Talking about Initial Coin Offering (ICO), one often thinks about some extremely innovative and expensive projects which are to change the way world functions. Since ICO was implemented for the first time, it has become an instrument for crowdfunding which is currently used by a great many of startupers and business founders. However, what are the chances of the ICO to succeed in case it has a rather limited budget?
Risks associated with any Initial Currency Offering are usually the same and include regulatory risks, business risks, security and cyber attacks risks. Both for low and large budget projects, risks of investing in the ICOs are alike with only an extent of the losses ranging. So what are the advantages and disadvantages of investing in the low budget Initial Coin Offering?
Whatever the budget for a potential Initial Currency Offering is, what really does matter is the business idea behind. If this idea is to work and bring respective profits in the future, then investors should not have any doubts. Thus the advantages of investing in the shoestring budget ICO are as follows:
- Potential for returns: recent Initial Coin Offerings have created a number of huge returns in a short amount of time.
- Shorter time horizon: ICOs do bring profits earlier than other types of investments such as venture capital investing.
- Increased liquidity: since a cryptocurrency ICO is able to build a solid network, investors instantly have much more liquidity.
- Clear direction for execution: when investing in a cryptocurrency ICO, you know exactly what the network does and will be doing.
One of the main cons of the low budget ICO is an inability to run a marketing campaign and promote the project before doing an Initial Currency Offering. This may result in lack of confidence among the investors and, subsequently, the ICOs failure. Among other disadvantages are also:
- Network stall: the real value of any cryptocurrency relies on building a strong product that a network of users wants to use. If these networks fail to attract users, then the currency will likely see a drop-off in price.
- Shortage of resources: if a cryptocurrency Initial Coin Offering does not raise enough money or the startup spends more money than expected, the doors close and the network really takes off.
- Mismanagement: as every cryptocurrency is a startup and has a team of founders running it, this team needs to be a solid one, otherwise, ICO is doomed to fail.
All in all, in the modern world, cryptocurrency Initial Coin Offerings offer many benefits that venture capital, as well as other investment instruments, lack. When you start thinking about investing in a low budget ICO, take time to look into whether this Initial Coin Offering is really competitive and will be able to generate expected profits for you.