ICO is the abbreviation of initial coin offering. ICO takes place before the launch of the project. Funds are collected in it to be further used to build the product about which more information is specified in the white paper. So read it carefully before Investing in ICO. Which comes with some benefits and risks connected.
Let’s discuss about them-
Benefits of investing in ICOs.
- Chance of investing in a new or upcoming technology which has the potential for capital growth.
- Allows even small investors to participate in the sale.
- Due to limited supply it allows tokens to gain value in the future.
- The return portion from the investing of the ICO can be 1000% and also complete losses too.
- you can use crypto-tokens to purchase the services offered by the underlying company.
- Early investors will get more tokens to invest in early-stage companies.
- It adds diversification to traditional investment..
Risks of investing in ICOs.
- Scammers take the advantage over the unregulated industry and are scamming in the name of ICO funding. Unlike IPO there is no regulatory body to monitor ICOs.
- Due to the long project timeline delivery, there is much risk that competitive products will be launched before.
- Regulators can crack on this environment or on some set of coins in the future.
- This piece of technology is much new and has some basic issues such as agreements on protocols are not yet established.
- Certain tokens can be copied or made better . The clone can become to be of more value than the original one. This will be happening when the token is not an intrinsic part of the network.
- Foolish investing can result in losses. Also investing in unsound projects results same.
- No legal right or benefit for buyer.