be running the application. The coin that you will receive in return of their investments, is directly related to Baccano. These blackany call Protocol (the blockchain protocol), because they define the rules, dynamics and technical characteristics of the applications based on them. The Ethereum, NEO, Bitshares and Waves — examples of Protocol of the block chain.
So-called service tokens (token utility) are applications built on the blockchain Protocol. Cryptocurrency, called a token, is actually used only for the application.
As an example, consider the Ethereum with its Protocol ERC20. In this set of manuals provide rules for applications and their tokens built on top of the Ethereum network. Popular tokens ERC20 —Tron, ICON, OmiseGo and Waltonchain. All these applications are based on the Ethereum blockchain and thus complement its ecosystem.
Investors it is very important to understand this difference. Blackany are growing rapidly, but still far from maturity, and we have no idea how it will look industry in a few years. We don’t know what the Protocol will become the basis for a future Internet, so investing in applications based on these protocols, carry much higher risk.
Looking at the current state of the industry, you can see that a small number of blockchains and apps are really in demand. Time will tell which Protocol we will use in the future and what applications on top of these protocols will become popular.
Finally, there are investment tokens (security token). They represent a share in the business. This model most likely will soon be illegal in most countries. These tokens have no practical use and increasing in value with the growth of profits of the company standing behind them.
Currently, securities are subjected to serious analysis, and regulators like the American SEC has already notified that it will oblige cryptocurrency that actually apply to the securities to follow the rules of registration of traditional assets. Because these tokens will not be used for any related bloccano action, it is better to avoid such ICO.
Risks associated with investing in ICOICO extremely volatile
Investment in ICO risky, and there is no guarantee of a refund. In fact, ICO is not much different from the usual startups. It is estimated that about 90% of these projects eventually closed. Realizing this figure, it becomes easier to assess the risk of investments in ICO.
Why do startups fail? Most of them simply can not cope with the tasks, as in any developing industry. The same applies to the teams behind the launch of cryptocurrency. The team may be experienced, cohesive, well-funded and have the best of intentions, but there is always a chance that it simply will not attract clients.
Add to this that we don’t know how the blockchain will affect the world, what Protocol it will be built and how quickly the technology will be extended. That’s why investment in ICO belong to the highly speculative.
ICO some may be running scams
In addition to the speculative and risky nature of legitimate ICO, on the market there are also fraudulent projects. Recently a company called Prodeum deceived their investors, leaving them with just one word on the empty web site. This is just one of the cases when the organizers of the ICO funds are being collected for personal needs and hiding from them.
Professionals interested in the market and study the ICO themselves takencare to ordinary people was easier to understand whether to trust any project. The number of sites, studying and evaluating ICO, constantly growing, and these resources will help you to filter out the obviously dishonest projects.
With the maturation of the space, you can expect proper registration procedures the ICO and, as a consequence, better quality of primary offerings of coins. The NEO Ethereum and set the standards for the ICO using their protocols ERC20 and NEP5, but clearly the measures for the registration of the ICO are likely to come from regulators.
Legal if the ICO?
Because of the numerous malicious ICO the need for market regulation is debated across the world. Scams happen all too often, and these practices harm the cryptocurrency market in General, as they undermine the credibility of the industry and deters new investors.
The important difference between ICO and IPO is that an IPO clearly regulated. Comprehensive body of regulations, huge volumes of documents, and regular inspections of business activity — an integral part of the world the IPO. Six guys in the attic will not be able to arrange the IPO, but the launch of the ICO for them will not be a big problem.
The government cannot accept this model of fundraising. The fact that the state is obliged to protect its citizens, including from fraud. Despite the fact that there are respectable ICO and a lot of them, the legal framework to register the ICO is required.
The problem is that regulators are unable to classify the ICO because of their novelty. Cryptocurrency is the money, goods, assets, or something else? Governments around the world are working to give the cryptocurrency ICO’s legal status; once that happens, Cryptoprotected there will be many new laws and regulations.
The ICO have a positive impact on cryptocurrencies
Given the current state of blockchain technology, ICO is the best thing that could happen. Large amounts of capital that ICO attracted cryptoprotection, gave a huge impetus to the development of blockchain technology and infrastructure to maintain it.
In addition, each ICO is launching its own marketing campaign. Each of tomenselo aimed at different audiences, and together they attract very different people with different way of life, requests and financial possibilities. ICO is a good way to promote blockchain technology and cryptocurrency industry in General.
Several projects with huge potential have already been launched and will be launched in the future, and those few diamonds will ultimately lead to widespread adoption of blockchain technology. We are still waiting for a killer app on the blockchain, which will use people who are far from this technology. Most likely, this app will be launched via ICO.
Should you invest in the ICO?
Search killer apps will be long, difficult and probably will lead to more investment in slow projects. However, once the ICO is indeed “off”, you will receive your profits. Despite the fact that the total capitalization of cryptosphere has increased tenfold, capital, requested medium-ICO, not increased.
The ICO space is incredibly saturated, so projects may not require too much money. However, due to the increase in the number of investors and amount of money in the market successful ICO do collect a lot of money and bring investors huge profits.
Sounds promising — and it is. Before you jump into the deep end, you need to do only one thing: to conduct your own research. This does not mean simply watching a video on the ICO website. Study the white paper, rate the following aspects of the project, as its goals, objectives, scheme of income generation what problem the app solves, etc.
View on the project team. Do they have experience working with blockchains and decentralized applications? Whether they are experienced entrepreneurs? Can the team be called meaningful Cryptoprotected?
And then there is one very important question you need to ask yourself: does the blockchain or is it the app problem, which the company promises to solve?
A ICO collect money for the idea, which can be solved or are already solved by the good old Internet.
To answer these questions, use as many resources as possible. The ICO website is a good starting point, but for obvious reasons is the worst source for unbiased evaluation of the project. We cannot blindly ignore the skeptics of the project; instead, listen to them and try to take their criticism to better assess the quality of a startup and its ICO.
We have stressed the risks associated with participation in the ICO, as this is very important. Nevertheless, there are really wonderful projects that are running through ICO. When you get in the habit of conducting thorough research and make sure that you not be led astray by promises of mountains of gold, you will be able to find that killer app.
Resources that will help you evaluate ICO
With the popularity of ICO tools for thorough study of such projects are proliferating. Most of these instruments, semi-professional, so no need to rely on them 100%.
Many people call themselves experts on ICO after one good investment. Always use multiple tools and resources for evaluation. Also note that it is not always possible to know whether the objective of any website or review was paid for.
Here is a list of useful resources for the analysis of ICO:
I hope this article has convinced you that investing in the ICO carry a high risk. Be very careful, beware of scams and projects that don’t need the blockchain or cryptocurrency ICO, tokens which are unlikely to be used in the near future.
Differentiate between Protocol and service cryptocurrency tokens applications. In the second case, carefully study the platform for the application. And always ask yourself the question: is the cryptocurrency that I will get to participate in the ICO, is the stated purpose?
The legal framework for the ICO are under development and in future will help to filter out fraudulent or substandard projects. A wide range of rules for primary offerings of coins, most likely to appear during the year. Watch for any changes in legislation and how it will affect the ICO, in which you have invested or wish to invest.
Investment in ICO can bring huge profit. Just remember: you always need to do your research before making this important decision.