Ico and token sales risk: Understanding the unstable world of cryptocurrency
The increase in cryptocurrency has caused a new era of innovation, entrepreneurship and financial freedom. However, great responsibility is accompanied by great power and the world of cryptocurrency is not without risk. One of the most common traps for the first investors is the initial range of parts (ICO) or to sell tokens. In this article, we are diving on the risk of ICO and the sale of tokens, helping to make conscious decisions while investing in the cryptocurrency market.
What is ICO?
The initial range of parts (ICO) is a type of securities offer in which the company passes its own cryptocurrency tokens to collect funds for activities or future projects. In return, investors have access to these new parts or tokens that can be used for various purposes, such as trade, investment and even keep them as an investment.
Risk linked to ICO and to the sale of tokens
Although ICO can revolutionize the way we think of raising funds and investing in cryptocurrency, there are several risks linked to these events. Some of the most important risks include:
- Safety risk : The safety of cryptocurrencies is not as solid as traditional assets, such as shares or bonds. With an increasing number of people using digital currencies for daily transactions, pirates and cybercriminals are better likely stealing your parts.
- Liquidity risk : ICO often lacks liquidity, which hinders the quick sale of tokens if you need to access your funds. This can cause significant losses if the market falls or the token becomes less precious.
- The token in error : Many ICOs have been harassed by tokens in which companies claim that their tokens have unique functions or use them in a way that they do not really exist. Investors who buy these tokens at the start of ICO can end up with parts without value later.
4 The changes in the regulations can affect the value of your tokens and even make them worthless.
- Variability of the market : The cryptocurrency markets are notoriously unstable and prices quickly change in response to moods and market messages. This can cause significant losses if you invest in a token that is not well supported by its basic use.
Types of risks linked to the sale of tokens
Although ICO and the sale of tokens are shared with certain typical risks, there are several types of risks specific to these events:
- Turning tokens : The tokens can be overestimated or underestimated due to their value or their request perceived for them.
- No use of use : If the token has no explicit use of use or conviviality, it may not have its value, even after initial sales.
- Risk adjustment : As mentioned above, regulatory changes can affect the value or lifespan of a specific token.
Protection against ICO risk
Although there is a risk associated with ICO and the sale of tokens, you can take measures to protect yourself:
- Do your research : Before investing in a cryptocurrency, examine its basic technology, username and team.
- Check the information : Check the company’s information, including its website, social media and public registers.
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