With Crypto going up, is there any hope for ICOs wanting to venture into this space? How are ICOs able to raise money if they have to compete with rising value of cryptos?
We all know that the Winklevoss twins are behind the CBOE futures for Bitcoin and it would have better returns if you traded these future contracts than to invest them in ICOs. Bitcoin has become a speculative vehicle so what about Ethereum?
The problem is, not many are aware that Ethereum is also traded on Nasdaq in the form of debt securities or ETN (exchange traded notes) but is not as well known compared to its Bitcoin brethren. To know more about ETNs, click here. On Nasdaq, you can buy ETH based ETNs via XBT.
The Value of ETH is hovering around US$700 a pop from a low of US$280 earlier this year. The chart above says it all. As ETH becomes more valuable, why invest in an ICO?
In one way, you could say that Wall Street has hijacked ETH and made it a bloodsport.
This serves as a lesson to ICOs who wish to jump on the crypto bandwagon hoping to promise more returns as clearly at this stage, such a promise would be impossible to keep.
What's more the SEC is breathing down the necks of ICOs to suss them out. As long as your ICO is structured like an IPO, token exchanges around the world are not allowed to list you.
So what does 'structured like an IPO' mean?
As long as an ICO token promises a return on the investment, be it a t-shirt, coffee mug or cash, it will be deemed to be a security and thus will fall under the guise of an illegal ICO. The situation has gotten so bad that TenX's PAY token had to be restructured. You can real more here. I brought up TenX PAY token because it was delisted from CoinGate exchange in Hong Kong and was wondering why they made such a move. From the onset, PAY token was seen as a type of security but it was only of late that they have come out of the closet to say that they are not.
TenX is one of many ICOs that got funding through the ICO method so the question you are begging to ask is....what's it in it for me?
Absolutely nothing I'm afraid.
When you put your hard earned crypto to work, you gotta expect some kind of return. If not why not convert it to cash and get smashed on a few bottles of Dom Perignon Champagne while you wait for Trump to start WW3 with North Korea? Why put your hard earned ETH into an ICO that doesn't give you any value or return. So whose is 'I am with stupid' now?
Of course you can put your crypts in to an ICO in good faith but why would you? These ICO folks have a salary drawn from a project you funded but you are not a part of it since you have no voting rights and don't get a dime in return. Investors want to be reassured that they are funding something for a return and that should be written in stone from the onset of the ICO.
It would be a different story if the ICO is about buying up land banks to keep as part of nature and with no promise of returns, at least the wild animals who live there would enjoy it. But ICOs are just another means to get people to part with their money to earn more money.
For the record, I am not against ICOs. But with regulation so tight, you need to give value to your investors without it seen by governments as a form of an IPO. There are many creative ways to go about this and you don't need a proof of concept to know this. ICOs in 2018 will have a hard time proving they have a viable business model that has some kind of returns that isn't already a long stretch. I have seen ICOs that try to convince you with Whitepapers (boring stuff that only academics would gloss over) on their business strategy and model.
As an investor, you should be selfish and ask outright questions on the business plan. If they can't give you a straight answer on their Telegram chat, you should not get involved.
However if you want to play the me-first investor role, this is what to look out for:
- Buy back prices for the tokens on a later date.
- Trade these tokens for current services offered by professionals (car towing isn't one of them)
- Kickstarter style returns of a finished product
- Barter trading the tokens for real world goods.
- (Haven't figured this one out yet but five looks like a good number)
So my take on the matter is TenX is overvalued and if you held any tokens, you should dump them now, convert your cash back to ETH or LiteCoin, sit back and wait for the value to rise before you sell them.