5 Pros and Cons of Investing in a Cryptocurrency ICO

With an enormous growth of cryptocurrencies, a lot of new coins and service offerings have been hitting the market on a regular basis. Before you understand the pros and cons of investing in ICOs, you must understand what an initial coin offering is and how does it work.

Every project required initial funding. With the launch of blockchain Technology, it has become easy for the developers to collect an initial amount for starting. In exchange for your funding, the project team will give you the token which can be retained later as and when the business grows.

Among the many ICOs that came in the market, ethereum has been the most successful. Initial coin offerings have brought a lot of good to the blockchain technology. However, there are a lot of people who are criticizing them. Below we have listed down some of the pros and cons that you must be aware of before you begin to invest in any such ICOs offerings.

5 Pros and Cons of Investing in a Cryptocurrency ICO

PROS

  • The most significant advantage of initial coin offerings come to the development teams that are looking for investment to begin their project
  • There are no paper works needed to invest any initial coin. An investor needs to go through the business’s white paper of the offering company and then decide to invest.
  • Building a community of investors across a project which is just in the face of initiation will help the development team to expand a little more quickly as compared to any other project.
  • It gives early exposure to the new coin which are set at a much lower rate compared to the competitors and if the business model growth rapidly the investors can surely make a lot of profit.
  • Companies that provide initial coin offering are always looking for an enthusiastic developer who offers innovative thoughts, and you can make some additional money by giving your ideas

CONS

  • One of the main concerns of most of the new investors is that initial coin attracts a lot of scammers, with any scam linked to any of the cryptocurrency the faith of the common public in such coin offerings is reduced which ends up depreciating the value of your investments.
  • Your investment will inevitably base on your speculation, and the more you gather knowledge, the safer you will be.
  • Many of the big whales of the market run away with most of the initial coins and thereby reducing your chances of getting a good deal at the very start
  • Like most of the cryptocurrencies, any such new coin is not regulated by the government bodies or any of the legal Financial Institutions which put your money in potential risk.
  • The liquidity of such coins is very high because of which there is a lot of changes in the market value of the coins that can again affect your capital value.

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To be able to make the most out of your investment in an initial coin you need to stay in touch and keep yourself updated with the listings and news feeds on ICO calendar.

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