We know that crowdfunding events are quite lucrative and convincing to invest your share in digital tokens, but they are highly risky too!
The major risks associated with all of these tokens include:
- The risk that they may start losing the value gradually.
- The risk that projects may die soon and get stalled for a long time.
- The risk of a poor return on investment. In many cases, these projects are not even good enough to start with.
But apart from having such risks, there is also a possibility that you might end up making a significant mistake and losing all your money.
So, what are those precautions which are being taken by savvy ICO investors?
Here is a list of all those measures that will ensure you play around an ICO unscathed:
A right project for the right investment
The foremost step is choosing only the right project for your investment. This means that you must analyze the project and its sustainability with an open mind and avoid following the tips given by a Facebook acquaintance or an old friend.
Additionally, investing in a token just because it is being talked about or being advertised aggressively all over the social media is a foolish step and might cost you all of your investment in the longer run.
Examine the chosen project
Next is to thoroughly assess the project and for this, you may read the complete information on their website, get details about the advisors and the team along with their backgrounds. In the case of the involvement of outside investors, check who they are. Read the whitepaper and get an expert’s help.
In short, assess the roadmap of the project to determine whether it just looks like a lucrative opportunity or is actually realistic.
Understand the risk of taking up ICO investment
Typically, if the ICO project fails, you lose the invested money and get no return on your investment. For instance, if you have bought a thousand dollar worth currency, be prepared to lose a big chunk or even the entire amount. Since ICO-issued token cost tenfold in value, you must not invest more than you can afford to lose.
After all, ICO is the riskiest of all investment types, so don’t just simply squander all of your money in the hope of earning instant bucks.
Therefore, before investing, consider all the terms and conditions in your country of residence. Just like China has banned ICO completely, citizens of some other countries are not allowed to participate in crowdfunding or ICO. This is not only prohibited, but may also lead to punishment and penalties as it is considered an illegal activity.
No Investment is Risk-Free
Since there is no investment which can guarantee you 100% return, the only precaution you can take is make a well-informed, well-thought decision. Consider all the investment options. Remember that investing in ICO is a complex task and cannot be assumed as investing in stocks or real estate.
The only way to work around ICO is to select a solid project and complete your research to determine growth potential. Once done, then it’s time to just sit back, relax and enjoy the increasing value of your digital asset.