The hunt for cryptocurrency is in full swing, and with Bitcoin surging in value and popularity at the end of 2017, an increasing number of investors are searching for the next big thing in hopes of achieving the success of the early Bitcoin investors. And so the Initial Coin Offering (ICO) was created. From 2013 up until present day, ICOs have been used, and will continue to be used, for the funding and development of new cryptocurrencies.
Since mid-2017, the Initial Coin Offering was worth more than a billion dollars, with the total market value estimated to be more than 100 billion dollars, which begs the question: are ICOs worth investing in? The logical conclusion would be to get into the cryptocurrency game as quickly as possible, and seize the opportunity while it’s still lucrative.
However, this highly volatile market necessitates caution and careful planning before making any long-term investments. Here to help you make the best cost-effective decision are the advantages and disadvantages of cryptocurrency ICOs.
Advantages of ICOs
Cryptocurrency is all about decentralization and public management, and given the fact that ICOs work on the same decentralized public ledger (Blockchain), they can be funded and supported from all over the world. This means that ICOs can potentially raise money quickly, if the development team plays their cards right. And that means creating a strong white paper and convincing the community of the feasibility of their project.
One of the biggest advantages of investing in new ICOs is the opportunity to be an investor of a new technological breakthrough. Given the fact that the blockchain technology can be used to revolutionize the industries and spark a new way of life for a society of tomorrow, the investor has the chance to get on board with the right start-up, and lead the project to fruition.
The key is in meticulous research and preparation, and trustworthy sources of blockchain news that provide deep industry insights and timely information can help investors stay on top of the latest developments in the cryptocurrency arena, ultimately investing in the next big thing. Given the fact that the cryptocurrency industry is a volatile one, the investor can potentially make a small contribution but reap tremendous rewards should the project succeed.
This type of environment, including the potential it has to revolutionize entire industries, creates a favorable opportunity for investors, leading to the conclusion that ICOs are worth investing in. However, ICOs can have their drawbacks, risks, and inherent problems the investor needs to be aware of in order to reach the best cost-effective decision.
Disadvantages of ICOs
ICOs are, however promising they might seem, risky in a number of ways. Firstly, the deregulated state of blockchain technology in general is a double-edged sword, and it can work in favor of the public, and against it. Your ability to discover scamsbefore you make an investment will decide. ICOs do not answer to any regulatory body, meaning that anyone can potentially influence them without repercussions. This creates an unstable environment that deters affluent investors from reaching a decision and investing.
Secondly, ICOs, unlike other investment markets, undergo little to no professional scrutiny or vetting, leaving the due diligence process vague at best. The only “concrete” evidence of the project’s feasibility the investors have to go by is the development team’s white paper, or a version of a business plan.
Most white papers have vague inception points and concepts that offer no real assessment of the long-term potential of the project, meaning that your No. 1 priority as an investor should be to find a promising, professional team that put work and effort into their white paper. Again, without a regulatory body in place to stipulate the concrete requirements of every white paper, finding a promising ICO is a tough challenge for an eager investor.
Given the fact that the majority of ICOs are a longshot at best, the rewards for investing in a winning project exponentially rise to staggering heights. However, because of this inherent lack of oversight, there is always a possibility that the ICO issuer will flee with the investment, leaving the investor with little to no chance of retrieving the funds.
This is why it’s important for investors to diversify their portfolio, and make small contributions to numerous ICOs at the same time instead of betting everything on a single racehorse, in order to minimize risk and increase their chances of hitting the jackpot. Remember, though, that each of these investments requires meticulous research and merciless scrutiny.
Congratulations @emmah! You have completed the following achievement on Steemit and have been rewarded with new badge(s) :
Click on the badge to view your Board of Honor.
If you no longer want to receive notifications, reply to this comment with the word
STOPDownvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit