Initial Coin Offerings: The 4 Minute ICO Guide | Blockchain Central


What’s is up guys? It’s Blu here and you are watching Blockchain Central. In today’s episode we’ll take a closer
look at ICOs. Is it something you should be spending your
hard-earned cash on, or is it not? As always, please note that this content does
neither represent financial, legal, or tax advice, nor is it supposed to be understood
or interpreted as solicitation to buy or sell any securities, coins or tokens. Surely you came across the term “ICO”. You might have also heard of recent success
stories and how much money a company could make in just a few hours when being involved
with an ICO. I am pretty sure, you’ve also met people
who warn against that too. But what exactly is an ICO? How does it work? How can you profit from it? Is it a safe investment? Let’s start by having a closer look at the
word “ICO”. ICO is the abbreviation for Initial Coin Offering. This expression describes a relatively new
way of crowdfunding. ICOs are mainly issued by early stage companies
coming from the cryptocurrency sector. The so called “Initial Coin” is more of
a digital voucher or “utility token” as the intended cryptocurrency does not yet exist. That way, individuals can invest in a cryptocurrency
at an early stage, before it actually exist!. In most cases, investors acquire a so called
ERC20 token, which later entitles the investor to exchange it for the newly created cryptocurrency
on the new blockchain. If the company’s efforts realising the project
are successful, the coins will one day hit the cryptocurrency exchanges. Investors will then be able to sell them at a premium
as demand for the currency hopefully increases. An ICO therefore provides the opportunity
to invest in early-stage projects without actually getting a stake in the company, as
would be the case with IPOs (Initial Public Offering). Please remember that an ICO does not entitle
shareholders to dividends, nor does it automatically carry voting rights. In contrast to IPOs, where the stakeholder
is interested in the company itself, ICOs have their main focus on the future project. Are you ready to invest? Here’s how it’s done: To invest in an ICO,
in most cases you don’t need euros or dollars, but cryptocurrencies, like Bitcoin or Ether. After you have found a project you like during
your research, you should carefully read the whitepaper which specifies the purpose for
which the money will be used and the expected completion of the project. Take your time to read as you should be sure
to invest in the right project. You may have to wait a little while before
you can invest, as most of the token sales will only open at a certain point in time. Once the token has been opened, you can exchange
your cryptocurrency for the token of the ICO. To do this, you transfer the requested cryptocurrency
from your wallet to the wallet of the company, which is organising the ICO. After you have completed this transaction,
you may have to wait a little before your token is shown in your wallet. This transfer may take a few
days or even weeks. If the money collected is not enough to finance
the project, it will be returned to the investors. As you can see, it’s really not that difficult
to participate in an ICO. From now on you can sit back and watch the
progress of the project. Don’t see your investment as a way to make
a quick profit, but rather as a long term investment. But wait. Don’t forget that every investment is not
only an opportunity, but also a risk. An investment is only a chance, but not a
guarantee to multiply your invested capital. This especially holds true for most ICOs. Investors neither have full transparency about
the use of the invested money, nor do they know how the legislator will regulate this
type of crowdfunding in the future. So be prepared to lose your invested capital
and only invest the money you can afford to lose. Investing in an ICO is a great opportunity
to participate in potentially innovative and disruptive projects at an early stage. Not only do you have an outlook on a good
return on investment, but you also help young and ambitious entrepreneurs to turn great
ideas into reality. If you are aware of the risks involved in
the investment, you have a lot of fun to see projects grow as you are actively involved
in them. By the way: Ethereum also started as an ICO. Now it’s your turn to find the next big thing! If you liked this video, make sure to hit
that like button, share it with others and don’t forget to subscribe to Blockchain
Central to never miss a beat! Happy investing!

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