Initial Coin Offering (ICO) is a fundraising or crowdfunding method employed by crypto startups and entrepreneurs to raise money for their cryptocurrencies and other related services. It often involves the exchange of tokens to crypto investors and speculators for monies and or other established cryptocurrencies like Bitcoin and ethereum. ICOs (just like the crypto market in general) are however not without risks. It is possible for investors to lose their monies to scammers and from the under-performance of the proposed currencies. This reality often discourages investors from investing in ICOs.
The good news is that crypto experts advise that to minimize risks in ICOs, investors should only put in what they can afford to lose and conduct background research on the ICO team. It is very helpful to ask questions to the ICO team such as their identities, their experiences, antecedents and how they can be contacted.
Indeed, there are great risks in investing in ICOs, but the benefits are lucrative, enticing and cannot be denied. This is evident in the increasing number of ICOs and investors. We will now examine seven reasons to invest in ICOs.
1. High yield investment
That ICOs have huge potential to give investors very high returns on their investments. This is perhaps the single most common reason why investors take a chance on it. You can make huge fortunes by investing in genuine ICOs and those run by high-performing teams. Although these are not great times for cryptocurrencies unlike in mid-2017 to early 2018, however, Bitcoin and ethereum are presently valued at about $3,790 and $138 respectively. Despite the acknowledged decline in their values, their current prices are still significantly higher than what they were at their inception – Bitcoin was valued at $0.08 in 2008 and ethereum at $0.40 in 2014.
ICOs are usually cheap and very affordable. With little money, you can seize the usual incentive of price discounts and acquire substantial units of the token – which you may not be able to afford when it becomes popular. Despite the cheapness of ICOs, crypto experts still advocate the investment of only what you can afford to lose. ICOs are great crypto investment opportunities as prices are low. The hope is that the crypto project will succeed, have its currency launched and experience increasing demand from more investors. This will ultimately lead to a growth in its prices. The ridiculously low price of Bitcoin and ethereum at $0.08 in 2008 and $0.40 in 2014 are examples of how cheap cryptocurrencies can get initially before their prices go up.
3. Less risky
Since ICOs are generally cheap, you have little or nothing to lose if the crypto project/currency you invested in doesn’t really perform as expected – this is especially if you have invested cautiously. ICOs, unlike stock, hold very less value until the token actually hits the market and gains some popularity. So with little money, you can afford good units while hoping that the project succeeds.
4. Popularize a crypto project
ICOs offer opportunities to popularize a crypto project. This is because ICOs typically entail the promotion of the project team and its abilities. The attributes of the proposed currency like its transparency, security, scalability, and decentralization are also promoted. When someone decides to invest in an ICO, they are helping to raise awareness of the project to potential investors. This will improve the demand and generate incremental price increases, giving you a good reward for your investment.
5. Support for innovation
Putting aside the expectations of high yield on your investment, when you invest in ICOs, you become part of a community support team. Together you work towards the promotion of the credibility and acceptance of the crypto project. You are supporting innovation, technology and providing incentives for even more innovations. Ethereum will remain a key success story for ICOs. In less than five years of its launch, it has shown great capacity as a technological platform upon which the future can be built. It has created an environment for the development of other projects. The revolutionary prospect of cryptocurrencies to overcome the bottlenecks in conventional financial systems, organizations, and governments is a cause worthy to be supported. Investing in ICOs is only one of the major ways to provide this much-needed support.
6. Early and easier acquisition to prospective viable tokens
ICOs offer investors the opportunity of early acquisition of potential valuable cryptocurrencies. It also offers easier and cheaper access to these tokens that would have only been obtained when they get launched and become popular. ICOs often remove bottlenecks in the acquisition of these tokens, saving investors the rigors that may obtain when acquiring the established and popular currencies.
7. Opportunity to become a cryptomarket influencer
Investing in ICOs can offer you the opportunity to be a stakeholder and market influencer of the invested token. This is however dependent on the quantity of the token you are able to acquire. Many crypto influencers assumed their roles through ICOs. They purchase substantial quantities of the ICO tokens, withhold them, promote them aggressively with the aim to influence and determine their prices when the demand expectedly goes high. This business strategy will usually bring about high profits and make them not just stakeholders for particular currencies but in the overall cryptomarket.
8. Saves time
ICO’s are analogous in principle to the Initial Public Offer (IPO) of the stock market. ICOs, however, differ from the IPOs in practice. Unlike IPOs, ICOs do not involve much paper documentation and regulation from government and regulatory agencies. Also, ICOs are exclusive for cryptocurrencies and their services and do not bestow certain rights like voting rights or rights to attend stakeholder meetings to its subscribers. This limitations means that ICOs will save investors time and rigors of obtaining capital funds from banks and other conventional financial institutions.
The obtained ICO investors’ funds are used to advance the goal of the crypto team in the realization of the proposed cryptocurrency. For the investors, it has the potential to offer very high returns on investments. This is because there are possibilities that the cryptocurrencies could significantly appreciate in price and value over time, making the investors big profits from their investments. Bitcoin and ethereum amongst other popular digital currencies are success stories of the huge gains investors can derive from ICOs.