Pros and Cons of ICO (Topic)

Cryptocurrency is interesting to many people. Whether students or retirees, office workers or stock traders, digital money holds promise for every group of people. Someone is attracted by the opportunity to quickly increase their savings, someone invests in the hope of ensuring a quiet old age, others see the future in cryptocurrency and a complete restructuring of the global financial system.

The concept of digital assets is much broader than simply accumulating cryptocurrency or trading it on an exchange. Blockchain technology greatly simplifies making money transfers, making them safe, fast enough and in many cases anonymous. This technology allows not only to confirm the authenticity of money transfers, but also to create on its basis registers, for example, of land plots or legal transactions. Another hypostasis of the blockchain is ICO, which forever changed the principles of investing in new projects.

ICO in simple words

The abbreviation Initial Coin Offering (pronounced ay-si-oh) literally means the initial placement of coins. Why is this needed? Any startup requires an initial investment of capital for development, writing software code, building infrastructure and other needs. In this age of technology, it is not at all necessary to bow to investors or beat the thresholds of banks to find the necessary funds. Everything is easier to solve if the idea is really worthwhile.

Startup developers just need to create their own digital coins (tokens) and sell them to all people interested in a new startup. The benefits are received by both parties: investors make a profitable investment in a future project, which can subsequently bring significant profits. The authors of the idea receive funds for its further development. In words, everything looks quite simple, but in fact, ICO has both big advantages and huge disadvantages for investors.

Benefits of Initial Coin Offering

In addition to the fashion for ICO, this type of investment brings a number of benefits to investors:

Possibility to get super profits The price of cryptocurrency is growing, and a successful purchase of tokens can bring hundreds or even thousands of percent of income.

Fast return on investment. Cases of receiving hundreds of percent of income in the first week after the appearance of coins in the free sale are not so rare, but most often they receive significant income much later.

Anonymity of investments. The purchase of tokens, like cryptocurrencies, has until recently been almost completely anonymous. The situation is gradually changing, but many cryptocurrency exchanges still allow you to buy or sell coins without mandatory user verification.

Availability. Anyone can invest in a profitable (according to the investor) project. At the initial stages of the sale of tokens, their price is usually reduced, which makes it possible to purchase a certain amount of them for a relatively small amount of cryptocurrency or fiat money.

Moral satisfaction. They will feel their importance by understanding that you are investing in a product that is useful to people is also worth a lot. Most investments in startups are more about supporting the development team than hoping to make a quick profit, so participating in an ICO is a great opportunity to make the world a better place.

ICO Risks

In addition to the visible benefits, the initial placement of coins also carries considerable risks:

Opportunity to run into scammers. Beautiful website design, photos from non-existent conferences and product presentations, promises of super profits in the first month: everything is done in order to attract not very competent investors. The situation is not new and has long been known. After the initial placement, the authors of the project receive money and simply close their project.

No Warranties. All investments are made based on trust in the developers. The investor has no legal protection. Perhaps tightening the rules for the withdrawal of companies to ICO will change the situation for the better - steps in this direction are being made in many countries of the world, including USA.

Low probability of success. Only five startups out of a hundred go through all stages of their development and ultimately bring stable profits to token holders.

The Topic of Article: Pros and Cons of ICO.
Author: Jake Pinkman