The Problem With ICOs

We all love the idea of the ICO right? I mean, bringing the power of investing into private companies back to the little guy. Nowadays you do not need hundreds of thousands, or even millions of dollars to be early into the next potential "Facebook" or "Microsoft" but rather a much smaller sum of money represented in cryptocurrency.

So why then would I want to write an article about the problems? Because people are dumb. Not you, dear reader. You are highly intelligent, but maybe this is something you can send to your dumber friends.

People need to realize that an ICO, while similar to an IPO that a company might issue on the stock market, is not the same. In that, there is almost no regulation for what they can do with the money. An ICO is more akin to a kickstarter in that your money is a donation. Now, are there good companies out there? Absolutely. There are some fantastic companies that have had ICOs and I have invested in them myself. But just like with any industry in which money is involved, there will always be scammers.

Let's start with research. you must learn how to do your own research. From the terms of the investment, to the team backing the company. Read the whitepaper. On top of that, look at the fundamentals. Are you speculating on a pump and dump or can you actually see yourself using this product. It seems like everybody and their mother is issuing a cryptocurrency these days, find something good.

Avoid playing ICO roulette. Meaning, try not to throw money at every single coin or token that has an ICO. Historical data shows us this is generally less profitable than holding on to a select few strong coins.

Do not let yourself become emotionally attached to any coin you have, or any ICO you are thinking of getting into. I will not write about which recent ICOs I think were not worth it, since I'm sure we can guess as a collective group of smart readers. That being said, if a company adjusts the rules of the ICO abruptly and soon before the ICO, maybe it is a sign to take another look and decide if you still want to buy the coin.