Like Initial Public Offerings, cryptocurrencies have Initial Coin Offerings (ICOs). During the ICO, the project details are revealed through whitepapers and users get the first exposure to the cryptocurrency. Firms raise capital through ICOs and in return, provide tokens to investors.
Initial Coin Offerings are very risky. The projects are usually in their inception stage without any major developments having been made. The experimental stage of the project leaves matters to speculation. A huge number of Initial Coin Offerings fail or fail to provide the returns that are expected. A lot of things can go wrong with investing in ICOs. However, in the world of investment high risk is equal to high return which is why ICOs are pretty popular.
Risks in investing in ICOs
Unlike an IPO, you are not investing in a registered company during an ICO. An ICO is more like investing in an idea that you believe will flourish. The highly speculative nature of ICO investment itself is a huge risk. But scammers also use social media platforms to manipulate the market. By being active on social media, anyone can drive up the value of an ICO only to sell tokens at inflated prices.
Moreover, ICOs are not traded through official channels. There is no registered website where you can invest in an ICO so there are less safeguards, if any. You can be robbed of your investment as ICO investment is a hotbed for scammers, given the nonexistence of any checks and balances. Lastly, there is not much one can do to ensure the ICO is legitimate. A scammer can make an ICO appear so legit that many people fall for ICO scams every year.
With that being said, the currently top ten ranked coins also had their ICOs held and people believed in their technology, took the risks and would be enjoying astronomical returns today. But of course, you can take steps to ensure from your end that the ICO has the potential and is not a scam. Research is the key to unlocking the returns of ICOs.
Top three ICOs to look out for
Starting on March 25th, the project has set its goal at $81,250. The project presents an innovative solution to the high risk involved while trading cryptocurrencies. Ethbox will be a digital escrow service through which users can transact safe and securely.
Starting in a few hours, the DeHive is like the Dow Jones of cryptocurrencies. The decentralized protocol will enlist the top performing DeFi tokens into one index. The index will comprise of impactful DeFi index which will allow investors to invest in the whole cryptocurrency market.
This blockchain-based bank has set out to transform the future of banking. Point Pay is a fintech company based in Estonia and has been under operation since 2018. The aim is to create a block chain ecosystem comprising of many financial instruments. Users can open cryptocurrency checking and savings accounts, take cryptocurrency loans and so much more. The ICO is set to end on July 22nd, 2021. The token is priced at $0.10.