ICO Investing: How to Purchase Initial Coin Offerings
One of the key factors to investment success? Beginning early. Imagine yourself as one of the first to invest in a tech giant like Google or Facebook such as. And, imagine what your life would be like , if you were able to buy ICO (initial coin offer) products for a giant cryptocurrency like Bitcoin or Ethereum?
The portfolio you have would likely appear different, wouldn't it? Well, there's always a chance to get in on the next big IPO or ICO.
In this piece we'll cover ICO investing, the best way to purchase ICO coins, and the best places you can find ICO listings. In short, if you're still all "IDK" about ICOs, you're about to receive a crash course.
What Are ICOs?
They are similar to IPOs that are the initial public offerings that are the first time the public can purchase the stock from an exchange. There is a major difference: an ICO is a public sale of crypto, whereas IPOs are about stocks.
And just as some investors are involved in IPO investment, they can participate in ICO investing as well. This basically means purchasing either a stock or cryptocurrency, when it's available, with the expectation (or hope) to see it increase in value
The ICO market has grown into a huge market. From 2016 to 2019, more than 7,400 ICO attempts were attempted, raising a collective $35 billion.
How ICOs Work
Companies go public, or on the market in order to raise funds. They're selling parts of their ownership to raise cash. The same principle applies to the ICOs, which are crowdfunded efforts to develop a cryptocurrency.
It is a ICO means an "initial coin offering," which allows crypto investors to be part of the initial base of cryptocurrency startups. These investors make up the first waves of investors who have jumped into the world of cryptoand, as such could be the ones to gain the most should (and that's a huge "if") the crypto you're interested in investing in increases in value.
As for how an ICO actually operates? It's distinct from an IPO with an extremely standard procedure that involves different parties as well as regulators. The process of bringing crypto to market is more of a DIY process. In brief, the person or team behind the creation of a new crypto describes their strategy in an article for the new technology or system explaining the nature of the crypto and how it will function.
Then, the crypto creators will focus on a marketing drive to make it easier for people to put money into and buy the cryptocurrency. If they choose to invest as investors will trade funds for the latest project's token or coin.
The creators of cryptocurrency collect funds from investors through providing the cryptocurrency prior to its ICO to purchase. During this time they usually issue coins at a price that is lower than the market value, usually to secure the capital needed to build the currency.
This is, naturally only a general overview. However, things can become more precise. But this should give an understanding of how ICOs function.
How to Value ICOs
IPO valuations usually reflect thorough examination of the firm's books and its performance. The valuation process for ICOs is unique, because there's no such company's accounting records to go through.
As such, the rise in hype and investor skepticism are a big underpinning of ICO valuations. Crypto assets, in general can derive their value due to their functioning as cryptocurrency, or utility tokens, or security tokens specifically for certain networks and systems. That makes it difficult to determine a monetary value initially.
Investors usually assess the value of an ICO price based on potential usages the cryptocurrency could see in the future that could lead to price appreciation. If investors are more hyped and the more hyped they are, the more the value are likely to rise, but it is it is the reverse also.
Research has shown that negative investor mood can result in negative first-day returns for an ICO which could impact the performance of the currency for at least six months.
If that sounds risky, this is because it could be. In fact, ICOs are among the most risky investment. Fraudsters and scammers are well-equipped to extort investors with no experience in the crypto space, and regulators in the government are still trying to figure out their role in the space.
How To Buy ICO Tokens in Four Steps
Are you wondering how to purchase ICO tokens? Then follow these four steps:
Step 1: Register for the ICO
The first step for buying ICO items, or getting to the front row of a new cryptocurrency investors, should conduct a little homework. This could mean researching new and potential ICOs and perhaps even studying some white papers.
As well as studying the white paper, you'll also want to know all there is to know about team behind it, as well as whether it's garnered a lot of interest from investors elsewhere. In the event that the paper does not have details about token's code or security features , that's a possibility that it could require more due-diligence.
If you've found an ICO that appeals to you then sign up to take part in the. This might require some research but you'll be able track the pre-ICO list as well as ICO listings on sites like CoinDesk, ICOBench, TopICOlist.com, ICODrops.com, and CoinMarketCap.
Each ICO generally has distinct registration procedures. So, if you're interested, look around to discover the right procedure, and then follow the procedure as required.
Step 2: Set Aside Funds for Payment
Next, you'll need to prepare to actually invest when the time comes to make cash in. This includes putting money aside to facilitate the investment.
It is necessary to have fiat currencylike dollars, or another crypto that can be used to make an exchange, if needed (typically one of Bitcoin or Ethereum which are the two major cryptos). You'll also need to have some money or crypto in a wallet to make the transaction.
And finally, be sure to join the correct or appropriate cryptocurrency exchange for the ICO. ico token restrict investors to trade specific cryptos. It is important to ensure that the ICO that you're looking at is listed as a trader on the exchange that you're engaging with.
Step 3: Make the Exchange
The procedure is simple Simply execute the trade! The exact details will be contingent on the particular ICO exchange, as well as processes.
Step 4: Receive and Store Your ICO Purchase
Ideally, following the successful completion of the trade, your new coins will be placed in your cryptocurrency wallet (whichever of the different types you pick) for safekeeping. After that, it's just a matter just sitting back and letting the market determine the course of your new investment.
Be aware that ICO investing is inherently risky, and there's a good chance that things could happen in a negative direction. For that reason, it could be worthwhile to take a close look at the ICO as well as the other news surrounding the new crypto, so that you make educated decision about when or when you should actually sell. The benefit of ICOs when compared to IPOs is the absence of an IPO lock-up deadline that can prevent the sale.