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ICO Pros & Cons — What You Need to Know

Cryptocurrencies are revolutionizing the world as we speak. Who knows, by the time you finish reading this, a new ICO could be launched and millions of dollars could be pouring into it.

The cool thing about ICOs is that anyone can do them, even you. You could earn millions of dollars if you launched an ICO.

You should be thinking now — What in the world is an ICO?!

ICO means Initial Coin Offering.

Well, what does Initial Coin Offering mean??

If you’re familiar with Kickstarter or IndieGogo, ICOs will make a lot of sense. It’s essentially crowdfunding for a new cryptocurrency.

ICOs START NEW CRYPTOCURRENCIES

Imagine you’re scrolling through Kickstarter and you see a “new project.” That project would be a new cryptocurrency. If you decided to invest in it, you’d get the early bird (sale) price for being a first investor.

Instead of receiving a product for your money, like you would on Kickstarter, you’d receive “tokens” for the new cryptocurrency. Those “tokens” would then increase or decrease in value depending on the total amount of investment the ICO received.

Simple enough, right? Now that you understand what an ICO is.

We are going to explain to you some pros & cons of launching an ICO:

Pros

1- Equity stays with the founders, 100%:

Unlike VC (venture capital), where you trade company shares for funds, ICOs trade tokens for funds. That means that founders keep 100% of the company.

2- You can raise much more money than VC funding:

Because ICOs are public and available for anyone to invest in them, the amount of total money raised has a much higher potential than that of VCs, where only a very limited number of people know about it.

3- Marketing strategies are abundant for launching an ICO:

There are well-defined and clear paths on how to run ICO marketing campaigns. Plenty of articles and books have already been written about them. There are even teams who specialize in launching an ICO

4- You can raise funds with only a “white paper”:

A “white paper” is a document that founders provide potential investors in order to convince them to invest in their cryptocurrency. It should give a summary of how everything will work and what the plan will be. Your white paper could be the tipping point for many investors.

Cons

1- Highly recommended to reserve 15–25% of raised funds:

Founders need to save a big chunk of investment as a reserve fund in order to maintain a stable price for the token in uncertain times.

2- Public reputation may be harmed if the ICO fails:

If something goes wrong in the ICO, the founders’ public image can be severely damaged.

3- There is little to no regulation:

Because cryptocurrencies are fairly new, there is still no efficient way to regulate it. This could make investing incredibly dangerous

4- It is harder for investors to place their money into ICO:

Users have to hold a solid technical background in orders to obtain new currency. Luckily, there is a solution to solve this problem. You can use Citowise wallet to make investments into almost any ICO campaign worldwide and see the result in seconds.

Our wallet has a list of running and upcoming ICO.

Also, keep in mind that if founders don’t plan their ICO well enough, investors will take advantage of it. These mistakes can cost thousands, maybe millions, of dollars and ultimately cause the cryptocurrency to fail.

There are many more pros & cons of an ICO, but we decided to focus on the basics in order to give you a simple understanding.

And of course we are interested in hearing from you