The cryptocurrency usually appears in the news, and one of the things that has recently been causing a stir is the initial offers of coins, which are known as ICO. In theory, it is possible to obtain large profits if you invest an ICO, but what are and are safe investments?
An ICO is simply a way for the new cryptocurrencies to raise the initial capital needed to launch a new currency or token. An initial version of the currency is offered to the first adopters in exchange for an investment made in conventional currency, or more usually, in other cryptocurrencies.
An ICO works in a very similar way to a crowdfunding campaign. The cryptocurrency business will usually publish all the details of how the new currency will work, along with details of what other currencies will be accepted as an investment in the initial launch of the currency and what the time limit will be on the offer.
The idea behind an ICO is not different from that of the first public offering of shares that the company will carry out. In a traditional initial public offering (IPO), a company will offer shares for sale to the public to raise capital.
In both cases, a minimum amount of high total capital will be established and, if that capital is not increased within the determined term, the offer will be withdrawn and the funds that have been collected will be returned to the investors.
Currently, ICOs are perfectly legal in most countries, although China and South Korea recently banned them because they were not regulated by the strict financial regulations of those countries. ICOs fall outside the regulatory framework in most other countries as well, but most people agree that it is only a matter of time before ICOs are included under the umbrella of statutory financial regulation.
In 2017, more than $ 1.8 billion were raised through initial coin launches and, although there were some failures, there were many cases where both the cryptocurrency and the investors achieved their goals.
For investors, the attraction of this type of investment is that, when the cryptographic currency begins to operate completely, the value of the coins or tokens will increase drastically, which will generate a high return on their initial investment.
However, like all investments, you need to know what you are doing if you are going to risk your money with a new cryptocurrency, particularly because the ICOs are not currently regulated. That means doing your own research and finding all the background information you can about an offer.
While the returns of some top ICOs of Crypto currency have been exceptionally high, it is important to remember that there is no guaranteed scheme to get rich quickly and that there is a risk in any type of investment, so you should only invest what you can allow yourself to lose.
That said, there are many investors who have enjoyed returns of many times the original sum they invested in an ICO. However, as any successful investor in any market will tell you, the key to a successful investment is not to put all your eggs in one basket and do your background checks diligently.