It can be really frustrating to hear stories about how Bitcoin and Ethereum were once measured in cents. And how people who bought them in those times are now billionaires. Now everyone is waiting for the next big opportunity to come to them. But before you decide to risk all your investments in some shady scheme because of FOMO, hear us out.
Also, we are not going to tell you where to invest. What we can do for you, is tell you how you can invest in coins in their initial launch stages and how you can pick the right coin to invest in.
What Is An ICO?
ICO usually refers to an Initial Coin Offering. If by any chance you’re into finance. You’ll find the term to be very similar to IPO (Initial Public Offering).
In simple words, an ICO is a process to raise funds for a new cryptocurrency project. But unlike IPOs, there is more freedom in ICOs. Anyone can launch their cryptocurrency as well as their ICO because there is no regulation around it. For every investment made in an ICO, the user is provided with the token of the cryptocurrency. Which is equivalent to having a stake in the company.
Picking the Right ICO
The fact that ICOs are unregulated is both a boon and a bane. There is no formula to be 100% sure about the legitimacy of an ICO. However, we can make it less risky by keeping a few things in mind.
● Background Check: Whether it is a cryptocurrency, ICO, or NFT, Research is of absolute importance. To start, you can take a look at the company’s websites and see if it already has other successful products.
If it does, then it is a really good indicator. This process can be unfair to startups or new teams. In that case, we can just do a check on their online presence and the people working in those teams.
● The USP: If you don’t know already, USP in marketing terminology is short for “Unique Selling Point.” As the name suggests, it describes how a product is different from the other similar products on the market.
There are literally thousands of cryptocurrencies and not all of them are successful. For a new cryptocurrency to make its place in the market, it must have a feature that separates it from others. We don’t need another meme coin or a fan token that has no real use case.
● The Implementation: Good ideas can fail if they are not implemented correctly. Before going to invest, we must check the company’s implementation of the idea. If a team has a plan of action ready for their product, it is a safe bet.
Reading them would also give you insights into the team’s workings, and if you like the idea and believe in its implementation. You can make a better choice when choosing to invest in the ICO.
How an Initial Coin Offering (ICO) Works
When a cryptocurrency project needs to fundraise through an ICO. The basic step is to figure out how the project is well structured. ICOs can be set up in a variety of ways, including:
Static supply and price: A company may declare a specified financing goal or limit, which means each ICO token has a defined price and the overall token supply is fixed.
Static supply and dynamic pricing: An ICO can have a fixed supply of tokens and a dynamic funding goal which means that the ultimate price per token is determined by the amount of money raised in the ICO.
Dynamic supply and static supply: Some ICOs have dynamic token supply but static pricing, implying that the amount of money raised is fixed.
Prior investing in Initial Coin Offerings (ICOs) is very dangerous and speculative. Each person’s circumstances are different. So you should always get advice from a trained specialist before making any financial decisions.
Now that you know what an ICO is, keep in mind that ICOs are new, which means there are very few regulations. So, as mentioned earlier, you should always be careful when choosing an ICO to invest in. It is extremely important to do your own research!
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