Cryptocurrency and ICOs hier have been a catch phrase in the world of finance the past few years. So, everyone has been in frenzy with trading and investing in cryptocurrencies like Bitcoin, Ethereum, and Ripple; to name some. ICOs now also have high investment potential although this also poses risks just like any other investment tool.
What is an ICO?
If you have a brlliant business idea of a payment system but lack the capital then you can either go to capitalist investors or enter Initial Coin Offering (ICO). With an ICO, you retain ownership of your business idea. All you have to do is create a white paper or a document which details the blueprint of how the system works and then create an intuitive website to explain your business idea and the great potential it has in store for every user. You can then ask them for money or Bitcoin and any other digital coin then in exchange, you give them some tokens or coins.
ICOs are actually a fundraising method used by startups with products and services in line with blockchain companies and cryptocurrencies. There are ICOs that have generated massive profit for their investors while there are some which performed poorly or turned out to be scams.
Once you invest in an ICO, you don’t really get an ownership or a stake of the company. You’re investing and hoping that the currency worth would increase and gain you more profit.
Who Can Launch An ICO?
Your currency can get funded as long as you have your system or tech set up. There are no strict regulations on ICOs in the United States which makes it prone to scams. Anyone can just create an ICO and ask for funding making you believe in their golden idea and the fleeing with your money. So, before you put your investments into an ICO, you must have it verified first so that your investments won’t vanish on thin air.
What Makes Up a Good ICO?
A good ICO should have transparency and accountability. They should show a credible history of their team in the cryptocurrency arena. If you have made up your mind on investing in an ICO, then you must carefully investigate and do your homework. You have to dig up more details about the team member and their white paper and website. You can also check on the names of credible and reputable ICOs on review sites for cryptocurrencies and ICOs.
Regulation for ICOs
ICOs are classified by the SEC as securities as of December 2017. Jay Clayton, SEC Chairman, states that tokens is considered as an investment contracts and categorically under securities following the federal securities laws. SEC also is determined to crack down ICOs that just exist to scam money from investors and not really to build or grow their brand.
Going for ICOs is a great way to raise funding for your business. There is a high risk and high reward system that works around ICOs and cryptocurrencies. So, you really have to do your homework and check on your risk appetite because investments in Initial Coin Offerings or ICOs are highly speculative. If you really want to try investing in ICOs then you must learn the ropes of how the crypto world operates and also compare one ICO from another to check for legitimacy and profit potential.