Funny Money | Cryptocurrencies: Heads You Win Tails You Lose.

What are ICOs? ICOs are initial coin offers, when a company wants to raise funds to set up a cryptocurrency token, often they initiate an ICO to raise funds, ICOs are a form of crowd funding and crowd funding is the new format that has evolved to bypass venture capitalists or approaching the financial market to raise funds because these traditional channels are fraught with bureaucracy and huge expenses, so to bypass this crypto companies are now going via the ICOs to raise funds.

So, what are initial coin offerings, initial coin offerings are an unregulated, (please note this: cryptocurrencies main unique selling point is the fact that they are decentralised, being decentralised ties in with having none or very little regulation; the idea of crytpcurrencies are a completely or as near as possible, democratised financial platform), means of raising funding which is used mainly if not solely by cryptocurrency start-ups.

With this format, the investor invest either through fiat money or a crypto and in return they get a vested interest in the new currency being created, often ICOs are incentivised, there are offerings where you get 30% more on top of the tokens that you buy or you buy the tokens at a discounted rate.
The coin or token that you buy effectively serves as a form of digital stock certificate similar to own shares on the conventional stock market.
This concept of ICOs was started off in 2013 by a token called Mastercoin and it quickly gain momentum with coins like Ethereum, etc. using this format to crowd fund, Ethereum as at the date of this recording has had the most effective use of ICOs with approximately 50% of the Ethereums in circulation being own through this format.

ICOs are not without their controversy, in September 2017 the Chinese government banned the use of ICOs, not only did they do this they also passed a retrospective edict compelling ICOs that had taken place prior to the law being promulgated to refund the funds raised via this format back to the investors or face “severe punishment according to the law” and we can only guess at the severity of this under a draconian regime such as the Chinese government.
ICOs remain a popular means of raising funds primarily because it is quick and easy, companies can raise the full funds that they need virtually within seconds of launching the ICO, in fact, ICOs are so popular and oversubscribed that some of the more robust ICOs are having to create an investors presales audit list which the use to audition who can invest and how much they will be allowed to invest and there is a reason for this.

The reason why ICOs are so popular and the companies, as opposed to the investors, have the upper hand is because the cryptocurrency market is so lucrative at the moment, if you happened on a good currency then it is virtually a license to print money, for example, Etheruems were trading for approximately £7 as at November 2016, as of the date of this recording, Ethereums are trading for approximately £250, so, if you had invested a modest £1000 in Ethereums in 2016 then you can calculate your gains as you make your way to your local Ferrari showroom.
However, because cryptocurencies are so lucrative, they are also fraught with danger, in a free for all wild west awashed with money platform such as cryptocurrencies you will inevitably attract crooks scammers chancers and schemers and this platform is no different. Investing in ICOs is a shark invested cesspit, there are all manners of iffy goings on in there, there are tokens with little or no prospect being hyped up and sold, there are offering being sold for the sole purpose of grabbing the money and running, there are all manner of people setting up websites and putting together glossy and impressive proposals to impress and deceive people to relieve them of their money, etc.

So, though investing in ICOs are a near sure fire way to a financial big bang, there is a lot of hard work needed to get from that B to the bang.

There is a lot of research needed before you decide to invest in an ICOs, first you have to research what the token is offering, its place in the market and the need for it, then you have to research the team behind the token, what is their pedigree what have they done before, what wins and fails have they had and most importantly what is the nature of their fails, fails are okay but what underpins it an crucial aids to decision making.
You also have to research the roadmap/business plan of the token, you must find out how much token that they are intending to create, (traditionally, crypto tokens state how many tokens that will ever be created, e.g. we all know that there will only ever be 21 million Bitcoins ever created), this would enable you to weigh the ICO price Vs the total tokens to be created to give you a sense of the market value of the token, you can then determine if the price par unit/market value of the token justifies what the token is seeking to do before deciding to invest in the token.
Another consideration to bear in mind is the presale distribution of the token, often a percentage of the tokens are distributed to the management team prelaunch, now I do not personally agree with this but I have a reluctant understanding of the profiting from your hard work, (GREED!) idea, (personally I feel a 100% of the offering should go to the open market, the management team can use their own money to invest if they had so much confidence in the token/coin/stock etc. by allocating tokens/coins/stocks etc. to them free of charge this really creates an all gain no lose scenario, they have invested nothing, and no, the time/expertise invested does not count because if you they are already plentifully remunerated for that, if they are to be advantaged at all for being in the inner caucus then they can be sold the tokens/ coins/ stocks etc. at a reasonable discount but definitely not given them free of charge. That is just plain cheating. ), you should consider how much of the tokens are being given to the management team as a form of golden handshake, how much of the tokens are being held back as a buffer to support the currency, (e.g., Ripple are creating a 100 billion coins 50% of which will be held back to defend the currency, this to me is not a decentralised currency because half the total available coins are being held in private hands to manipulate the market).
So, to bring the conversation back into focus, ICOs are crowd funding tools used typically used to raise finance for cryptrocurrency start-ups, they are a good and a profitable way to invest because it enables you to get into an investment at its initially stages, however, before you decide to invest you need to take into consideration some of the factors discussed above, additionally, you need to do your own detailed and extensive due diligence.