Understanding the Structure of Initial Coin Offerings

March 18, 2018 by Adrian Thorpe

There are bound to be lots of questions that you may have if you have been considering buying into an initial coin offering, and today’s I have decided to give you run through of what to expect if you do invest in one.

The first thing you will of course need to find out, when you do select an initial coin offering, is whether there are any incentives for investing when an ICO launches or during any pre-ICO period.

If there are bonus coins and tokens to be claimed then the earlier you invest the better, if you are willing to invest in that ICO, but never be tempted to invest purely on the amount of bonus coins or tokens you are offered.

Also, regarding such incentives it is important to find out when those bonus coins and tokens are going to be distributed and whether you must claim them too, for some ICO’s require those early investors to put in a claim in one way or another to have their bonus tokens added to their wallet.

You are also going to find that some initial coin offerings as well as some token events will only issue you with the coins or tokens after the chosen time period for the ICO or token coin period has expired, so make sur you make enquiries to find whether that is the case or they become available the moment you purchase them.

Money Back in Soft Cap Not Met

There are going to be all manner of different rules in place when you do set about investing in any ICO, and one thing worth making a note of is regarding what will happen if the ICO does not meet its soft cap, hard cap or a set amount of cash from the ICO.

Some ICO’s will have rules in place that stipulate that all funds will be returned to investors if they do not reach their funding target from an ICO, and that will often be written into the smart contract.

However, some of them will not have such rules in place, and as such the project behind such ICO’s will continue even though they may not have met their funding goals, as such it really is important you find out what will happen to your invested funds.

Possibly the best ICO to invest in will be those that do have rules in place that stipulate all investors funds will be returned to them if the funding goals are not met, for it could be the case the project behind the ICO will fail if they do not reach their funding goals

However, at the end of the day it is always up to you whether you should invest in any ICO you come across or not, and that is something you should think long and hard about, for it is your cash after all you are investing after all and it is always going to be at risk when you do invest in such projects.

Buying Established Coins and Tokens

There is money to be made by buying into any coin or token that has been established, however they can be just as volatile as cryptocurrencies such as Bitcoin and Ethereum, so you do need to be fully aware of the risk when investing in them.

However, if you have made the decision to buy into any coin or tokens that have been established you may have a better chance of making a profit when investing in several of them rather than just in investing in one of them, so keep that in mind for spreading the risk around is much better than putting all of your investment funds into just one coin or token.

Whilst there are risks associated with investing in established coins and tokens, those risk may be slightly lower than the risks in investing in a coin or token that is part of a new start up company, so also keep that in mind for it is all about the risk element when investing in such things.

Please do have a good look around our website if you are interested in investing in ICO’s for we do have plenty of additional guides and articles that may pint you in the right direction regarding just which ones to invest in, and there certainly are plenty of them to invest in by the way!