Cryptocurrency is often in the news, and one of the things that has just been causing a stir are first coin offerings, which are known as ICOs. In theory, it’s likely to earn very huge returns if you invest in an ICO, but what are theyand are they safe investments?
An ICO is simply a means for brand new cryptocurrencies to boost the initial funding that is required to establish a brand new coin or token. A first release of this money is offered to early adopters in return for an investment made from conventional currency, or more usually, in other initialcoinoffering.
An ICO works in a very similar manner to a crowdfunding effort. The cryptocurrency company will usually publish full details of the new money is going to operate, together with the particulars of what other currencies will be accepted as an investment at the initial launch of the coin and the time limit is going to be on the offering.
The theory behind an ICO is not any different from that of their initial public offering of talk that firm will make. In a traditional initial public offering (IPO), a company provides shares for sale to the public to raise capital.
In both situations, a minimum total capital raised figure is going to be put and, if that funding isn’t raised within the specified timescale, the deal will be withdrawn and any funds that have been raised will be returned to the shareholders.
Presently, ICOs are perfectly legal in most countries, though China and South Korea recently banned them, because they were not being regulated under the very strict financial regulations of these nations. ICOs fall outside the regulatory framework in most other nations too, but most men and women agree that it is merely a matter of time until ICOs are brought under the umbrella of statutory financial regulation.
In 2017, more than $1.8 billion has been raised through initial coin releases and, even though there were several failures, there were still numerous cases where both the cryptocurrency and the investors attained their objectives.
For the investors, the allure of this kind of investment is that, when the crypto currency begins full operation, the value of those coins or tokens will increase sharply, resulting in high return on their original investment.
Like all investments, even though, you need to understand what you are doing if you’re going to risk your money with a brand new cryptocurrency, especially as ICOs are currently unregulated. That means doing your research and finding out all the background details which you can about a deal.
That said, there are many investors who’ve enjoyed returns of many times the original amount they spent in an ICO. However, as any successful investor in any marketplace will tell you, the key to successful investments is not to do put your eggs all in one basket and to do your background checks .