ICOs

Coins Versus Tokens

Welcome to the crazy world of Crypto where coins, which are anything but, are considered coins and tokens are something else entirely.

There are grey areas and blurred lines. Both have value, but tokens tend to offer a little bit more functionality.

A Simple Metaphor is this…

Coins = Cash

Token = Shares

Tokens are a more recent invention and generally speaking tend to belong to Blockchain 2.0: the second generation after-market blockchains.

What is an ICO ?

An Initial Coin Offering, as opposed to a Token Offering, is basically a crowdfunding campaign. All new coins will publish a white paper outlining their manifesto. This will explain the technology their coin employs, what makes it different from others and what they are trying to achieve with it.

Some coins have philanthropic agendas like Grid-coin which states its purpose is to help facilitate scientific research. Other coins may have a more niche market and be aimed at video-gamers or their concept might be as simple as a joke. (See Dogecoin)

ICOs offer people the potential to buy into the currency, usually at inviting introductory rates. This suits the coin’s developer because simply by having it, owners will artificially inflate the value of their coins.

After the ICO the team behind the coin will treat it much like any business venture and do their best to advance it in any way they can. They may try to partner with big brands, raise the coins public awareness or just attempt to get it listed on one of the many exchanges. If they are successful, their coin should rise in value and those who invested in the ICO will see a good return. For this reason it’s a good idea to research the team behind the coin, this information will also be in the white paper.

Some coins soar into the stratosphere, others pad along, while others sink without a trace. Get it right and ICOs can be a solid investment, get it wrong and you’ll lose the lot.

The Difference Between ICOs and Investing.

Investing in an ICO is not the same as trying your hand at Forex trading. When you invest in an ICO you are buying coins, not stocks or shares. The biggest single difference is this. Coins may lose their value entirely and become worthless, but they cannot go lower. If you put $50 dollars into Riskcoin, you could lose the lot, but you’d never lose your home. If on the other hand you bought shares of Dodgy Corp and they’re suddenly in administration. You could, in theory, end up owing more than the $50 you put in. There are other differences too, you won’t get dividends on your coins, there are rare examples which are exceptions to this rule, but they are very much the exception.

Ask us about our recommended ICO.

Missed the Boat?

You may be forgiven for thinking it’s all too late and the Crypto-ship has sallied, but don’t worry you haven’t lost out yet. Some folks struck gold in the first dotcom boom, but it was the second round which created the billionaires.

It’s true there was a time when you could pick up 5 Bitcoins for just registering your email address. Sure, if you’d hung on to them you could probably put a down a payment on a house for that now. But would you have kept them? When they first arrived folks spent them on Pizzas and cups of coffee in Thai beach-side bars. So yes maybe you missed the first big rocket to the moon. But the technology is in its infancy and the next Bitcoin is out there.

Know the Risks

Like everything else in life, there are pros and cons to crypto-currencies and any interested partner would do well to understand them.

Pros

You may be forgiven for thinking it’s all too late and the Crypto-ship has sallied, but don’t worry you haven’t lost out yet. Some folks struck gold in the first dotcom boom, but it was the second round which created the billionaires.

Accessible: One of the best things about the world of crypto-currency is how little you need to invest. The risks are great, but so then are the rewards.

Volatile: This will also be listed under cons, but we’re listing it here because the volatile nature of cryptos means there is always movement in the markets. It is these fluctuations which attract the money and makes it such an exciting investment.

Transparency: Although the market can be confusing at times, once you have your wallet in place. it is simple to track your investment.

Liquidity: If your money is in crypto-currencies you can access it with ease. There are no mandatory time periods or hoops to jump through, but be aware that you will be at the mercy of the market price.

Cons

Financial Security: If your bank goes under tomorrow there are rules in place to protect your money. If your crypto-currency portfolio plummets like a stone, there is no safety net, no crypto ombudsman and no one can help you.

Cyber Attacks: Crypto-currencies were born on the dark web, where the hackers practice their dark arts. It is no surprise then that many of the crypto- exchanges have been attacked and millions in virtual coins have been stolen in the last few years.

Volatility: What goes up must come down. Sure Bitcoin broke box office records in December last year went it soared to $20,000 dollars a coin, but don’t forget it crashed back down to just over $7,000 a coin just a few days later. Remember, it has yet to recover.

Complexity: The crypto world is not an easy place to navigate, there are no road maps and there is no help desk. Once you’re in, you’re pretty much on your own.

Ask us about Crypto-trading.