A common term in the world of cryptocurrencies is the Initial Coin Offering (ICO). Successful ICOs have been a source of wealth for many cryptocurrency investors. But it also comes with a share of risks.
Let’s get a deeper understanding of the term, from Artur Hochberg, an expert in the field.
What is an Initial Coin Offering
It is common for new companies to offer a portion of their company to investors in exchange for funding. The same case applies in an ICO only that, in this case, the investors receive new cryptocurrency in the form of a token with the expectation that it provides good returns on their investment.
The investors provide funding in the form of fiat currency or preexisting digital currency. The company uses these funds to meet its goals.
ICOs are decentralized and unregulated. There is no governing body overseeing them, which makes it a hotbed for scammers preying on overambitious and careless investors.
The fact that you are reading this guide by Artur Hochberg soarfx.com is proof that you are willing to take caution when getting involved in an ICO. And we will guide you through it.
Precautions when Participating in an ICO as Explained by Artur Hochberg
There are a few things you should be careful about when backing the new cryptocurrency company.
Do they have a white paper?
A white paper provides information to the investors on their goals. It will indicate what they intend to do with the money and how much they expect to collect. An ICO that does not have a white paper is a red flag. If the whitepaper is not understandable or is inconsistent, that’s another red flag.
Know Who You Are Working with
You are going to be investing your money in this project. You need to know who is behind it. Expect 100% transparency, and if you do not get it, pack your money and leave. The developers should be open about their location. They should answer questions from investors openly and be clear on issues such as the timeline for the project.
Read Between the Lines
Do not assume anything. Some vital information could be stored in the legal Terms and Conditions. Besides, ICOs are largely unregulated, but with the understanding of the terms of the contract, you could legally fight any breach of the agreement.
Insist on Using Escrow Wallets
An escrow is the use of a third party to regulate payments between two parties for a specified transaction. It eliminates the risk of you making the payment and not receiving the token agreed upon. An escrow wallet will only be accessed using multiple wallets, and when a third party holds one of the keys, you can protect yourself from ICO scams.
Final Words
There is no guarantee that an ICO will have high returns or that it will not be a scam. But the risk is worth it, as explained by Artur Hochberg Malta.
Be careful when transacting by understanding who you are working with and the terms and conditions of the agreement. Be sure to use escrow wallets. Follow these tips, and you are assured of minimizing the risk of losing your money.