ICOs are just about everywhere nowadays, you can’t surf the internet without hearing those 3 letters accompanied by obvious and blatant marketing material hailing this ICO as the one to watch, and the one that is going to set you free financially. This is the current state and mindset that a growing number of people have right about ICOs, and to tell you the truth I don’t blame them. The truth about ICOs is pretty astonishing and yet obvious when you take a step back and think about it for a second. Although the prospect of investing in an ICO might seem quite appealing given that you have been roped in by the marketing material, there are darker forces at work here so you must take extreme precaution when looking to throw your money into something that many of you don’t fully understand. The news is full of reports about countless prosperous ICOs with people claiming that they have struck it lucky and their only regret was that they didn’t invest more because there have been claims that there have been successful ICOs that have raised millions of dollars in a matter of minutes.
Why ICOs can be bad for investing?
Avid entrepreneurs are straight up convincing people that their ideas are powerful enough to change the world, and they detail these ideas in long-term roadmaps called whitepaper and outline how exactly they are able to improve a certain aspect of the world, but only after a round of funding through an ICO. Herein lies the problem, because a whitepaper may look very very appealing to naive investors who don’t know the truth about ICOs and will dump more money than they can afford without realising that there might not be a live product. There are too many reasons to list as to why ICOs can be bad for investing but here are some of the main issues that have resulted in people fleeing.
1# Majority of ICOs are SCAMS
First and foremost, we have briefly touched on this one, but hey we will go over it again. SCAMS! I am not saying that all ICOs are scams but certainly the majority of them are and you have to be careful not to fall into the trap of one. The truth about ICOs is that a huge majority of them are scams and in most cases, people are parting with huge sums of money and investing that money into a project that simply doesn’t exist yet. The creators could literally hold an ICO for a project that doesn’t yet, collect all the money and vanish.
2# Handing your money over to a hacker
Secondly, there have been quite a few ICOs that have been the subject of hackers. Unfortunately it has happened where large amounts of cash, and I mean large amounts of cash were stolen during the raising of funds. Hackers can swap the real address for buying tokens with a fake one that diverts all investors’ cash to their own wallet address, and the thing is there’s no real way to know if anything has happened until after it has happened, so in a sense you could be handing your money over to a hacker and you wouldn’t even know it.
3# Transparency in ICO investment
Transparency is also an issue when it comes to ICOs because sometimes there will be an ICO with no real identity. No matter how hard you do your homework you will struggle to find out about who is behind the project that you are looking to invest in, and this should be an immediate red flag when investing in ICOs. Remember the old adage: “If something seems too good to be true, it probably is” just remember those when you’re looking to invest in an ICO. I hope these points have opened your eyes to truth about ICOs and have supplied you with the knowledge to know what to stay clear of in future.