Financial Tech has been growing significantly since crytocurrencies like Bitcoin, Etherium, and Litecoin have emerged with huge gains making some investors multi-millionaires. With this in mind, companies sought to launch their own initial coin offerings (ICO). If you’ve never heard of ICOs before it has to deal with blockchain raising capital through that of cryptocurrency. As of November 2017, there was 3.7 billion dollars raised this year, and this number is increasing.
This trend in ICOs has sparked the interest of many investors seeking bigger profits then what Main Street investments have offered. However, when it comes to ICOs there are good and bad issues about this funding method. On one hand, you have a great solution to raise capital for your projects through ICOs, on the other hand some ask why invest when you can earn coins for free by participating in bounty programs which are often outsourced to an ICO Bounty Management company. With a bounty program coins are distributed for free for various marketing or social media efforts.
If you are an investor wanting to hop on board one of these ICOs, you should be aware of specific indicators which we will go over in more detail today.
Indicators Involving ICO Investments
- Researching a Companies Background
If a company is about to offer an ICO you will want to do a thorough search into the background of that company. It may seem suspicious if a company is brand new; however, if they have a sound background, this can deter any worry an investor might have. You should look into the legal framework along with detailed project information; the more detailed a project and company are, the better.
If a company is just trying to milk investors, you will find little if any details along with no legal framework to protect investors. If the company states they will put up these details later, then you should remain skeptical as it sounds like they are trying to hide information.
- Look for Physical Backing
If a company is serious when it comes to their ICO, they will tack something physical onto their offering. This could be anything from precious metals, property, corporate shares, or even other valuable crytocurrencies. Even though the crytocurrencies for the most part, is unregulated, when a company steps up to back their projects with physical assets, you will be able to tell they are serious.
- Answering Critical Questions
When you are interested in investing in an ICO you may want to have the following questions answered:
- Are the trading conditions fair for these coins? Can prices be manipulated? Can I sell my coins when I want to? Are holdings audited?
- Are there any substantial risks of theft, or can this be hacked? What are the security protocols to prevent theft or hacking?
- What is the advice from Main Street investors about this ICO? This could include brokers, investment advisors, lawyers whose actions make an impact for Main Street investments.
As a final thought, we are living in a digital era, and it’s logical that we are moving away from physical currency into digital currency. There are many issues in an unregulated market setting, which may be dealt with later. Investors from all over the world want to make sure they can invest in this digital trend to make profits, but have to take into considerations the dangers that are in existence. We hope you consider the indicators we mentioned today to be well informed for any future investments in ICOs.