ICO (Initial Coin Offering) – What is it in crypto?

Between 2017 and 2021, the values of digital currencies underwent an unparalleled period of consistency, reaching unprecedented heights. Across the world, numerous individuals became wealthy from successful crypto ICO ventures. This development could capture the attention of countless individual investors. Before diving into the growing pool of new tokens appearing each day, it’s essential to carefully weigh the possible drawbacks and advantages.

What is an ICO in crypto?

An ICO, also known as an Initial Coin Offering, involves the release and exchange of tokens by investors, which can be utilized to access services on the platform of a new venture. The primary objective of this event is to secure capital for the project, essential for its successful development, launch, and growth.

In some cases, investors perceive conducting an ICO within the crypto market as similar to conducting an IPO, though this comparison is not completely accurate. While companies considering an IPO might seek additional funds, an ICO serves as a fundraising mechanism to realize a concept.

Simultaneously, additional proof that supports the likeness additionally bolsters it. An initial public offering leads to the person possessing the securities obtained from said offering becoming the possessor of a particular quantity of stock in the corporation. This transpires if said individual holds the capacity to influence its regulations and judgments. A backer who endorsed the Initial Coin Offering doesn’t obtain any capital. Key goal: To ascertain that the tokens hold prospective value in forthcoming ventures following a triumphant launch and marketing. Appraising the standards for financiers and the assessment of a venture

Investor risks and project evaluation criteria

Only arround 11% of blockchain projects made progress after their initial funding. The popularity of crypto ICO, driven by private investors, is the main reason for financial losses. Due to their limited understanding, these investors are eager to invest in any new token, overlooking the associated risks:

• A significant portion of cryptocurrency projects are fraudulent, with estimates ranging from 60 to 75%. So many worthless Tokens (also known as “shitcoins“) are creted from day to day.
• It is highly likely that the completion of the software development process will face obstacles, such as internal disagreements among the development team or ambiguous algorithm design.
• Potential competition from established management systems like blockchain or centralized solutions could lead to projects being abandoned or overlooked.

Additionally, the legal perspective is a critical consideration. However, some countries currently lack clear regulations regarding the cryptocurrency market. Outcomes range from the abrupt halt of Pavel Durov‘s TON project, anticipated to succeed, due to legal actions by the SEC in the United States and China’s prohibition of mining activities.

How to increase chances of selecting a successful project?

When considering embarking on a high-stakes venture, the investor should factor in:

1. The reliability of the crypto ICO and the distribution of tokens. Scrutinizing the White Paper involves not just evaluating the market dynamics, but also gauging the level of user engagement with a specific platform’s offerings, its attractiveness to a broad user demographic and community, as well as its pros and cons compared to competitors.
2. Mapping out the project’s evolution.
3. Facilitating direct interaction between developers and prospective users and investors.
4. Reviewing test iterations for the blockchain protocol.
5. Creating a strategy to allocate extra resources to enhance the network.
6. This serves as a strategic and precise approach for business owners to assess the required funding for initiating the platform and its potential for future growth (considering the funding from crypto ICO).
7. A plan is in place to distribute tokens among developers, investors, and retail purchasers.
8. Exploring possibilities of incorporating the token into the listings of top cryptocurrency exchanges.
9. The roster of prominent investors spearheading the initiative.

In the event that all queries set forth by the creators of the project receive affirmative responses, there is a strong chance of achieving success with minimal risk.