BitPinas. Initial Coin Offering, also known as ICO is your cryptocurrency equivalent of fundraising. Are you ready to invest for a cryptocurrency start-up? We’ll let you know more about this new type of funding.
What is ICO?
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ICO or Initial Coin Offering happens when crypto companies pre-sell their cryptocurrencies or tokens. The funds raised are then used as additional funds for the development of their application, software, or the cryptocurrency itself.
How to join an ICO
You can get in the loop of new ICO by joining Facebook groups centered around cryptocurrencies, Twitter hashtags, and here at BitPinas. These ICOs usually take in other cryptocoins such as BTC, ETH, DASH etc. Usually, instructions to join an ICO are surely posted by the company issuing the ICO.
As mentioned, the company issuing the ICO will set up instructions on how to join it. So it doesn’t matter if you are from the Philippines. It will usually fall along the lines of:
- Buy our coin using your bitcoin – For this, you can use Coins.ph or BuyBitcoin and you will send it to a certain wallet address that they will state.
- Buy our coin using ethereum, or other cryptocurrencies – For this, assuming you already have ethereum and an ethereum wallet, it is simply a matter of sending it to the company’s designated ethereum (or other coins) wallet.
- By using USD – Normally, the majority of ICOs accept USD instead of PHP. If you have a dollar account, then great. You can most likely fund the ICO by depositing to the company’s dollar account. If you do not, you need to convert your PHP to USD first, which is not advisable. We suggest you use the bitcoin guide stated above instead of this method.
ICO Profit or Loss
Since ICO gives you tokens or coins on pre-sell value, you’ll get it at a cheaper price. If the said coin is in high demand, you can make a profit by trading them in cryptocurrency exchange sites or holding them. A good example is Ethereum, also known as ETH. Initially, ETH was sold at 0.0005 BTC per coin and as of press time, 1 ETH is equal to around 0.05 BTC.
From ICO success stories, let us now go to ICO losses. There are some ICO losses like Omni that currently doesn’t have the same BTC equivalent. Meaning, it has lesser value than its pre-sell price.
ICO and Scamming
Scamming in ICO is rampant, sadly. Scammers can just put up a fancy website, write a bunch of fancy words in their whitepaper, promise a great project, and start a countdown for their ICO. They will tend to just accept the coins and give nothing back.
“There needs to be some standards around launching an ICO and investing in ICOs in the space, and I caution all to tread carefully until those standards emerge.” – Nick Tomaino
- Note: You can compare and evaluate ICOs easily by using BitInvestors’ platform. Currently, it is in Japanese language and will be available in English soon! (The owners of Bitpinas also own BitInvestors)
How to spot a fake ICO
If it’s too good to be true, it is probably fake. A lot of these fake ICO just put fancy words like you’ll get 10,000% profit in less than three months or there’s no loss, only profit. Again, if it’s too good to be true, it’s probably fake.
Another thing you should look for is its members or the founder itself. If Founder A posted his name on the site, search him on Twitter or Google and have a good research.
Check the ICO’s whitepaper. The whitepaper is like the ICO’s guide. You should look for words with actual content and not just pure BS selling. Also look at the goal of the ICO or even the goal of the project. Why are they raising ICO? What will they use the money for? Do you believe in what they are building? These are some serious questions before you even invest in anything, be it traditional stocks or cryptocurrencies.
- ICO means Initial Coin Offering. This is when a cryptocurrency company pre-sells their coin/token.
- Funds from the ICO will help develop its cause – project, app, or cryptocurrency itself.
- ICO can mean a profit or a loss.
- There are fake ICOs being put up, be cautious.
Investing in ICOs may be tempting but you have to make sure you’re funding the right and legit ICO. Make reading their whitepaper a habit. Don’t forget to check their timeline too! Once you’re all set and everything is looking good, time to shell out some coins. Investing maybe seen as a gamble, you lose some and win some.
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Notes and Disclaimer:
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- Invest in bitcoins (or in any altcoins) only the amount you can afford to lose!
- Don’t put all your eggs in one basket. Spread your bitcoin and cryptocurrency investment.
- Before investing in any cryptocurrency, check the people behind it, its mission, and other details to ensure that they are worth investing for. Don’t invest in something you don’t know.
- This article is for informational purposes only and does not constitute an investment advice. Your actions are solely your own responsibility. There is no substitute for doing your own research. This website is not responsible for any losses you may incur, nor will it claim attribution for your gains.