Why do so many ICO’s restrict US Investors?
First of all, in an Initial Coin Offering (ICO) the product you’re buying is nothing. Yep you read that right, it is absolutely nothing. It would be an extreme liability for the issuer of a coin to promise you anything at all. Even the mention of a promise of value would be patently false.
So What is an ICO?
An ICO is the sale of an imaginary asset, usually highly overpriced, to raise funds for a project or idea that the coin issuer came up with. Essentially, it’s a crowdfund where you trade something of value for something that may or may not represent an asset that may or may not ever be created.
Why Do People Invest? It sounds like a scam
It can be a scam, you can lose 100% of the investment you put into any coin. Even Bitcoin has no value other than what’s agreed on by people who buy and sell it. People invest because they either trust the issuer or they believe the coin will appreciate in value.
Usually the coin loses value after the initial bubble
A coin, especially without substantial backing, frequently depreciates immediately after the end of the ICO. The reason for this is that the people who received free coin, via “airdrops” or by being members of the “premine”, often sell some or all of their coin as soon as exchanges accept it.
If it’s not a scam, why do preminers sell so fast?
Preminers aren’t in it for the long term, these “investors” want a quick turn on the value before anything has an opportunity to crash. After the premine dump, remaining coin holders are in one of two groups; Long term investors who have faith in the project, and Short term market makers that create waves and bubbles in the coin’s value.
A coin is made “legitimate” by investors and the value they give it.
Should I invest in ICO’s?
The simple answer is the answer to another question. Do you like to gamble?
An ICO is a gamble, the likelihood of success is really no better than the likelihood of a good poker hand. If you have faith in the hand that the issuer is showing, then invest. If not, stay away.