The standard IPO have inspired the ICO (Initial Coin Offerings) even though they have a difference in the practice. The easiest way to understand an ICO is that it includes crowdfunding on the top of a blockchain. The investor will purchase the coins which are the units of digital currency. The start-up wants to build an integral part of the application with the digital money. The value of the tokens can be generated with a demand to make the application famous.
The ICO’s are built mostly on the top of the Ethereum which is similar to a version of Bitcoin to hold the applications called for smart contracts. These days, much money is coming from China. Most of the investors from all over the world are trying to get on the ground floor as they want to become a stakeholder. Those stakeholders may turn out to be the next early investors for companies of the likes of Facebook or Google.
The critics say that the SEC regulation is evaded with the schemes of ICO’s. The current fervor is a bubble even if the ICO’s have the potential. The real question is that whether it is an excellent way to get rich quickly by investing. Most of the ICO’s will reply to this question as “no”, but on some occasions, the answer is “yes”. It is risky to buy the cryptocurrency with high returns on the investments, and the ICO’s are still at risk. If you consider the current investments, it is better to invest the money which you can afford to lose as it is a wise idea.
It is essential to understand that buying a stock is not the same as buying into an ICO. A piece of the company is purchased by you when you buy the stock. Obligation like Fiduciary duty and accreditation are involved when a stock is regulated. We are not in a position where the legal infrastructure will enter into the cryptocurrency. The early investors are motivated to purchase the crypto coins for their operations to make their plans successful. Before initiating the project, they are buying the crypto coins to translate it to a higher value.
There is no functional product for a typical ICO company even if it has a website and white-paper. It is not suitable for a startup to get more money quickly as it is the consensus in the venture capital world. The founders cannot spend the funds simply, and they feel compelled. The product market fit will be reduced with the need of the abundant market resources. Thus, it is better not to rely on the mission-critical apps unless it is necessary. It is an innovative mechanism to stress on the ICO’s as they rely on Ethereum.
You have chances to make money when you invest in the ICO’s. You must try to estimate the approximate value as there are some risks involved. It is due diligence that the traditional investor should do when he is committing cash to a new project. ICO’s would be fantastic if you raise money for something according to the interest of the people. It is unfortunate to say that there is no correlation between the desires of the people and ICO’s. So Study ICO and then Choose to invest.