Cryptocurrency is frequently in the news, and among the things which has recently been causing a stir are first coin offerings, which are called ICOs. In theory, it’s possible to earn huge returns should you invest an ICO, but what exactly are they, and are they safe investments?
An ICO is only a means for new cryptocurrencies to increase the initial capital that’s required to establish a new coin or token. An initial release of this money is offered to early adopters in exchange for an investment made in conventional money, or more generally, in different cryptocurrencies more info coinmarkets.net.
An ICO functions in a very similar manner to a crowdfunding campaign. The cryptocurrency business will normally publish full details of how the new money will work, together with the specifics of what other monies will be approved as an investment in the first release of this coin and what the time limitation will be on the offering.
The theory behind an ICO is no different from that of the initial public offering of talk that firm will make. In a conventional initial public offering (IPO), a business will offer shares available to the public to raise capital.
In both cases, a minimum total capital raised figure will be set and, if that funding isn’t raised within the specified timescale, the offer will be withdrawn and any funds which were raised will be returned to the investors.
Presently, ICOs are perfectly legal in many states, although China and South Korea recently banned thembecause they weren’t being regulated under the very strict financial regulations of these countries. ICOs fall outside the regulatory framework in most other countries also, but most folks agree 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 first coin releases and, though there were several failures, there were many instances where both the cryptocurrency and the investors attained their objectives.
For the investors, the appeal of the sort of investment is that, once the crypto money begins full operation, the value of the coins or tokens will increase sharply, resulting in high return on their initial investment.
Like all investments, however, you will need to know what you’re doing if you going to risk your money with a new cryptocurrency, especially as ICOs are now unregulated. That means doing your own research and finding out all of the background information which you can about an offer.
While yields on some Crypto money ICOs are exceptionally high, it’s important to not forget that there’s not any such thing as a guaranteed get rich quick scheme and there is risk involved in any sort of investment, so you should only ever invest what you can afford to lose.