The idea of coming up with ICOs as a way of crowdfunding for blockchain projects was brilliant. Borrowing heavily from the IPO models, it eased the way raising funds from all corners of the world for major projects. Investors from all over could now invest in their projects of choices without worrying about geographical limitations or extraneous verifications strenuous processes. As a form of crowdfunding, Icos elevated the financial industry to another level. However, it could be a curse in disguise. This is how……
Why are ICOs popular?
The application of blockchain technology in the real business world has excited many. But the lack scalability of the current blockchain technology has been the main reason why it’s difficult the technology as it is. The idea of alleviating scalability is the origin of most of the ICOs. Thousands of developers have with ideas of decentralizing the blockchain technology to achieve millions transaction per second to meet real-world business needs.
But the current ICOs’ influx into the market as much as it is a good thing, it is also worrying. Whereas we agree that new ideas will keep coming up every day, the trend casts a shadow of a doubt to some ICOs. Since they are unregulated, how can you tell who is genuine and fake? Who are the real faces behind these ICOs?
But how many ask these questions when a token suddenly pops on Binance and other exchanges? Well, the number is very few. Unfortunately, traders want is just to buy the cheapest token, hold it while waiting for the value to rise without asking questions. That’s where the problem is.
So what is the way forward? Well, ICOs are here to stay. It is has proven to be an effective way of crowdfunding for major projects. Therefore, there is no doubt that much more will be coming up every day as the technology keep advancing.
What’s the Worry about
Unfortunately, some scrupulous fellows could be putting up ICOs to swindle public money. Not all projects will see the end of the day. So the popping up an ICO every now and then could be a curse in disguise. That’s why traders need to beware of some of these projects.
How to avoid getting scammed
some the question that traders need ask themselves is how viable is the project? How will impact the intended industry? Does the team have a provision for continuous improvement? Who is running the project? Do they have a prototype project already? Any serious cryptocurrency trader, they should have these answers at the fingertip.
Research on each member of the team and mostly their experience and more so if they have ever handled a project of such magnitude. That will give you an idea if it is a mediocre team or serious people who have achieved great projects before.
The Whitepaper Ghost
The other thing is the issue of the whitepaper. What is a whitepaper? Some traders are confused by meticulously written copies of these documents. It is recommended if you can focus on the products and not stories. Invest in an ICO that has a project running. Avoid investing in a mere whitepaper no matter how convincing it is.
Now you know! Invest wisely and don’t be misled. The blockchain is the future and investing in a genuine ICO is a great investment.