Investment in ICO’s are bigger than Venture Capital

In 2017, the capital raised through ICO’s will be higher than through Venture Capital.
So there is big money going in. But should you put your hard earned money in?

Let’s be clear: Investing in ICO’s is NOT the easy, risk free way to get rich fast. Many ICO’s don’t deliver the value the project and some are outright fraudulent.

But if you see it as the long tail, high risk – high return part of your portfolio, the answer may very well be Yes.

But: it is wise to never commit more money than you can afford to lose. This goes for any active investment, but for ICO’s and Crypto currencies in particular.

That said, investing may make sense if:

1) a project makes sense as a business and

2) there is demonstrated demand for it, and

3) the business is something that needs a cryptocurrency token system to work, and

4) you can commit the funds without hardship

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Alternately, if you know that you are a talented speculator irrespective of an asset’s underlying value. (However, this is probably not true even if you think it is. Even most professional stock traders don’t beat the market.)

That said, it is crucial to understand that buying into an ICO is not the same as buying stock. When you buy stock, you literally buy a piece of the company. Similarly, stock is regulated and obligations like fiduciary duty and accreditation are involved. Legal infrastructure may come to cryptocurrencies eventually, but we are not there yet.

Rather, as Investopedia plainly put it: “Early investors in the operation are usually motivated to buy the cryptocoins in the hope that the plan becomes successful after it launches which could translate to a higher cryptocoin value than what they purchased it for before the project was initiated.”

Conclusion – Invest in ICO?

You may be able to make serious money by investing in ICOs.
But there are substantial risks involved and you should try to approximate the due diligence that a traditional investor would conduct before committing cash to a new project.