Everyone in the world of finance is aware of the term ‘cryptocurrency.’ If you are a blockchain enthusiast and have some relevant experience with bitcoins and ethereum, you might consider investing in ICO, an initial coin offering.
Whether you are an absolute beginner or not, you would probably want to learn all there is about ICO in general. But, be aware, the initial coin offering might be very dangerous even under the best possible circumstances since it is susceptible to scams.
However, before getting into potential risks and scams, it is essential to know the basics. Let’s get started with these basics, shall we?
ICO – definition, and explanation of it
ICO represents a fundraising method that startups primarily use to offer services and products that are usually related to blockchain space and cryptocurrency. They are very similar to stocks. Sometimes they have utility for a product provided or a software service.
There is the ICO calendar for all the relevant and current information to track important cryptocurrency fundraising events. This calendar is very significant for investors since they provide a clear insight into the tokens sales, and therefore they allow them to make smarter decisions.
The difference between investing in ICO and IPO
However, investing in an initial coin offering is somehow different than investing in an initial public offering for one particular reason. You see, investing in an ICO doesn’t result in you having an ownership stake of the company you give your money to.
It means that you might be gambling that the currency you pay for, which is currently worthless, might increase in the future and that you will earn some money with it. Even though that would be a preferred scenario, that is always unpredictable.
Who can launch an Initial Coin Offering
If you were wondering who is allowed to launch an ICO (an Initial Coin Offering), the simple answer is – literally anyone in the world! At the moment, in the United States of America, there is very little regulation on ICOs. It means that you are free to try getting your currency funded.
Cryptocurrency, in general, is still some ‘the wild west’, meaning that there is gold in the hills and surprisingly little law to speak of. If you are smart enough, you’ll see how that works in your favor. However, it can lead to getting swindled.
Be aware of the potential risk of investing in ICO.
One thing you must keep in mind is that, of all possible avenues of funding, an initial coin offering is definitely one of the easiest ones to set up to be a scam.
Because there is no regulation, nobody could stop all the scammers of the world from making you think they have an astonishing idea and then vanish with the money you invested.
Since ICO is poorly regulated, especially when you compare it to an IPO for stock, be very cautious before making any investments. Since there are no government regulations of ICO currently, anyone can launch their own.