What is an Initial Coin Offering (ICO) and why are they popular?
ICO’s are controversial, often volatile investments in cryptocurrencies before their full release, potentially yielding massive returns.
They use crowdsourcing to take funds in return for a percentage of the upcoming new currency. Ethereum is the greatest ICO success story to date, and after its success, people took notice.
If a new cryptocurrency launches successfully, its value will likely rise. Early investors will also be the first to access the mining software, and can earn great rewards in the currency’s early going.
Often the best way to find legitimate ICO’s is through reddit, twitter and other online forums, where you can cross check people’s claims and track record. If several reliable people agree on an ICO’s prospects, that could be the tip you need to add it to your portfolio. The first investors in an ICO should be the programmers themselves. They will often use the profits to fund further development.
Pros and Cons of ICOs
ICOs offer potentially huge profits. Therefore, it’s no surprise that there are plenty of genuine scams, as well as genuine failures in a competitive new market based on evolving technology. Sadly, there have been examples of ICOs that simply set up a crowdfunding account with an advertising campaign, took the money and vanished. There is a justifiably high level of scepticism around them. This is a challenge for programmers who are trying to start a legitimate business.