What Is An ICO?
Entrepreneurs that want to start a new cryptocurrency can do so via an ICO, which is a form of initial public offering (IPO). An ICO can be launched by a company wanting to raise funds to develop a new currency, software, or service.
ICOs are another type of cryptocurrency that businesses use to raise funds. ICO trading platforms provide investors with unique cryptocurrency “tokens” in return for their monetary investment in the firm. It might be referred to as corporate fundraising. Investors who engage in an initial coin offering will get a new cryptocurrency token issued by the firm.
Why do People Invest in (ICOs)?
The key reasons for investing in ICOs are profit and the ability to join in ambitious initiatives. ICO cryptos are an excellent alternative for investors since they are supplied at cheap rates in order to generate demand before they can be traded on the markets. As a result, when most tokens first reach the market, they are in great demand, and early investors can benefit from selling them.
During an ICO, also known as a “crowd sale,” investors purchase tokens that may provide them with a variety of benefits. They anticipate that the project in which they are investing will be successful and that the value of its token will rise. For example, the Ethereum blockchain project raised USD 18 million in bitcoins in 2014 by selling its token ether for USD 0.40. The price of ether in December 2017 was around USD 750. In other words, if you purchased $100 worth of ether tokens at the 2014 ICO, your investment would have been worth more than $187,000 in December 2017.
Tokens often bestow a variety of rights on their holders, and individual tokens may impart a variety of rights. Such rights may include the following:
Token Holders Rights
Payment rights: You can use where a token is the only means of “payment” for a platform or service.
Access rights: You can use it where the token is required in order to use the platform.
Profit or fee rights: You can use it where “holders of a token get a portion of revenues or profits”.
Contribution rights: You can use it where token holders are allowed to play a role in maintaining the network that doesn’t involve creating blocks for a blockchain.
Block creation rights: You can use it where tokens determine who secures the project’s blockchain.
Governance rights: You can use it where token holders can influence project features, direction, protocol, and more.
Things to know before you invest in an ICO
Don’t know which ICO to invest in? Or perhaps you simply want to know more. It might be confusing, but we’ve got you covered with six recommended practices for selecting an ICO to invest in.
While they can be extremely profitable for both corporations and investors, they also carry a significant level of risk owing to their unregulated nature. Despite the knowledge that the vast majority of ICOs are fraudulent, many regular people continue to take part.
The cryptocurrency market is mostly unregulated or you can say uncontrolled. This means that if an ICO is a scam or the company fails, investors may be on their own. Neither of these situations is out of the ordinary, and with irreversible transactions and few rules, you can only rely on yourself to make wise financial decisions.
Here are some suggestions before you choose an ICO.
- Do your own Research on ICOs (Important)
- Read and Study an ICO’s White Paper
- Check The ICO’s Site
- Know What ICO Coins are For
- Evaluate the ICO Team Composition
- Check the Long-Term Use of the Funds
How To Identify Fraudulent ICOs?
If you come across an ICO project that you want to invest in but want to reduce your risk, keep an eye out for the following probable red flags:
- The project’s creators are unknown, utilize fictitious names, or have fake social media accounts. There is little to no credible PR or media activity or positive mentions of the project.
- The team lacks professionals with relevant experience.
- The token or blockchain does not appear to be required to achieve the project’s objectives.
- The ICO is not backed by any legal body.
- The whitepaper and business strategy appear unrealistic and/or lack a deep study of the industry and competition.
- There is no working prototype.
- The project doesn’t have a clear roadmap.
- There is no escrow wallet that allows investors’ money to be sent to developers (ideally in sections) only when specified requirements are satisfied.
- There is no reliable company or project behind the ICO project.
Finally, you have to do your own research and figure out for yourself whether the ICO is credible or not. Try to avoid projects with numerous red flags or the ones which are located in uncertain regulatory environments, and your ICO investment should turn out just fine.
What is the best ICO to invest in in 2022?
Are you planning to invest in cryptocurrencies? Just make sure to do your homework because ICOs are barely regulated.
BTL is a safe and secure ICO to invest in. The company called Bitsleader regulates BTL. You can read the whitepaper, can check reviews online, and can also ask people on social media.