ICO stands for Initial Coin Offering. It means an offer is made to buy small percentage of a new cryptocurrency in the market. In an ICO, investors can buy this small percentage of the new cryptocurrency. The ICO investment normally helps the cryptocurrency makers to raise funds to make their cryptocurrency project live. The major risk comes from ICO being unregulated in nature.
For example, in 2014 Ethereum project was annouced and through its ICO $18 million were raised. At the ICO stage 1 Ether was estimated to be $0.40. Ethereum project was live in 2015 and by 2016 1 Ether traded at a value of $14.
As with any boom or upcoming trends, there are risks involved. But calculated investment may surely better the chances of greater gains.
How to evaluate an ICO?
Token are representation of an asset, in this case it represents your stake in the company. You must notice how many tokens does an ICO makes available and at what price?
During an ICO, a company presents their business value or how their product works through whitepaper. This whitepaper should answer all your questions related to their business.
Start & end date
The date when the ICO begins and end. Pay attention to what the ICO intends to do with the unsold tokens. Best case is they destroy, if not then it may deteriorate your invest.
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