I’m sure by now you’re constantly seeing new ICO’s in your Facebook feed. And usually the advert mentions Bitcoin and how you’ve missed a great chance to be a millionaire. The success of Bitcoin has made ICO’s a very tempting investment. Before you jump in here are five things to consider before investing in ICO’s.
Do you understand what you’re doing?
If words like blockchain, tokens, wallets sound like magic then you should avoid them. As a rule of thumb you shouldn’t invest in things you don’t understand. Do some Googling, read some books and understand how it works. This will help you evaluate new cryptocurrencies and make better decisions.
The ICO craze is just starting
ICO’s are tempting because of the fear of missing out. But blockchain is a new technology that people are just starting to adopt. There will be many more new coins introduced to the market in the near future. And they will usually be better because they have learned from the mistake of the previous coins. So be prepared and don’t lose your money chasing quick gains.
Do you already own crypto currencies?
If you don’t own even a little bit of cryptocurrencies you probably shouldn’t participate in an ICO. There are many exchanges where you can easily buy them. I personally use cex.io to buy Bitcoins and Ethereum. They support Sri Lankan accounts and have some good security measures. For example you get instant email notifications about logins and they have two factor authentication. This will provide you with some understand of wallets and the crazy price fluctuation of cryptocurrencies.
Existing coins at attractive prices
For all their hype you don’t know whether a coin offered by an ICO will ever take off. But, there are already established coins that are steadily making progress. For example, Ripple(XRP) is a well established coin already supported by some banks. As I was writing this article the price of Ripple is just $.0223. Dash, Litecoin are few other established coins that I personally feel will do well in the future. So instead of focusing on investing in ICO’s you can invest in those coins. Below image show the top 12 cryptocurrencies bases on their market capitalization.
Are you ready for extreme price fluctuations?
As I mentioned before cryptocurrencies are relatively new concept and their prices fluctuates dramatically. The prices go up and down 30% to 70% regularly based on news. For example the price of Ripple shot up by 70% when the Japanese Bank Consortium was formed. Even a well established currency like Ethereum fluctuated heavily. Below is the Ethereum price chart for 10, June 2017 to 31, August 2017 courtesy of Coindesk.
As you can see the price have doubled and halved within 3 months. So if you’re looking looking for short term gains then this is probably not for you.
Investing in ICO’s is risky and rewarding
Investing in cryptocurrencies itself is a bit risky. So Investing in ICO’s is even more risky because you don’t know whether the coin will take off. However, you shouldn’t ignore them because you don’t understand them. Take the time to understand them and be prepared to profit from them. If ICO’s seem like a risky option for you then check out more safer options like copy trading and other methods to make money online from Sri Lanka.