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The craze of ICO (initial coin offering) took the world by storm between 2017 and 2018. Although the interest in ICO is reducing, the reasons why you need to participate in token sales have not changed.
So, why should you invest in an ICO? We will consider some reasons why in this article.
Reasons Why You Should Invest in ICO
Profit and opportunity to take part in ambitious projects
These are the main reasons why people invest in ICOs.
To support a crowdfunded project, you need to donate money. In an Initial Public Offering (IPO), which is the traditional way of raising funds on a stock exchange, an investor will get shares in the company. This comes with voting and dividends rights.
In an ICO (also referred to as a crowdsale), investors will need to acquire tokens that will give them different benefits. They expect that the project they are investing in will become successful, and the value of the token will increase. For instance, the Ethereum blockchain project raised $18 million in bitcoins in 2014 when it sold Ether for $0.40. The price of Ether had risen to $750 in December 2017. This means that if you bought $100 worth of Ether coins during its ICO in 2014, your investment would have been over $187,000 in December 2017.
Access to different types of rights
There are other benefits of ICO investment apart from an increase in value. According to Smith+Crown (a research company that specializes in blockchain and cryptocurrency finance), tokens give the holders different gifts. Each token can give the holder many types of rights.
The rights include:
- Payment rights
This refers to a situation where the token is the only payment method for a platform or service.
- Access rights
It is the situation whereby the token is needed before the platform can be used.
- Profit or fee rights
This is a situation whereby the holders of a token receive a percentage of revenues or profits.
- Contribution rights
It is the type of rights in which the token holders are permitted to participate in maintaining the network that does not have to do with creating blocks for a blockchain.
- Block creation rights
In this case, the tokens determine the person that is in charge of the security of the project’s blockchain.
- Governance rights
It is the type of right whereby token holders can influence the features, direction, and protocol of the project.
The specific rights that come with a particular ICO token need to be specified in the whitepaper or ICO website.
I hope this article has done justice to the question; “Why should you invest in an ICO?”
If you found this article useful, you will also love our guides on:
- How Is Cryptocurrency Taxed?
- What Are Stablecoins and How Can You Make Money With Them?
- 3 Reasons Why You Should Own Some Cryptocurrency
Thanks for reading.