Many new investors wonder what form of cryptocurrency investment is the best strategy. Recently there has been a lot of noise about ICO, or Initial Coin Offering. But what are ICO and IPCO, and is it worth investing in them?
What are ICO and IPCO?
Both the ICO and the IPCO are two names for the same action. ICO is when start-ups raising capital decide to distribute part of the money in exchange for sponsorship. For the most part, we are dealing with ICO before the project is completed. The term mainly refers to the sale of cryptocurrency tokens before they are released on the stock exchange.
Who benefits from ICO?
Creators of the project in question benefit directly from the ICO. By launching the ICO/IPCO mode, they not only have the opportunity to raise additional capital, but they also gain publicity and interest among investors even before the finished product is launched on the stock exchange. Therefore, cryptocurrencies operating in the ICO mode at later stages of the process record a smaller decrease after the release on the stock exchange.
On the other hand, ICO is a good opportunity for investors. Tokens released as ICOs are usually cheaper than their underlying stock exchange rate, to compensate for the risks incurred in sponsoring the project. Support for promising cryptocurrencies can, therefore be very profitable. On the other hand, there is a chance that the project will fail and the tokens purchased will not be worth much on a cryptocurrency exchange.
How can we protect ourselves against loss on ICO?
The risk of investing in ICO is not constant. Much depends on the specifics of the project itself. It depends on the investor’s ability to assess investment risk and start-up potential.
The vast majority of ICOs announce themselves in large cryptocurrency forums. Some of them have a design pad in the form of a white paper certificate. A good ICO must be distinguished by transparency in the presentation of data and the purpose of the project, which will attract a large number of investors.
Is ICO a fraud?
As is the case with many start-ups, ICO/IPCO sometimes involves fraud when the promised currency is not released at all or is altered or cut off. It is not only the cryptocurrency community that suffers – start-ups are still regarded as a somewhat risky form of investment. Well run products, though, provide sponsors with a profit of multiple amounts of invested capital, thereby the ICO still has many supporters.
Every entrepreneur should assess for himself whether it is worthwhile to put money into a given product. The success or failure of a cryptocurrency released as an ICO is closely linked to its potential growth on the digital currency exchange – so if you buy low-potential tokens at a low course, you may flush your money down the toilet. A good investment, on the other hand, can pay off even with a small bull market. When investing in ICO, it is, therefore, worthwhile to be guided above all by the knowledge of the specifics of the cryptocurrencies and the laws of the market governing them.