Netizens are going gaga over this craze that is ICOs, apparently for its promise of huge, quick and easy profits. And if you aren't aware, here's help.
With growing advancements in technology (especially fintech) and a plethora of investment options popping up, investors have really become spoiled for choice. Many startups are coming up with unconventional and rather innovative ways of funding their businesses. Take ICOs, for example – there are just so many ICOs raising money and capital for essential and useful projects.
Successful ICOs have a tremendous potential of bringing colossal returns for early investors. Not just that, they also bring massive dividends for their organizing companies, startups and individuals.
In today's article, we will discuss how to buy ICO tokens – a beginner's guide in that regard. This article is a part of the series of articles written about ICOs, including basics, working of ICO tokens and key differences between ICO and IPO.
Let's get started!
Process of purchasing tokens during an ICO
- Registration for an ICO: Every legitimate project sourcing funding through ICOs has a project website that details the objectives of the project, its goals, the money needed, tenure, minimum investment, etc. The project website is where you essentially register for an ICO. Most high profile ICOs mandate registration. Those who don't – well, a question can be asked about their legitimacy.
- Get a cryptocurrency: In order to participate in an ICO, you will need one of the two major cryptocurrencies – Bitcoin or Ether. Bitcoin enjoys dominance in the crypto world, however, owing to the stable blockchain platform provided by Ether, it has become the platform of choice for ICO.
- Collecting the cryptocurrency in a wallet, you control: To maintain the security of your cryptocurrency, it is always advised to refrain from using wallets provided by exchanges. It is a prudent practice to move and keep the tokens in a software wallet that preserves the passwords in your chosen device. For added security, hardware wallets can also be used.
- Purchase ICO tokens: Once you have completed the above steps, you are ready to buy the ICO tokens. All you need to do is transfer the cryptocurrency to the project's website. The project website will contain detailed guidelines about the entire process of investment. However, extreme caution needs to be taken while making such investments. Make sure you double-check the website and wallet address before making any transfers.
- Receipt of ICO tokens: On successful completion of a transaction, the ICO tokens are directly delivered to your wallet address. Don't worry if it doesn't happen right away. Busy ICOs sometimes push deadlines to accommodate the investors. The key to staying ahead is being updated about the happenings and communications with other investors through dedicated forums and platforms.
- Storing of the ICO tokens: Safety and security are the two main contentions one must have with respect to the ICO. The majority of the ICOs ensure that the tokens are supported by major wallets, especially Ethereum's wallet 'MyEtherWallet". Major developments have also been made to store the tokens on hardware wallets for investors looking for that extra security.
Purchasing ICO tokens after the expiration of the ICO period
If an ICO was successful, the ICO tokens would eventually be listed on an exchange (after the expiration of the ICO period). The nature of the project decides which exchange they will be listed at. In order to find out where the tokens are getting listed, investors can follow announcements from the project itself or check the Altcoin section on the Bitcoin forum for a topical discussion of a particular token. When ICO tokens are listed on exchanges, they are mostly traded against Bitcoin and Ether.
What to do after buying ICO tokens?
So, you have bought some ICO tokens. Now what?
Well, it is an investment you have made, and as it happens in the case of any investment – you have two options:
- Hold the tokens and earn dividends, or
- Trade the tokens.
Once the project/company passes the ICO stage, it's value starts increasing because the company becomes well-established and trusted in the market. As a result, the token value goes increasing, generating higher profits for the investors. The tokens also provide future access to the product or service of the company along with certain perks. ICOs, therefore, are very similar to conventional crowdfunding methods where investors earn rewards in exchange of their investments.
Other perks may include a token bonus for early investors, free trading, money withdrawal and deposit, issue of an Aurora debit card for a free worldwide use, etc.
Trading the ICO tokens
Trading the ICO tokens is possible only after they have been listed on an exchange. To start with, Bitcoin and Ether will be the only two trading options available. As some time passes and the token still remains in demand, other trading pair options would also become available. It is to be noted that not all ICO tokens get listed.
It is a game of patience. You may sit on these tokens for a while, and there would be no steady returns. It may so happen that you incur a loss right away. Or suddenly, there is a spike – which can either indicate positivity for the future or can be a one-off event. All these spikes happen within just minutes, and it is therefore important to be able to catch them. Numerous exchanges have alerts and notifications for the same – learn to take full advantage of them.
Who can participate in an ICO?
The answer is simple – ANYONE! All you need is an active internet connection and some cryptocurrencies (bitcoins or Ether). The beauty of blockchain technology is that it facilitates the investments to flow from virtually anywhere in the world, with minimum fees and within a short time (we talking minutes here).
This article served as overview instructions on how an investor can purchase ICO tokens. Anyone can invest, and it is not a difficult process. However, one must be prudent enough to read through all disclosures and announcements thoroughly before making any investment decision. Another important consideration is to know whether investing in ICO tokens is legal in your country!
So, are you investing in ICO tokens? Tell us in the comments below.
Stay positive, test negative,