Since the first ICO campaign in 2013 by Omni Layer (formerly mastercoin, built on the bitcoin network), there has been a surge in the patronage of unregulated crowdfunding events. In the past two years, more ICO products have been released into the internet market with cumulative huge amounts of token sales breaking the boundaries of $3,353,094,276 USD. Early investors in the Bitcoin cryptocurrencies have reported earnings of over 3,000% since they started.
These testimonial as we would expect has pulled a large crowd around this phenomenon. New practical use cases are being investigated on a daily basis with more asset-backed tokens with real life applications being created. Companies are expanding through their R&D to include decentralized blockchain technology to solve daunting problems.
Tokens and cryptocurrencies are often viewed as store of value, now this value like every other commodity can depreciate or appreciate, depending on market activity. But why it is profitable to invest in ICO?
When bitcoin emerged in early 2010 it traded at $0.008 to a coin, within 5 days the price had risen 1000%. Over the years, the price of BTC has showed a preempt value above its contemporaries.
Imagine being one of the early investors, having just 1 BTC stored in a wallet, and having to see the price grow from $0.008 to over $6,000 in just seven years. No doubt, an appetite for other cryptocurrencies will be created, especially when one has the funds to purchase the stakes in high volumes, the return on investment would be exceedingly large. Digging through history, we find an incidence in the early days of Bitcoin, where individuals negotiated price of 2 pizzas to be 10,000 BTC. That number at this point in time would amount to over $60,000,000; – those pizzas should have been kept in the museum as a monument.
Ethereum is also another good example of tokens with remarkable interest capitalization after its inclusion in the exchange market. Second in global crypto market capitalization, Ethereum started out with a price index of US$2.83 per ether in August 2015 to as high as US$414.76 per ether in June 2017.
There are many other examples similar to that of bitcoin and Ethereum showing potential for great ROI; the essential goal of a tokenized digital asset, crowdfunding is eventual to become a cryptocurrency tradable and has inherent value on the market exchange platform.
Similarly, what tokenized digital asset offer are no different from the perceived growth and proliferation potentials the Bitcoin cryptocurrency models. The question then is what kind of returns can one get and how long does one have to wait before getting the desired output profits.
What drives people to create ICO projects are the updated proofs of how blockchain technology can solve inherent societal needs? Whether or not a person chooses to invest in an ICO all depends on his understanding of the underlying concepts on which that particular ICO ideology is founded.
More people believe in the aptitude of the blockchain technology despite it being in its infancy stage of development. Notwithstanding, the extent to which this technology can be exploited is currently unknown. As of the time of this writing, there are over 249 ICOs from 2016 to date, out of which 203 were created and executed in 2017 alone. This shows the potential of more ICOs rolling out in the coming year.
Profits that could arise from investing in an ICO can be divided into two categories:
Short term: this involves buying tokens during the pre-sale and main sale and right after the tokens / altcoins have been listed on the exchange market, they are sold and quick profits are made. This type of investment creates multiple opportunities for other investors who didn’t get in early on the token sales period to affordably purchase the tokens are a much cheaper rate. This is because, most ICOs give out incentives to their early investors and these investors leverage the bonuses attached and the entry point market capitalization of the ICO when it hits the exchange market.
Long term: some investors hold their tokens for a longer period of time and wait until the full measure of the potential in the project is attained. This provides an advantage to people who have speculative inclination to bullish returns to gain on the merits. Most investors who hold onto their tokens / altcoins for longer periods tend to gain from the day-to-day trading activities of the cryptocurrency. On a daily basis, due to market fluctuation, some traders have been able to realize huge profits from their trading activities.
While there appears to be risks involved in ICO crowdfunding events due to unregulated nature of the program, jurisdictional barriers, presence of scammers and hack threats; the promising returns far outweighs the uncertainties and uneasiness involved in staking few dollars into a system that provides a decentralized economic services.
Having said all that, not every ICO project that promises huge returns live up to their claim. Most of the projects may have genuine interest in meeting up to expectations but due to low pool of investors, they ultimately close up shop. Others fall in the categories of not being able to maintain a steady market value and don’t hold their value in the long-run thereby further driving away other prospective investors. The last category comprises of those who set up shop to scam people, and have no intention of pursuing their objectives from the beginning.
Investors may want to look at the following among others when choosing an ICO to invest to get higher profitability:
Profiting from initial coin offering events can be very tricky, as technical and analytical skills are involved. But once one has gotten the right parameters in place, all one needs to do is watch the dynamics of the market and make a move where necessary.
As a final note, be it cryptocurrencies, tokens, altcoins, or an ICO. There appears to be a potential economic inclusion in the global market that is currently abyssal. It would pay off in the end to join the wagon not for fear of missing out, but for investment purposes made through informed decision.