The Initial Coin Offering is a controversial platform. In their essence, ICOs are positive and exciting, though as many will know, they open us up to a whole host of potential problems and risk. In the growing cryptosphere, we want to minimise risk in order to secure our investments, therefore ICOs are considered by many, as a total no go, although even with this in mind, ICOs still run, they still happen and they still bring in heaps of investment for new and budding crypto projects.

Many are starting to consider how ICOs are helping investors who are bogged down by Bitcoin to get out and find better, faster crypto solutions. Since many ICOs allow investors to make purchases in Bitcoin, ICOs are giving investors the opportunity to get rid of batches of their Bitcoin, in the pursuit for more decentralised, faster and cheaper cryptocurrency payment options. Moreover, given that the Bitcoin price is pretty stable at the moment, investors are no longer able to find short and fast returns on their investments. By moving Bitcoin into an ICO project however, investors are exposing themselves to more opportunity to see fast growth which in turn, will make them more money.

ICOs can address Bitcoins scalability issues, simply by offering investors to purchase a cryptocurrency that is built upon faster technology. ICOs can also address the issue of centralisation experienced by many Bitcoin investors, by allowing them to move their Bitcoin into a more decentralised project.

According to City AM, ICO’s also provide what has been referred to as the ICO Hedging Strategy, a strategy that allows investors with huge amounts of Bitcoin to really benefit from the current surge in the popularity of ICOs. According to City AM, David Siegel has explained how this strategy works, stating that:

“By fully subscribing to an entire issue of an ICO, the Bitcoin whales can create a positive narrative of success behind the startup raising funds. Whatever legitimate market demand there was for the ICO is side lined and left unsatisfied. If the startup issues further offerings later, then the value of these tokens is likely to increase.”

Moreover:

“In essence, the Bitcoin whales can ‘lock in’ a floor value for their Bitcoins via this ICO proxy for a few months as long as the ICO is legitimate enough for a relatively liquid secondary market to exist in the short- to medium-term. At that time they can (hopefully) offload all or some of their ICO exposure based on the underlying market demand and move onto the next hot ICO (until they can cash out their Bitcoin exposure into fiat currency).”

An ICO can’t be used to make Bitcoin better, however as we have expressed, many ICOs can help investors get more from their Bitcoin. Remember though, ICO investment is incredibly risky, so, whilst solutions may look clear cut and easy to reach through investing in an ICO, risk is high and the chance of a loss is great. If you do want to buy into an ICO, do your research first, check the companies whitepaper and run checks on the team behind it. Only invest what you can afford to lose.

City AM