Uses and risk factors of Initial coin offerings investment

An Initial coin offerings, abbreviated as ICO is procedure in which projects can raise money over the internet. Persons invest in them by sending money or crypto currency to a block chain project, and they receive digital tokens associated to that project. ICO tokens are held in a digital holder.

For common man, it can be described that in an ICO, tokens or the coins are created and destroyed using a Block chain platform. The company offers these coins to the investors/ pubic for purchase by buying them for virtual currencies. One of the most significant ICO models has been the creation and issuance of digital tokens known as “Appcoins”. Market structure for Initial coin offerings is comparatively new and intricate for investors. Major concern is issuing transferable tokens to the general public.

ICOs are frequently sponsored through closed groups on social media platforms and messaging apps. Risk is also involved in this type of investment. These are speculative investment and if ICO is issued by foreign group or company, there are more chances of fraud.  ICOs are sold globally, online and generally paid for with crypto currencies, it can be difficult for regulators to shield investor protections. The value of ICO tokens can change quickly.

Before investing, individual must evaluate the company. It is imperative to comprehend that who is running the company and authenticate the companies’ team portfolio. It can be done through searching the technical and the business experts of the company in internet or social media sites like Facebook, LinkedIn. Investors must be assured that company is maintaining well in business area and adopting technological advancement. Further, investors must analyse the whitepaper properly, and assess the target audience as well as target market. When appraising the fund structure of company, it is necessary to check previous investment of company. They must be assured that company is not fully relied on the token sale. It is recommended to invest in capped ICOs. Communication channel of the company should be smooth.

In final note, an Initial Coin Offering is a trade of crypto currencies by a start up to raise funding for their business. In simple way, it is crowd investing tool conducted entirely on the blockchain technology.  Investing in ICOs may be attractive, lucrative and fascinating to financiers/Individuals. But people must be cautious and carefully assess the company before making investment.