What to Look for in an Initial Coin Offering?

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Looking for a way to invest in the new market of digital currency? Cryptocurrency is setting the world on fire and shows no signs of slowing down any time soon.

Many companies like Bitcoin and Ethereum are garnering attention in the mainstream media for their extraordinary increases in value since their initial launch. If you’re wishing you had been in on it the ground floor, there are plenty of companies putting forward initial coin offerings that you can take advantage of.

What is an ICO?

An ICO (initial coin offering) is an early release of tokens from an upcoming cryptocurrency company. It shares some similarities to an initial product offering (IPO) put out by corporations to generate early revenue. In that sense, an ICO is the same.

Start up companies offer tokens to investors to generate funds to get their business started. It’s an early sale of the intended cryptocurrency the company plans to bring to market. For early investors, the hope is that the tokens will rise in value as the company grows. If the cryptocurrency is successful, the investor will have a positive return on investment.

Where ICO’s differ greatly from early shares in a public company is in the lack of regulation. There is no governing body to set rules in place for a new ICO.

In that respect, ICO’s are often compared to crowdfunding. Crowdfunding allows new companies to present their idea or product to the public and ask them for financial support. Crowdfunding is strictly a donation, however, so there is no expectation of a return on investment. Innovative platforms like Covesting have taken this a step further and enacted ICO events to unlock the potential of cryptocurrency investing couple with peer-to-peer copy trading.

Peer-to-Peer Investing

Covesting is introducing the concept of peer-2-peer asset management to cryptocurrency markets, the approach that has a solid performance record in the classical markets such as FX and Equity would soon be available for investors and traders that are turning to crypto.

In the remaining space between IPO’s and crowdfunding are crowdsales, and this is the spot that initial coin offerings best fit into. Crowdsales set an expectation of some sort of return, in this case, cryptocoins or tokens, in exchange for fiat or bitcoins.

The advantage to the investor is obvious. They have the first opportunity to purchase a new cryptocurrency and watch it rise in value. However, as in all areas of finance and business, there are fraudsters about.

Unfortunately, there is an undercurrent of fraudulent cryptocurrency startups, who gather up as much cash as possible and are never heard from again. Fortunately, these fly by night companies are relatively easy to flag if you know what to look for. This is another reason why most reputable investors prefer a peer trading application when investing in the cryptocurrencies. A legitimate company with a legitimate need will have a professional offer. They don’t just want your money, they want your commitment and future business as they grow.

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