Guide | Money and Finance

Home > Guide

What You Need to Know About ICO (Initial Coin Offering)

There is a growing interest, in fact exponential growth in interest in ICO (Initial Coin Offering). Financial experts are getting excited about the currency, but despite the apparent successes, so far these are miniscule in the grand scheme of investments world-wide. So why the fuss? The reason being is that so far, that have been no major upsets in terms of investment loss. As long as something appears to be successful then there is going to be an interest, curiosity is probably a better description.

What is ICO? A very simplistic way to describe ICO is it is currency. It is just a different type to what we use every day in terms that, currently this currency has limited use. ICOs are unregulated means of raising funds and growing in popularity.

The technical terms for an ICO is that it is a cryptocurrency, which means that money is converted to a digital code into a different type of currency. Or if you prefer a physical reference, it is like a token.

It could be argued that all the money we have is not carried around in our purses and wallets. Smart phones tell us how much our bank balances are, we can use out phones, laptops and tablets to buy goods and services all digitally. An ICO is based on the same principles, but has limited use for now. Maybe that will change.

However, that limited use of an ICO is potentially powerful and lucrative. ICOs allow anyone to make an investment for a new business venture. ICOs are opening up doors for new venture capitalists who can only, or only want to, invest small amounts in venture capitalism. These days you can find resources such as ICO list and ICO news only.

Investing with an ICO is just the same as using currency from our bank account. Investments could go up or down. Never forget that.

The proclaimed benefits of ICO are, as mentioned earlier ICOs are accessible to anyone. ICOs are democratising access for investment capital. Currently venture capitalism is confined to wealthy corporations and individuals. Some ICO opportunities have had phenomenal results such as a browser start-up launched by former Mozilla CEO Brendan Eich, raised $35 million in under 30 seconds.

Entrepreneurs have increased opportunities to raise capital for their business projects. A diverse mix of investors means that decision making is less restricted without the need of checking with significant shareholders.

A wide range of business ideas can now access funding as the capital investment market has been opened out. ICOs are creating an environment where people can shape the future of product development.

There are, of course disadvantages because investors have no guaranteed rights. Although that could be argued for most traditional investments are also risky.

ICOs could be subject to scams, and some have been reported. Some might be seen as scams and just business ventures that were never going to work. Not all failures are scams. Fans of Dragons’ Den will know that the Dragons almost always ask for more share than offered by the entrepreneurs, purely because not all their investments will be successful. The higher percentage share requests are also to offset losses in other parts of their investment portfolios.

How secure are the codes? This is not necessarily as disadvantage but more of a concern. Every now and again our banks have their systems go down inexplicably, and sometimes have caused inconvenience for customers for days.

comments powered by Disqus