Initial Coin Offering (ICO) is a digitalized crowdfunding initiative that sells digital tokens through block chains using cryptocurrencies as the medium. It is considered convenient for companies that want to raise funds as well as swiftly and cost-effectively reach out to financial sources. From the standpoint of an investor, there are many success stories in the beginning about the initial sales of tokens. However, there were also gaps for scammers to take advantage of. Therefore, before investing in anything, one should spend enough time considering all the conditions.
When you want to know someone, what you start with is asking for their name. Considering ICOs is the same. Take your time in getting to know who the developer was and who the current consultant is. Take their names and search on Google to research their past achievements through various websites, social media channels, or even their LinkedIn profiles. Find out who they are connected to, what their accomplishments are, whether they are transparent in putting smart contracts up on their website, and how many followers they have online. There was one incident in China where fake ICO crowdfunding services with fake education degrees were found.
When investing in regular markets, you will receive a prospectus that explains what you will be investing in and the ratio of your shares. The ICO’s white paper works similarly, describing what this project will do, how, and for how long. For instance, JFIN Coin’s white paper states that there are three companies involved, including J Venture, J Fintech, and JMT. It also explains that these three companies have different roles, such as recording credit card data, managing costs of loans, and accessing financial assets before allowing loans to happen. Later, it covers the conditions of token usage, including what the tokens could be used for, such as to buy products and receive revenue from profit. Most importantly, don’t forget to to consider the possibilities of the businesses you are investing in, as with crowdfunding through ICOs investors will usually discuss about practical financial expansions and gains from tokens.
However, crowdfunding through ICOs does not guarantee that there will not be any stumbles along the way. For example, if you invest in an ICO about tourism, you will also have to consider the size of market for those specific products, consumer channels, and whether it will successfully solve problems.
Upon investing in ICO, we can observe discussions among investors through Facebook groups, Twitter, Telegram, as well as networking events for digital investors. In Thailand, we have founders of ICOs or exchange boards joining in on discussions. That is when you should take advantage of the situation and ask questions that will eventually help you decide whether you should invest in those particular ICOs. If the founder could not provide you answers to your concerns, you will have to take into consideration whether investing in his ICO is such a good idea.
VC, or venture capital, is a huge financer equipped with a lot of experience in investments compared to small analysts. Naturally, a VC has strict investment guidelines in the very beginning, in which we could implement accordingly when considering investments.
The team at TDPK would like to leave our readers with a proven opinion there are no investments in this world that comes without a risk.
Investments in IPO in the Stock Exchange of Thailand still comes with a risk, but there are also laws that aim to prevent damages that may occur. However, that is not the case with ICOs. The Securities and Exchange Commission had stated that this is beyond their scope of regulatory responsibilities and had asked investors to carefully weigh their decisions before investing, as there are often high risks in high returns. Please take our words into consideration as the TDPK team would not want to see our readers take swift actions and become new victims on news pages.
This article was first published on TDPK Facebook.