Have you ever heard of an initial coin offering? If not, you need to get caught up because a lot of people have made money with these investment opportunities. Initial coin offerings are growing in popularity, but they’re not suitable for all investors. Therefore, it is pertinent for everyone to learn more about them and the benefits they offer. Most people know about IPOs on the stock market. ICOs are similar but there are some differences. Within this guide, readers will learn more about initial coin offerings and the reasons to get involved.

What Is an ICO?

If you regularly trade stock, there is a good chance that you’ve heard about IPOs or initial public offerings. When a company decides to list its shares on the stock market, it will likely do so using an IPO. When the stock debuts, investors can purchase its shares. The first day of trading is usually volatile so there is money to be made. An ICO is similar but it has nothing to do with stocks or the stock market. Instead, it is an initial coin offering. ICOs are unregulated so it is important to be cautious.

Nevertheless, they’re great for people interested in buying cryptocurrencies. ICOs are used to raise funds for new cryptocurrency ventures. If you wanted to start a new crypto, you could use an initial coin offering to raise money. Then, you can use that money to further develop your new cryptocurrency. Below, you’ll find out more about the latest ICOs.

A Different Game

It is vital to understand that IPOs and ICOs are much different. You’ll find that IPOs allow the investor to obtain an ownership stake in the company. If you invest in an IPO, you’re going to buy shares of the company. As a result, you’ll have voting rights and other benefits. When you decide to invest in an ICO, you’re not going to receive the same benefits. If you’re confident that the cryptocurrency is going to be valuable in the future, you should invest in an ICO. Otherwise, you’re going to be stuck holding a worthless currency.

You’re getting the opportunity to buy a cryptocurrency before it becomes mainstream. There are risks involved, but ICOs can be profitable from time to time. It is often easier to make money this way instead of playing at a casino online.

Launching An ICO

Again, IPOs are heavily regulated by the SEC. As for ICOs, they’re not. Anyone can launch an ICO. There are few, if any, regulations on ICOs in the United States. Although it is great that people have the freedom to launch an ICO, it creates a risky situation too. When dealing with ICOs, you never know whether you’re dealing with someone shady. It is pertinent to carefully research the companies or people in question. You must make sure that they’re being honest. Otherwise, you might hand your money to a criminal.

If you’re eager to get involved in the latest ICO, make sure you research it first. Don’t lose your money to a scammer.

An Upcoming Crackdown?

Right now, the ICO market is the wild west. Again, there are few regulations. However, this could change soon. Energywin Casino was forced to adapt to new regulations on online casinos. The ICO market may experience the same. In December 2017, it was announced that the SEC would classify ICO tokens are securities. SEC Chair Jay Clayton explained that a token constituted a contract, so it was a security under federal laws. Although it didn’t change much, it could. It likely means that the SEC is going to crack down on ICOs soon.

It will likely go after ICOs that attempt to mislead investors. It started on December 11, 2017 when the SEC stopped Munchee from launching its ICO. There is a good chance that this trend is going to continue.

Summary

Initial coin offerings are growing in popularity, but there are risks involved. It is good that anyone can create an ICO, but this creates a problem as well. There aren’t enough regulations to keep scammers out of the equation. Therefore, investors need to be extremely careful when investing in ICOs. If they’re not, there is a good chance that they’re going to lose their money to scammers.