Advantages and Disadvantages of ICOs

Advantages and Disadvantages of ICOs

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Initial coin offerings, often known as ICOs for short, are starting to attract a lot of attention in the cryptocurrency world. Whether people like them or hate them, they have certainly managed to revolutionize funding techniques in the modern world.
The idea is that new project sells its crypto tokens in exchange for Bitcoin or Ethereum. Really, it is just a cryptocurrency version of an initial public offering, where investors purchase shares of the company and those funds go towards its development.
There are very few restrictions about who is able to take part in an ICO, and due to its unregulated nature, in the past some ICOs have successfully raised astronomical sums of money. One of the biggest issues with this method of fundraising is that in the majority of cases, the funds are raised before the product has been released, which can make the investment a pretty risky one. Despite this risk, many people seem eager to take part.
The legality of ICOs is a particularly grey area, and there are arguments both for and against this. Additionally, their track record is riddled with a number of cases of fraud and theft. Yet, without the use of ICOs, some of the best cryptocurrencies out there would not even be in existence, such as Ethereum.
If you are thinking about investing in an ICO, then it is vitally important that you do some research into what you are about to invest in, especially considering the risky track record. Despite the risk, ICOs in the past have also been very successful, and people have been known to make lot of money from their investments. Let’s take a closer look at some of the advantages and disadvantages.

Advantages
• The tokens that are ‘bought’ at an ICO can be done so at a very low price, much lower than they are likely to be sold for once they are put on the market. This could be a great investment opportunity, and there is a good chance you could make some money in the long run.

• ICOs are open to the general public, which means that anyone is able to partake in it, as long as they get the funds transferred on time. Investors from all over the world means that there is less centralization.

• The concept of an ICO means that people are able to help shape the future of the cryptocurrency ecosystem, with every single project aiming to bring something new to the table.

Disadvantages
• Investing in an ICO is very risky. There is no guarantee that the cryptocurrency project you are investing in is going to make any money, so you could end up losing your funds.

• Even if the project is showing some promise, it may take years for it to be an actual market for the project in question, which means that you could be in for a rather long wait.

• As an ICO is not registered or regulated, it means that you will not be reimbursed if something goes wrong, something that is often overlooked these days.




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