Thinking of Investing in an ICO? These 4 Risks Shouldn’t Be Taken Lightly

Anybody who’s studied investing is probably familiar with the golden rule.  Buy low, sell high.  For crypto investors who want to follow this rule, it makes sense to look for opportunities in Initial Coin Offerings (ICOs).  While there’s nothing wrong with wanting to get in on the action on the ground floor, ICOs pose some considerable risks.  Careless investment in ICOs can lead to preventable losses.

Beware of Blind Speculation:

Financial Writer Eric Rosenberg explains that “An Initial Coin Offering (ICO) is a term for the initial release of a new digital asset. Like an IPO in the stock market, an ICO is the first time new buyers can tap into a currency. ICOs present an interesting, albeit risky, investment opportunity. If you don’t think you can stomach the risk, there are a wide variety of investment alternatives.” Here are a few common risks associated with ICOs:

1. Exaggerated Value/Potential:

ICOs deliberately advertise digital coins as attractive assets.  This means the messaging associated with an ICO is likely to contain generous embellishments.  Failing to think critically about glamorous marketing can expose investors to financial risks.

2. Unpredictable Volatility:

Even if the price of a new coin is perfectly justified at the moment, there is no guarantee that the price won’t fall suddenly in the near future. Cryptocurrencies in general fluctuate rapidly due to market volatility.

3. Coin Offerings are Unregulated:

There are no universally-established rules about how ICOs should be structured and conducted.  This basically means that investors are generally liable for losses incurred for participation in ICOs.

4. The Architects of the Offering May be Inexperienced:

Not everybody who launches ICOs has experience with banking, securities, or large-scale technology.  If you’re going to invest in an ICO, research the engineers responsible for the project.

Conclusion:

Newly launched coins hold a lot of promise for crypto investors.  But it’s important not to get carried away with the fact that ICOs can be cheap.  Always research the background of an ICO before committing funds as an investor. If you like what you just read from our blog, you’ll love the various informative courses, workshops, and events listed on our websites and social media. Whether you’re interested in personal development, health and wellness, bettering your relationships, or the overall improvement of your business, give us a call at 1 (800) 913-0222 to find out how Richard Martinez can help you break past your daily struggles and start soaring in success.