Starting reading about Cryptocurrencies can feel a bit like starting a new job. Everyone seems to be talking a foreign language. There are so many new terms that everyone seems to be using all the time.
ICO
ICO is short for Initial Coin Offering. It is a play on words analogous to IPO or Initial Public Offering in the financial markets.
What is it?
An ICO, like an IPO, is a way to raise money. People with a project or business proposal get investment from investors in return for Coins, effectively shares in the project.
Pros and Cons
What are the pros and cons of investing in and ICO and raising funds through an ICO?
Many see ICOs as a great way to raise funds they can then use to fund their project. TokenMarket has an extensive list of up and coming projects.
So if its that easy why is it that not every company is raising funds in this way?
Investment
From an investment point of view there can be a few issues
- There is a lack of regulation, which means buyer beware.
- The project goals may be very vague and may change over time. There is often no clear strategy, just people cashing in on the Crypto Bubble.
- Getting your money out. Until the coins are listed on an exchange, and a liquid one it can be hard to get your money out.
Raising Funds
If you are a company trying to raise funds the main issues resulting from ICOs are pressures on the company from outside investors and speculation as soon as the coin is listed on an exchange. In some ways these are pressures that a company will experience from any investor but as always with Crypto the effects are magnified.
This can cause solid companies to become worth nothing overnight which is a real risk when raising funds through the ICO market.
ICOs are suited to Tech companies in the Blockchain space but there is no specific reason why companies from other industries could not raise funds in this way.
One Size does not fit all
Interestingly not all companies in the digital currency space raise funds in this way. The best example is Openbazaar who outlined in their blog some of the reasons
Why OpenBazaar Token Doesn’t Exist
- OpenBazaar Doesn’t Need a Token to Work
- Tokens are a New and Unproven Model
- A Token could Increase the Barriers to Entry
- Tokens Sales are a Regulatory Unknown
Further Reading
IF you want to learn some more about the pros and cons of ICOs you should check out a great post today by @calaber24p/
Thank you for reading this. I write on Steemit about Blockchain, Cryptocurrency, Travel and lots of random topics.
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Interesting, informative and timely post, @eroche. Upvoted and resteemed.
Thank you.
Great post! Definitely sharing this!
Thanks @bitgeek
Thanks for the info I am at the very bottom of the learning curve
I bet your far ahead of most
Lol you would be wrong tonight I will try to make time for some research between visiting the beach for sunset weather permitting catching up on various sites and editing photos
I read a lot About cryptocurrencies and I think I filter out the things that are important About them and the info I Need to do my investmens best, but ICO is still a biiiiig questionmark for me. Thanks for sharing this
I heard ''ICO'' is a considered a bad word right now :D
Ha ha. There are a lot of scams and "shitcoin" patterns emerging from ICOs
Yeah, there was a line in a video recently were it was said that it is unfashionable and negative to call your ICO that, they even had a different name for it, can't remember that on the top of my head :D
Nice post. Before investing in any ICO read my post https://steemit.com/cryptocurrency/@emble/be-very-careful-when-you-invest-in-crypto-ico-s-don-t-lose-your-hard-worked-money-to-scammers
Ill check it out. Thanks for the link
HashFlare together with Polybius created a ICO bank that got over $24M in investements since end of may 2017 ($8M the two first days!). More info about it you can find here: https://polybius.io/
Interesting topic on ICO thanks for sharing...
many ICO's have been ponzi and scams :(
True even if this was not the intention from the start many coins just fade away and the investment evaporates.
LUNA coin, 420G, Asafe and many more all just ponzi and scams people lost a lot of money :/
I didn't come across any of them in the past, thankfully by the sounds of it.
Nice article, better to look only at top 20-30 cryptocurrencies
Looking at the top 20-30 is a good start but even in there there there are a few that I am sure will end up being nothing more than pipe dreams. The valuations of some of the projects are absolutely off the scale too. Its hard to imagine for many of them how they can justify their valuations.
Yes, choose wisely
nice article buddy
can you please check my post if you have free time and give me some upvote :)
https://steemit.com/portraitcontest/@omrusman/gh9xi-steemit-portrait-photography-contest-week-1-entry-20
I've only invested in one and until the product comes out I will ignore it and assume its a loss. Of course I only spent a small amount that I considered gambling money.
Glad you didnt lose much. There was one I wanted to invest in and I couldnt in the end. It turned out not to get off the ground. I was lucky.
It shouldn't be a loss. I'm very bullish on Wagerr. I think it will be huge for the sports gambling world. Especially after the Raiders go to Vegas.
This post received a 2.2% upvote from @randowhale thanks to @eroche! For more information, click here!
Great #ICO is here Read more about @aventus you will love it :
https://steemit.com/aventus/@sayyedraza/what-is-avt-aventus
watch this: https://steemit.com/cryptocurrency/@alttrader/another-video-on-dcorp
Thanks for the good article. Crypto coins do the opposite of Gresham's law.
Good coins drive out bad ones.
The problem of course is that we have no idea what coins will be replaced with better ones later down the road. That is the biggest risk to investing in ICO's.
You may be investing in something that will soon be replaced. Then the old coin's value will almost certainly drop.
I have invested in one ICO, and I doubt I'll do it again. That ICO was for ZenCash. The initial investment was not a lot of money though. Will it pay off big time or not? If it does, great. If it does not, I've only lost a little.
Don't mortgage your house for cryptos in other words. This really is gambling in a sense, and people should be careful.
Good luck!
It sure feels like gambling these days. I have tried to diversify what I have invested but at the end of the day they all seem to go in the same direction. Either up or down.
LTC has been pretty stable. It is one of the ones I own.
I read this article in my frustrations that Nimiq's token offering is only 17 hours out but unavailable to be taken advantage of by residents of the USA. It is like starting a new job in Asia, as an English speaker, to follow these developments.
Are US IPs blocked?
Doubtful. It is pretty hard to block a country by IP alone.
It would be hard to block US residents from investing in that case, if its via bitcoin.
I saw it on icocountdown.com which I found recently. I definitely found a few new languages there.
Good post @roche. I'm new in all the cryptocurrencies world. Sometimes a simple reading article is the best time investment to do, instead of endless hours of research (and specially when you are new on something). Keep it up! Thanks
Hello !! thanks for posting this article , i'm new by and i'm following and up voted you :)
ICOs are great for tech companies since the blockchain technology is complex and would not be understood by all. Also when the currency becomes listed on the exchange, it becomes very volatile.
nice post... thanks for sharing.
Very simply put, well written and exactly my thoughts re the start of the crypto journey. Forget starting a new job it's like going from secondary school to NASA training camp @eroche