The risk with Initial Coin Offering (ICO)
The Risk of Initial Coin Offering (ICO)
I would like to discuss the risk with ICOs. I have never participated in ICO's because I can't see how the eventual profit of maybe 500% will exceed the risks.
There are multiple risks:
1. You pay for a whitepaper, there is no source and no guarantee there ever will be.
2. Even if the developers will try to create the currency they might fail, either by not being able to create the actual
currency or by not being able to live up to expectations or promises.
3. Let's say they succeed with the currency but fail to live up to all expectations or promises, the risk of not gaining a profit that exceed the risk is huge.
4. If they succeed with everything, they live up to every promise and all seems good there is still a risk that the price will drop instantly because of people dumping. That will leave you with a loss or a very small profit if you're not there the first hours.
There are also a couple of possibilities:
1. You find a development team with experience in business and competens when it comes to running a company. A well educated team that consists of marketing teams, core development, finance team and a community team. This means your invested money will be in good hands and the possibility that they keep their promises is high. They will be able to keep a high price for a long time and develop the coin over time.
2. You find a development team that succeed to keep their promises, your investment is at risk but the risk/reward-ratio is low. You're active enough to be able to catch the first pump where you get to sell off your coins at a high profit.
This is more luck than skill though.
Conclusion:
I would only invest in an ICO-project if it's a well-known Development Team with great experience,multiple departments and if their identities are public. I would never invest more than what I would be okay with to lose, I'd say maybe 15% of my current capital.
This would lower the risk/reward-ratio.
Never, ever, no matter what, invest more than you are fine with losing. Also, always consider the risks versus the reward. If it seems too good to be true, it probably is. Risk/Reward-ratio is a very common used investment "strategy" and is worth using in any part of life
Thank you for reading, if you think differently you can just comment!
Great post, I generally don't invest ICO as a rule. They rarely work out. Occasionally I'll break that rule if I've done research or really like the dev team but these are far and few between. Also, it's unfortunate, but it's the wild west out there right now and it's just to easy for a dev team to put together a project, collect a bunch of money from the ICO and then do nothing. Happens far to often.
If I see an ICO I like, I usually wait till after the crowdsale, let the coin hit the exchange, see what the devs are doing, look for community support, then maybe try to buy in on a price dip.
So many ICO's as of late , be careful everyone.
I agree, people are comparing ICO with pre-mine but I disagree with them. A pre-mine isn't worth anything unless the coin is a success and the coin wont be a success unless the pre-mine is used for promotions, campaigns and hiring.
I hope people will start focusing on old-school developments instead!
ICOs are a new gray area in finance that comes with probably more risk than upside in most cases. So easy for scammers to issue a new token and run away with the proceeds. Unlike the IPO equity counterpart in traditional finance, ICOs come with no legal claim to ownership, so you're truly at the whim of the issuer.
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个人认为NEVERDIE ICO 也不错，在我个人热帖里，Neverdie.com
https://steemit.com/cn/@maxtill94/neverdie-ico-erc20-ico