Cryptocoins and projects often are funded in similar ways to physical projects and businesses. The ICO has become the primary method of obtaining funding for project development as not only have they allowed for developers to access a pool of funding, but consumers can also become early backers supporting the project and receiving a proportional stake in the business. Like first offerings laid out by business like Alibaba on the Stock exchange, cryptocoins and services also offer â€˜sharesâ€™ by running ICOs, many services have become huge attracting interest from all sorts of corporate entities.
A ICO allows users to buy shares in business by using cryptocoins such as bitcoin and Ethereum.
There have been many successful offerings laid out by the business involved with cryptocoins. These include the likes of tokencard which recently had a ICO raising a total of just under $13 million. The project aims to help consumers truly go bankless as the card being developed has the potential to allow the card to tap into a debit card network for on demand transactions to be created. Furthermore, the platform also offers an essential 1% cashback in the form of Tokens being generated on transactions being made.
The BANCOR project also recently ended raising well over $150 000 000 during its ICO. The project has been dubbed fundamental in bring about a banking system to the unbanked as it has considerable benefits over traditional cryptocoins as it uses a smart token system. Having considerable potential in Nigeria, the system will allow for transactions to be seamless between users as the the tokens can be made liquid on demand. Furthermore, overcoming the volatility of many other cryptocoins, the smart tokens will also incorporate Predictable price spillage to predict conversion rates ahead of transactions accounting for volatility. Also keep low reserves, the markets can still be stable helping both consumers and business looking to create cheap but quick transactions!
While the prospect of investing into a technology which could potentially lead the evolution of payments is enticing, the risk associated should also be remembered. As with any investment, there is risk involved so never invest amounts you cannot afford to lose. Furthermore, finding legitimate ICOs to invest in has also become a slight problem recently. However, this can easily be overcome by duly researching the project you wish to invest in.
Looking out for the following can help protect your assets:
A whitepaper– this is displayed before the ICO is started, much earlier during the development of a coin or service. Highlighting the technical specifications of the project and the roadmap for future developments, reading the document will help you decide how professional/developed out a project is and whether it is worth investing in at all.
Team Members– These are the development and marketing team which the success of the project depends on. Exploring the legitimacy of the developers is also key with a number linked to rogue developments, doing your own background checks will help you decide the credibility of the developers and owners. Occasionally, fake social media profiles are also set up to fool consumers, if developers resort to using these underhand tactics, it can be safe to assume the project will collapse soon after the ICO is finished.
To conclude ICO’s provide users with an early choice to involve themselves in the development process of services. With many projects often allowing users to change roadmaps and contribute ideas, the ideological benefits compliment the financial rewards. ICOs often allow users to buy shares at lower prices with many such as the StorjCoin doubling user’s investment, as users could buy token for 50 cents apiece and can now sell them at a price of over $1 each.