Initial coin offering (ICO) refers to a technique that is used by the upcoming cryptocurrency companies to generate capital. In case you are interested in supporting the project, you will get the chance to buy the cryptocurrencies that are newly issued. In ICO the new cryptocurrencies are sold in exchange for currencies such as Ether, Fiat, and Bitcoin that already established in the market. The investors buy the new cryptocurrencies with the hope that they will make some profit once the value increases. The cryptocurrency market behaves like the stock market where investors buy shares with the hope that they will increase in value and they will be able to make some profit.
In the early stages, companies such as Karmacoin, Ethereum, and Mastercoin conducted ICO. Ethereum in the year 2014 conducted a big ICO that helped the company to raise $18million. Today, the sale of ICO has become very popular with nearly 50 token sales being made every month. From the year 2017, the growth of ICO is massive with about $2 billion token sale conducted successfully. This shows that the sale of ICO is not going to remain a temporary technique used by upcoming cryptocurrency businesses to raise capital, but it is with us to stay. The prediction is that there may be a rise in the token sale to $4 billion.
If you are to benefit from ICO as an investor, it is important to select the right one. First, it is paramount for the investor to know who is behind the sale of ICO. You will come across companies that are newly incorporated, but there are some which are the founders of ICO. Consider searching for mentions and news about their previous efforts and projects.
You should evaluate the target market of the company and the technology, and product the company offers. Since companies do not work in isolation, they are continuously under the pressure of the target market. To know the challenges and opportunities that a company faces, evaluate the environment it operates in.
Evaluate the amount of risk you can bear. Just like any other investment, investors in ICO should be aware of how much risk they can handle. It is paramount to beware of most startup companies. You may find some that are not even able to cater for their operating costs. If you invest in a venture that does not fly, you stand a chance of losing money. It is important to note that the ICO figures are not the only signs of the viability of a venture. It is important to conduct a further evaluation.