Initial Coin Offering better known as ICO in and around the cryptocurrency sphere is a process in which companies sell digital tokens in order to raise capital for its various operations. Chiefly, the company offers investors an amount of tokens in exchange for other cryptocurrencies such as Bitcoin or Ethereum or some other legal tender.
Initial coin offerings raised over $6.5 billion in 2017 with one company raising $35 million in just 30 seconds. It took Facebook 7 years to raise $1 billion from the investors, Uber 5 years to raise the same amount, EOS, a project of Block.one, surpassed that amount in mere 9 months with its ICO. With such vast amount of money involved it has become indispensable to turn away from ICOs.
Participants can buy tokens which gives them special access to the product’s services at a later date. Investors can buy tokens during the offering whereby the token value can appreciate if the business is successful. During the initial offering the price of token is usually low compared to the price after the product becomes successful.
In this day and age where the number of ICOs are increasing day by day, it is imperative to find the right ICO to invest in and stay away from the unreliable ones. First of all make sure that the offering company is a legitimate. A quick internet search about the company and its team members can give a clear idea about it. Make sure that the company has a proper dedicated office space and has not been setup recently. Pay utmost attention to the Whitepaper and make sure it doesn’t promise instantaneous off the charts returns on the purchase. Be aware of ponzi or pyramid schemes.
The final and the most strongest check is to make sure that the company has a working product or the know-how and technical expertise to deliver the promised product.
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