Since new cryptocurrency businesses will require raising funds for their businesses, they make use of the Initial Coin offering (ICO). In case you are interested in supporting the project, you will get the chance to buy the cryptocurrencies that are newly issued. The newly issued cryptocurrencies are exchanged for other famous cryptocurrencies like Ether, Fiat, and Bitcoin. The investors buy the new cryptocurrencies with the hope that they will make some profit once the value increases. The analogy used here is similar to the one used in the stock market where one buys shares with the hope that they they will increase in value and make a profit.
In the past, companies such as Karmacoin, Ethereum, and Mastercoin conducted ICO. Ethereum in the year 2014 conducted a big ICO that helped the company to raise $18million. Presently, ICO sale has gained massive popularity that has led to the sale of 50 token each month. From the year 2017, the growth of ICO is massive with about $2 billion token sale conducted successfully. This shows that the sale of ICO is not going to remain a temporary technique used by upcoming cryptocurrency businesses to raise capital, but it is with us to stay. The prediction is that there may be a rise in the token sale to $4 billion.
As an investor, it is paramount to make sure that you get the right ICO. Before you invest your money in ICO, take time to find out the people spearheading it. Although some of the companies that conduct ICO are newly incorporated, some have been in this area for many years. Consider searching for mentions and news about their previous efforts and projects.
You should evaluate the target market of the company and the technology, and product the company offers. Since companies do not work in isolation, they are continuously under the pressure of the target market. When you know the environment the business operates in, you will have a gist of the opportunities and challenges the company faces.
Get to know the magnitude of risk that you can assume. Just like any other investment, investors in ICO should be aware of how much risk they can handle. It is paramount to beware of most startup companies. You do not want to invest in a company that is not stable. Losing money is possible for any person who invests in a venture that fails. It is important to note that the ICO figures are not the only signs of the viability of a venture. It is important to conduct a further evaluation.