When it comes to cryptocurrency, everybody wants a piece of the pie. In the last year alone, Bitcoin, the most substantial cryptocurrency on the market has increased its value nearly tenfold. This has sparked a whole wave of ICO’s flooding the market.
But what exactly are they all about? Why should you care? And more importantly, why should you part from your hard earned cash to invest in them?
You will have the answer to all of these questions as we explore the rise of the ICO, and learn precisely what it’s all about.
But before you understand what one is, you first need to understand cryptocurrency.
What Is Cryptocurrency
Bitcoin’s value according to MarketWatch sat on 2nd January 2017 at $1,016, fast forward to the time of writing Monday 4th December, the same bitcoin is now worth $11,314. That kind of growth would grab anyone’s attention.
But before you can start to understand the potential in ICO’s, first you need to understand what cryptocurrency is.
Initially starting out in 2008 as a peer-to-peer electronic cash system, bitcoin was ‘accidentally’ invented by Satoshi Nakamoto. Understanding how Nakomoto made Cryptocurrency is a complicated process, however, understanding what it can do for you is very simple.
Some of the properties that make Cryptocurrency unique:
- Irreversible – After the system has confirmed a transaction it’s irreversible, there is no safety wall.
- Pseudonymous – Accounts and transactions aren’t connected to real-world identities. It’s often difficult or impossible to link the transaction to a real-world identity.
- Fast and global – Transactions are nearly instantaneous and get confirmed in just a few minutes. It’s irrelevant where in the world you send your money as the money is in a global network of computers.
- Secure – Every cryptocurrency fund gets put away in a public key cryptography system. So without a private key, nobody else can send the cryptocurrency. Strong numbers and cryptography make it impossible to break.
- Permissionless – You don’t need any permission to use cryptocurrency. It’s software available to everyone.
Why You Should Care About Cryptocurrency
Cryptocurrency is as much a digital revolution as it is a new currency. By being permissionless, pseudonymous and irreversible it attacks the very scope of the modern monetary policy.
Cryptocurrency takes away the control the central banks have on inflation and deflation, by manipulating monetary supply. The result of this is cryptocurrency is the equivalent of digital gold, money secured away from any outside influence political or otherwise.
While many use cryptocurrency mostly for payments, its uses birthed a hugely dynamic and potentially lucrative market for investors. Enter, the ICO.
What exactly is an ICO?
The initial coin offering or ICO as its commonly called is very much akin to an IPO. Although a little confusing it has recently become one of the favored ways to launch a new cryptocurrency.
However, as with all new rising products, there are a lot of legal questions and unscrupulous individuals involved.
Understanding the basic’s
An initial coin offering is a fundraising tool that trades upcoming crypto coins with existing cryptocurrencies which have instant value. Essentially you trade existing cryptocurrency like Bitcoin or Ethereum in exchange for the new type of coin.
Some financial establishments have their doubts about ICO’s, with some companies comparing it to ‘selling shovels to prospectors in any good gold rush.’ Whilst we can agree that they do remain unregulated, there are potentially huge returns on currencies that make the grade.
For many, initial coin offering’s are investments made in hopes of quick, strong returns. It’s worth noting that not all ICO’s are for cryptocurrency that will operate independently. Some are releasing ‘meta-tokens’ based on Ethereum, Bitcoin, etc.
What’s the Downside?
As with any new boom, there will always be the shadier types amongst us looking to lie, cheat and steal their way to a quick buck. Initial coin offerings are no exception, with fraud being fairly common, you can find a whole host of articles with people getting caught.
But Surely Initial Coin Offerings Are Regulated
Sadly, rules are not strong when it comes to cryptocurrency trading. Many investors are marketing initial coin offerings as ‘software presale tokens’ or ‘crowdsale’. This could be loosely compared to allowing early access to an online game for early adopters.
So to answer that question, regulations aren’t really in the mix right now.
What to Look for When Picking an Initial Coin Offering for Investment
Although, this all sounds terribly scary what you have is an unprecedented opportunity to launch into the cryptocurrency market at a moment where it could either exponentially take of, or potentially flop.
The trick, it seems is to invest in the right currencies. When you are selecting what to invest in, it may be worth taking up some advice. For example, the Top ICO list find best upcoming ICO’s shows you some of the best upcoming initial coin offerings that will be launching soon.
Red Flags to Watch out for When Investing
When investing, bare in mind cryptocurrency is not your only option. There are many smart investment solutions but should you choose to invest in cryptocurrency, there are a couple of hallmarks to watch out for.
Here are some red flags which will point out any potentially shady dealers. Beyond that like all investing it’s down to research, information and a bit of blind luck.
- ‘Guaranteed’ high returns – This might seem obvious but there is no such thing as guaranteed returns when investing. Be vigilant against anybody offering such promises as they are likely to be fraudulent.
- Someone who pitches you – Watch out for people who contact you directly without you showing any prior interest. It could be part of a fraudulent investment scam.
- Pressured to buy – It’s one of the oldest tricks in the book but fraudsters will often try and put pressure on you to buy right now. Take your time and research all investments before handing over any money.
Decide Whether to Jump In
Whatever stage you are at in considering investing, one thing is for certain. Cryptocurrency is here to stay, the only question is how rapid will the rise be, or how perilous the fall?
Make sure you consider the risks when investing, and if you don’t mind potentially losing your whole investment and not be too badly affected.
Although other investment strategies may have better track records, getting in early on cryptocurrency may be one of the strongest investments you could make.
Make sure to keep up to date with all the latest money trends here first.