5 Hot Amateur’s Questions about ICO

Experienced traders had invested in cryptocurrency long before it became popular worldwide and before cryptocurrency was highly demanded. The most cautious traders buy tokens during the first ICO stages. If you are not an experienced trader yet and the abovementioned just provokes questions like “How to do it?”, The Coin Shark will try helping you to understand what this three letter abbreviation means.

1.How to decipher the abbreviation?

ICO (initial coin offering) — is a release of tokens conducted by a project. These tokens can be used in future to pay for the services of the platform. Besides after the floatation you can sell tokens and gain on exchange.

2. How does it work?

A project that conducts such a campaign must use blockchain technology. Basically ICOs are used for financial or technical startups that exist only on the paper at the moment of an ICO-campaign. Blockchain’s main purpose is to make people’s life easier and it can be used in any sphere. For example, a farmer can create an internet platform where their products can be sold for tokens.

3. How can I gain profit?

You can study the project’s concept and join the ICO on the web-site. Beforehand you should have a digital wallet with cryptocurrency (you can buy it either for fiat money or via an online-exchange) and understand the basic principle of transactions completion. The easiest way to find information about it is to use https://blockchain.info, https://www.myetherwallet.com/ or any other resources. Interface is easy-to-understand even for an amateur.

4. Are there any guarantees?

There are no guarantees. No country has a law that regulates conduction of an ICO but a number of countries gradually ban such activities. In other words, ICO for a buyer is a deal based solely on trust. If we view ICO as a type of crowdfunding then it is necessary to understand that there is a possibility that a start-up doesn’t reach the moment of the product release or of the idea implementation because the required sum (hard cap) was not collected. And even in case of the project implementation, the result can vary from what you imagined or from what was promised to you. Some projects knowingly start ICO that is impossible to implement. Their only goal is to gain profit, and they are called SCAM. Your aim is to avoid such projects if it is possible. There are some special characteristics for their recognition. You can find them in The Coin Shark article.

5. How to avoid bankruptcy?

There is no straight answer to this question. Everything depends on your actions and project choice. Experienced traders can provide you with just one piece of advice — invest a sum that you are ready to lose.

Examples of successful and failed projects

Ethereum – is probably one of the most striking examples of a successful start-up. The idea was to make an open programming platform with an opportunity to create decentralized apps. In 2014 Ethereum managed to attract $18 million which is not a record for successful ICOs. As a comparison you can study ICOs of such projects as EOS or Tezos. However, today Ether is the only cryptocurrency that can compete with Bitcoin in capitalization.

Mobilego — is the world-first decentralized mobile platform for games. The project collected $50 million in Waves and Ethereum cryptocurrencies. ICO was started in April 2017. For now the platform has been successfully launched.

The practice shows that collection of big investments doesn’t guarantee that a project will be successful. This is exactly the case with such a large-scale project as Status. Singapore start-up was based on a wonderful idea — Ethereum based free mobile client with an open source code. Immediately after the ICO had been launched the project could have collected $100 million investments. However, because many exchanges froze capital withdrawal, the rate of exchange crashed.

According to Smith & Crown reports, this year start-ups have already collected more than $1 billion via ICO which is ten times more than in 2016. There are no doubts that cryptocurrency is a popular and beneficial investment tool. However, it is not possible to calculate the loss that traders had during different ICOs. That is why the best choice is to invest without any tangible consequences for your non-electronic assets.

 

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