One of the most important advantages of investing in an ICO is the chance of investing in a new, upcoming technology. Almost every ICO is put up to revolutionize the industry that it is targeting and a careful analysis of ICOs can help the investors board the right start-up and invest smartly.
Here, we discuss the major advantages or the reasons why ICOs are something you should invest in, for a long-term great return to the investment, while being assured that you are backing a technology that is going to serve a purpose in the real life.
No entry constraints
Most of the ICOs set the prices for their tokens very modestly and allow even small investors to reap benefits of the sale, unlike most traditional IPOs, small investors now have a chance to make a small investment and in an even that the invested project does well, the investor reaps huge benefits. ICOs have a limited supply-demand philosophy and allow the crypto coins to gain value in the future, the initial investors could leverage the economic importance of the principle and thus increase their chances of profiting in several multiples of the initial investment.
ICO or Initial Coin Offering is the term used to define a process of raising funds for some project and instead of issuing shares as in the case of an IPO, the participants here get coins for their contribution. There are electronic tokens that confirm the investors stake in the project and also investors share in the profit from the project.
The biggest difference here is that while equities in the United States cannot be sold to most of the general public and only about 3% of the adults with more than $1 million in net worth are eligible, the US SEC could not restrict the sale of API keys to the investors without hurting the IT industry and it is thus made available to 100% of the population without any constraints. This increases the possible user base by 33 times and can also be sold internationally which further increases it by over 20 times.
Scope for exponential growth
As per the current Cryptocurrency market, we use crypto-tokens to purchase the services offered by the company and if the cryptocurrency gains popularity over time and acquires the market trust, then the chances are that you can end up using it for most other purchases just like we can do with bitcoin now. This new model is based on the concept of a coin or a token, a digital asset which technology that is inspired by bitcoin. These tokens now have a collective market cap of billions and keep increasing each day.
The rationale behind an ICO funding is that once the product launches and acquires userbase, the demand for the token will increase drastically and this will result in a rise in the value of the tokens or coins that will finally benefit the holders. The pre-sale participants are thus rewarded for their trust with additional bonuses on their token purchase. It is important for the investors to understand that tokens are not equity and are more like paid API keys and the contributors do not measure the attractiveness based on the cost equity but measure it based on the future use of the product, the number of total tokens in circulation and the need or demand for the token.
Contributors are usually the first users of the token and thus the tokens can be more tangible as securities, the returns from the ICOs can also be 1000% or more in the profits and gives an option for portfolio diversification. We recently saw several ICOs booming up in a huge value, two significant of them are the Docademic and Storiqa. The Docademic saw a bump in over 10x and the initial investors made a huge chunk of profit from their initial investments.
No geographical barriers
As token launches can occur in any country, the importance of importance of a particular region to raise financing will diminish. While a large number of technology companies like Google, Facebook, and few other offer valuable products for free, they sometimes come under the light for making billions of dollars and early adopters only receive free service, the token model will provide a technically feasible way for companies to spread the gained wealth and credit the user base behind their success. Tokens will also break down the barriers between professional investors and will act in the same way that the internet helped bring down the barrio between professional journalists and bloggers. The internet will now allow millions of people to become young amateur traders and while some will do extremely well, a huge chunk will even recklessly lose it all.
The Token buyers need only the private keys to be held to guarantee the ownership and it changes the whole market, the final decider of who owns what property is not a national court but an international blockchain. Some of the major advantages of the ICO coins is that they can be subdivided or consolidated just like other cryptocurrency coins. ICO coins also have the same level of anonymity as the cryptocurrencies and they can be sold or bought in the multiple exchanges that trade them.
ICOs bring in a lot of advantages to the contributors over equity holdings and early contributors will have more liquidity in early-stage companies, they also get early access to a token that has a huge potential for rapid growth. It is not registered or regulated by any government organization and is an innovative way to deploy the capital that offers a protection against political and economic shocks.
Tokens have a liquidity premium of over 1000x improvement in time-to-liquidity, while a token has a price immediately upon sale, the price keeps floating freely in the global market at all times. Unlike an equity which takes 10 years for seed investment equity to become liquid in an exit, the token, in theory, can be sold within 10 minutes and although most founders can cryptographically lock up tokens to discourage short-term speculation exit, the overall liquidity time is generally much lower.