One of the key factors to investment success? Beginning early. Imagine being among the early investors in a tech company like Google or Facebook for instance. Imagine what your life is like if had the opportunity to purchase ICO (initial coin offering) securities for a massive cryptocurrency such as Bitcoin and Ethereum?
Your portfolio may look different, wouldn't it? There's always a chance of getting an entry into the next IPO or ICO.
In this piece on this page, we'll explore ICO investing, the best way to purchase ICO coins, and where to locate ICO listings. In short, if you're still "IDK" about ICOs, we'll give you a crash course.
What Are ICOs?
The ICOs are similar in nature to IPOs which are also known as initial public offerings that mark the first time you can sell the stock via an exchange. The major difference is that ICOs concern the public sale of cryptocurrencies, while IPOs deal with stocks.
Additionally, just like some investors have taken part in IPO investing, they may also participate in ICO investing, as well. This basically means purchasing stocks, or a cryptocurrency, as soon as it's listed on the market with the hope (or that) that it increases in value.
ICOs have become a large market. From 2016 to 2019 alone, over 7,400 ICO attempts were conducted which raised an estimated $35 billion.
How ICOs Work
Companies go through an IPO or go on the market in order to raise money. They're selling parts or their entire ownership for cash. The same reasoning applies to crowdfunding efforts to provide funding for a novel cryptocurrency.
In essence, an ICO could be defined as "initial coin offering," and lets crypto investors get in on the ground base of cryptocurrency startups. They are part of the first wave to invest in new cryptocurrency, and thus, stand to potentially benefit the most should (and that's a huge "if") the crypto worth of the crypto is appreciated.
In terms of how an ICO really works? It's not like an IPO that is regular processes that involve various parties and regulators. Making crypto available to the market is more of a do-it-yourself process. In shorter, the team behind the creation of a new crypto will outline their ideas in a white paper for the new system or cryptocurrency explaining the nature of the crypto and how it will function.
After that, the crypto creators will focus on a marketing strategy to convince people invest in and purchase the cryptocurrency. People who choose to participate and invest will be able to exchange money to purchase the project's coin or token.
The creators of cryptocurrency collect funds from investors by making the coin available before the ICO to purchase. In this time, they typically issue coins in a discount price, often to acquire capital to keep building the currency.
This is, obviously only a general overview. However, things can become more precise. This should give you an understanding of how ICOs function.
How to Value ICOs
IPO valuations are typically based on careful review of the base company's bookkeeping and performance. presale ico
of ICOs is differentbecause there is no underlying company with accounting records to go through.
Therefore, hype and investor skepticism are an important aspect of ICO valuations. Crypto assetsgenerally, derive their value either from functioning as cryptocurrencies, or security or utility tokens for certain networks and systems. This makes it difficult to quantify their value straight out of the gate.
Investors typically determine the value of an ICO value by looking at the possible possibilities for its use at some point in the future. That could lead to an increase in value. If investors are more excited and the more hyped they are, the more the value could rise, but this is not the case as well.
Research suggests that negative investor opinions can trigger negative first-day returns for an ICO which may affect the performance of the currency for at minimum six months.
If this sounds risky this is because it could be. ICOs are a notoriously risky investment. False advertising and con artists are well-equipped to extort investors who have no knowledge of the crypto sector, and regulators of the government are still trying to define their role in the space.
How To Buy ICO Tokens in Four Steps
Wondering how to buy ICO tokens? Then follow these four steps:
Step 1: Register for the ICO
The first step towards purchasing ICO offers, or to get to the front row of a new cryptocurrency being an investor is complete a little homework. This involves researching new and possible ICOs, or maybe reading through some white papers.
Apart from going through the whitepaper, you'll want to learn everything regarding the development team that is behind it, and whether it's received a lot of interest from investors elsewhere. If the white paper doesn't include details about the token's source code or security features , this is a signal that it may need more thorough due diligence.
Once you've discovered an ICO that is appealing to you and you're interested in participating, sign up to part in it. This might require some research, but you can track to a pre-ICO checklist and ICO listings on websites such as CoinDesk, ICOBench, TopICOlist.com, ICODrops.com, and CoinMarketCap.
Each ICO generally has different registration procedure. If you're interested, browse around to find the most appropriate process,, and then follow the procedure as required.
Step 2: Set Aside Funds for Payment
Next, you'll need make sure you are prepared to invest when are ready for some money into the account. This is essentially putting money aside to ease the investment.
You'll need fiat currencylike dollars, or any other crypto in order to complete an exchange, if needed (typically it's Bitcoin or Ethereum, the two biggest cryptos). Also, you'll need either crypto or money sitting in a digital account for you to execute the transaction.
In the end, make sure that you're on the right or the proper crypto exchange the ICO. Certain exchanges allow investors to trade certain cryptos. Be sure the ICO you're interested in is listed as a trader on the exchange that you're engaging for.
Step 3: Make the Exchange
This part is rather simple It's as simple as: execute the trade! The exact details will be contingent on the specific ICO or exchange as well as processes.
Step 4: Receive and Store Your ICO Purchase
Ideally, following the successful completion of the trade the coins you purchased will be placed in your crypto wallet (whichever of the different types you select) for safekeeping. Then it's a matter of letting the market dictate what happens to your new investment.
Make sure to keep in mind that ICO investments are inherently risky There's a great possibility that things may change. Because of this, it could be beneficial to be on the lookout for ICO as well as the other news surrounding the new cryptocurrency, so that you make educated decisions on when or if you should consider selling. A benefit of ICOs in comparison to IPOs is there's no IPO lock-up period preventing selling.