Why do you invest in ICOs?

[zalando95]

Hi,
this thread I want to ask you: Why do you, if you do, invest in ICOs?
I see horrible huge amounts of money going to those. What do investors think to get in return?
Mostly it's the same case: ICO starts, much money comes in, you get the coins.
But what if those coins do not get back the initial worth?
Or do you invest because of other reasons?

For example (disclaimer: this is NOT hate!):
Why did trueflip.io get over $4,7 Million?


Thank you for answers!

[DuarteFig]

Well, I won't comment on specific ICOs as saying they are good, bad, promising, scams or anything like that, but I will share my vision.

What do investors think to get in return?

To start, I think the answer to that question is pretty straight forward. I believe that even people that want to support the blockchain projects and community wouldn't invest just to help the people behind the ICO, everyone is expecting finantial returns. What do I think investors think to get in return? Money.

This happens because before this ICO madness began it was something less accessible and more risky to common investors (as it still is, but now more people are interested). One year ago a promising ICO would have raised around 5 million dollars and be considered succesful, and then as the company starts to show progress in their project development more people want to invest in them (through exchanges, after ICO period) and them its market value increases a lot, and people that participated on the ICO get higher profits.

But what if those coins do not get back the initial worth?

You should invest in an ICO if you think the project's value proposition is good, if it makes sense to be in the blockchain and if you trust the team can deliver what they are promising. If this is the case, price volatility is a common thing in crypto currencies and you should keep yourself updated about the project you invested in and see if their business is growing. Finantial returns should come naturally if you believe in the technology potential and in the specific application the ICO is proposing.

[lebitusa]

I do not think investment in ICO is good now. There are some reasons:
1) SEC just announced warning on ICO and will definitely have a serious look into the future ICO-funding companies
2) It is now in the peak. Many teams do not have real product, just a team and prototype
3) Ethereum platform is not fullly matureed
4) Almost all countries does not have regulations yet to protect investors from scams.

check out the warning by SEC:

Investor Alerts and Bulletins
Investor Bulletin: Initial Coin Offerings
July 25, 2017
Developers, businesses, and individuals increasingly are using initial coin offerings, also called ICOs or token sales, to raise capital.  These activities may provide fair and lawful investment opportunities.  However, new technologies and financial products, such as those associated with ICOs, can be used improperly to entice investors with the promise of high returns in a new investment space. The SEC’s Office of Investor Education and Advocacy is issuing this Investor Bulletin to make investors aware of potential risks of participating in ICOs.

Background – Initial Coin Offerings

Virtual coins or tokens are created and disseminated using distributed ledger or blockchain technology.  Recently promoters have been selling virtual coins or tokens in ICOs.  Purchasers may use fiat currency (e.g., U.S. dollars) or virtual currencies to buy these virtual coins or tokens.  Promoters may tell purchasers that the capital raised from the sales will be used to fund development of a digital platform, software, or other projects and that the virtual tokens or coins may be used to access the platform, use the software, or otherwise participate in the project.  Some promoters and initial sellers may lead buyers of the virtual coins or tokens to expect a return on their investment or to participate in a share of the returns provided by the project. After they are issued, the virtual coins or tokens may be resold to others in a secondary market on virtual currency exchanges or other platforms.

Depending on the facts and circumstances of each individual ICO, the virtual coins or tokens that are offered or sold may be securities.  If they are securities, the offer and sale of these virtual coins or tokens in an ICO are subject to the federal securities laws.

On July 25, 2017, the SEC issued a Report of Investigation under Section 21(a) of the Securities Exchange Act of 1934 describing an SEC investigation of The DAO, a virtual organization, and its use of distributed ledger or blockchain technology to facilitate the offer and sale of DAO Tokens to raise capital. The Commission applied existing U.S. federal securities laws to this new paradigm, determining that DAO Tokens were securities.  The Commission stressed that those who offer and sell securities in the U.S. are required to comply with federal securities laws, regardless of whether those securities are purchased with virtual currencies or distributed with blockchain technology.
To facilitate understanding of this new and complex area, here are some basic concepts that you should understand before investing in virtual coins or tokens:

What is a blockchain?

A blockchain is an electronic distributed ledger or list of entries – much like a stock ledger – that is maintained by various participants in a network of computers.  Blockchains use cryptography to process and verify transactions on the ledger, providing comfort to users and potential users of the blockchain that entries are secure.  Some examples of blockchain are the Bitcoin and Ethereum blockchains, which are used to create and track transactions in bitcoin and ether, respectively.

What is a virtual currency or virtual token or coin?

A virtual currency is a digital representation of value that can be digitally traded and functions as a medium of exchange, unit of account, or store of value.  Virtual tokens or coins may represent other rights as well.  Accordingly, in certain cases, the tokens or coins will be securities and may not be lawfully sold without registration with the SEC or pursuant to an exemption from registration.   

What is a virtual currency exchange?

A virtual currency exchange is a person or entity that exchanges virtual currency for fiat currency, funds, or other forms of virtual currency.  Virtual currency exchanges typically charge fees for these services.  Secondary market trading of virtual tokens or coins may also occur on an exchange.  These exchanges may not be registered securities exchanges or alternative trading systems regulated under the federal securities laws.  Accordingly, in purchasing and selling virtual coins and tokens, you may not have the same protections that would apply in the case of stocks listed on an exchange.

Who issues virtual tokens or coins?

Virtual tokens or coins may be issued by a virtual organization or other capital raising entity.  A virtual organization is an organization embodied in computer code and executed on a distributed ledger or blockchain.  The code, often called a “smart contract,” serves to automate certain functions of the organization, which may include the issuance of certain virtual coins or tokens.  The DAO, which was a decentralized autonomous organization, is an example of a virtual organization.

Some Key Points to Consider When Determining Whether to Participate in an ICO

If you are thinking about participating in an ICO, here are some things you should consider.

Depending on the facts and circumstances, the offering may involve the offer and sale of securities.  If that is the case, the offer and sale of virtual coins or tokens must itself be registered with the SEC, or be performed pursuant to an exemption from registration.  Before investing in an ICO, ask whether the virtual tokens or coins are securities and whether the persons selling them registered the offering with the SEC.  A few things to keep in mind about registration:
If an offering is registered, you can find information (such as a registration statement or “Form S-1”) on SEC.gov through EDGAR.
If a promoter states that an offering is exempt from registration, and you are not an accredited investor, you should be very careful – most exemptions have net worth or income requirements.
Although ICOs are sometimes described as crowdfunding contracts, it is possible that they are not being offered and sold in compliance with the requirements of Regulation Crowdfunding or with the federal securities laws generally.
Ask what your money will be used for and what rights the virtual coin or token provides to you.  The promoter should have a clear business plan that you can read and that you understand.  The rights the token or coin entitles you to should be clearly laid out, often in a white paper or development roadmap.  You should specifically ask about how and when you can get your money back in the event you wish to do so.  For example, do you have a right to give the token or coin back to the company or to receive a refund? Or can you resell the coin or token? Are there any limitations on your ability to resell the coin or token?
If the virtual token or coin is a security, federal and state securities laws require investment professionals and their firms who offer, transact in, or advise on investments to be licensed or registered.  You can visit Investor.gov to check the registration status and background of these investment professionals.
Ask whether the blockchain is open and public, whether the code has been published, and whether there has been an independent cybersecurity audit.
Fraudsters often use innovations and new technologies to perpetrate fraudulent investment schemes.  Fraudsters may entice investors by touting an ICO investment “opportunity” as a way to get into this cutting-edge space, promising or guaranteeing high investment returns.  Investors should always be suspicious of jargon-laden pitches, hard sells, and promises of outsized returns.  Also, it is relatively easy for anyone to use blockchain technology to create an ICO that looks impressive, even though it might actually be a scam.
Virtual currency exchanges and other entities holding virtual currencies, virtual tokens or coins may be susceptible to fraud, technical glitches, hacks, or malware.  Virtual tokens or virtual currency may be stolen by hackers.
Investing in an ICO may limit your recovery in the event of fraud or theft.  While you may have rights under the federal securities laws, your ability to recover may be significantly limited.

If fraud or theft results in you or the organization that issued the virtual tokens or coins losing virtual tokens, virtual currency, or fiat currency, you may have limited recovery options. Third-party wallet services, payment processors, and virtual currency exchanges that play important roles in the use of virtual currencies may be located overseas or be operating unlawfully.

Law enforcement officials may face particular challenges when investigating ICOs and, as a result, investor remedies may be limited. These challenges include:

Tracing money.  Traditional financial institutions (such as banks) often are not involved with ICOs or virtual currency transactions, making it more difficult to follow the flow of money.
International scope.  ICOs and virtual currency transactions and users span the globe. Although the SEC regularly obtains information from abroad (such as through cross-border agreements), there may be restrictions on how the SEC can use the information and it may take more time to get the information.  In some cases, the SEC may be unable to obtain information from persons or entities located overseas.
No central authority.  As there is no central authority that collects virtual currency user information, the SEC generally must rely on other sources for this type of information.
Freezing or securing virtual currency.  Law enforcement officials may have difficulty freezing or securing investor funds that are held in a virtual currency.  Virtual currency wallets are encrypted and unlike money held in a bank or brokerage account, virtual currencies may not be held by a third-party custodian.
Be careful if you spot any of these potential warning signs of investment fraud.

“Guaranteed” high investment returns.  There is no such thing as guaranteed high investment returns.  Be wary of anyone who promises that you will receive a high rate of return on your investment, with little or no risk.
Unsolicited offers.  An unsolicited sales pitch may be part of a fraudulent investment scheme.  Exercise extreme caution if you receive an unsolicited communication—meaning you didn’t ask for it and don’t know the sender—about an investment opportunity.
Sounds too good to be true.  If the investment sounds too good to be true, it probably is. Remember that investments providing higher returns typically involve more risk.
Pressure to buy RIGHT NOW.  Fraudsters may try to create a false sense of urgency to get in on the investment.  Take your time researching an investment opportunity before handing over your money.
Unlicensed sellers.  Many fraudulent investment schemes involve unlicensed individuals or unregistered firms.  Check license and registration status on Investor.gov.
No net worth or income requirements.  The federal securities laws require securities offerings to be registered with the SEC unless an exemption from registration applies. Many registration exemptions require that investors are accredited investors; some others have investment limits.  Be highly suspicious of private (i.e., unregistered) investment opportunities that do not ask about your net worth or income or whether investment limits apply.
***

Before making any investment, carefully read any materials you are given and verify the truth of every statement you are told about the investment. For more information about how to research an investment, read our publication Ask Questions.  Investigate the individuals and firms offering the investment, and check out their backgrounds on Investor.gov and by contacting your state securities regulator .  Many fraudulent investment schemes involve unlicensed individuals or unregistered firms.

[Seansky]

Hi,
this thread I want to ask you: Why do you, if you do, invest in ICOs?
I see horrible huge amounts of money going to those. What do investors think to get in return?
Mostly it's the same case: ICO starts, much money comes in, you get the coins.
But what if those coins do not get back the initial worth?
Or do you invest because of other reasons?

For example (disclaimer: this is NOT hate!):
Why did trueflip.io get over $4,7 Million?


Thank you for answers!

The only reason why people invest money on ICO's in the first place was because of money. If you ask someone who invested on an ICO and says that his reason for investing in a particular ICO is because he wants to support that particular project, think again. Why would people really invest on ICO's and look for a good one? The only answer is that they want to profit from it and because of the possible gain, they take risk.

[yslyv]

If i like a project and if i see a good potential i dont invest all of the money in ico.
I invest half of my money in ico time, and i keep second half for the time it is listed.

[bathrobehero]

I don't because ICOs are bullshit and are going against the basics of crypto.


But as I see it the reason others put money into ICOs comes with the massive increase of Bitcoin's price, which attracted all kinds of people seeking quick money.

It's exactly like a gold rush except most people are too lazy to prospect and dig in the dirt - as it were, they just want quick money with no effort. They couldn't care less about what crypto stands for or even sometimes not eeven the projects they're throwing money at.

That all boils down to what is essentially pure, no-skill gambling; they give money to anon people in exchange for a few pretty images and promises and for some coins the devs made out of thin air for free in the hopes of the price getting pumped higher than the initial price at which point they dump their coins and dance and cheer over the few slices of pizza's worth of profit they made or keep silent in case they lost and start looking for the next pull on the ICO slotmachine.

[DuarteFig]

I don't because ICOs are bullshit and are going against the basics of crypto.

I know that recently a lot of people are angry or annoyed by scams and really weak projects raising a lot of money, but imagine this wasn't the case. Without recent frauds and other problems, don't you think that the idea of a democratic crowdsale to fund a promising project that could increase the blockchain technology popularity and maybe help to improve the quality of a specific market segment or product has everything to do with what you call "the basics of crypto"?

I am interested in why do you think ICOs go against the basics of crypto and what are the basics of crypto to you.

I am not saying I support any kind of ICO and I am expecting some kind of change in the current scenario to help prevent people from falling for scams and solve other ICO issues, but "the basics of crypto" for me is about decentralization and allowing anyone in the world to get access to investment and participation in different projects and technologies they support, no longer relying on big corporations, regulators and government to do so.

I think that, problems apart, the ICO model was a big disruption in traditional investment model but now some malicious people are trying to take advantage of it. Besides, I don't think that this problem (of scams and people trying to take shortcuts to big profits) is unique to ICOs.

[zalando95]

Sounds like I heard in the past.
It seems that ICOs are just a bubble and when I read your comments, most of you are saying the same.
When I first readed about ICOs, I thought, that you get something from the company.
Like when you make classic crowdfunding, you get a product, a game, a service etc.
But in ICO it seems to be just new coins that you hope to sell higher.
Maybe it works, maybe not. I saw some good ICOs who offered good services, not only promised high returns.
But when I saw a simple gambling page collecting millions, it just ruined the concept of crowdfunding. Sorry for saying this.
I mean, you could do such great things. Like collecting for wells in africa or helping homeless.
But instead the most coins just seem senseless  
On the one side I hope that the bubble bursts asap, but on the other I hope to see some ICOs with a deeper sense.
With burst I specially mean those senseless ICO after ICO.
I mean after the ICO mostly noone really cares about the product itself. It's just the matter of the price of the coin.
And that's a sad fact.
I have a great idea and concept I could solve with an ICO but I have not much experience about coins or ethereum or anything else regarding this,
I'm just sitting here in my bedroom and thinking about how such senseless projects can collect millions, while others hardly build up their business.
And that's what hurs me in those ICO: That on the one side are sometimes maybe greedy people, on the other are sometimes people with just an idea.
There are always a good and a bad thing about something.
Thank you for all your answers, I'll be happy about more feedback and comments

[bongiu]

I currently don't invest in ICOs but If I would, I would only invest if the premise of the ICO it's really worth it

[jameshowlett]

Because we believe that we will earn a huge profit from the project. Most of the ICO always get a good price after it is listed on an exchange

[xuan87]

Most of the people invest in ICO because they want to earn money, or they believe that the ICO can become huge in the future, most of the ICO are not that profitable and most of them even turn out as scam, but if you choose the right ICO it can be very profitable, but I don't like to invest in ICO, I don't like to buy something that is uncertain

[bathrobehero]

I don't because ICOs are bullshit and are going against the basics of crypto.

I know that recently a lot of people are angry or annoyed by scams and really weak projects raising a lot of money, but imagine this wasn't the case. Without recent frauds and other problems, don't you think that the idea of a democratic crowdsale to fund a promising project that could increase the blockchain technology popularity and maybe help to improve the quality of a specific market segment or product has everything to do with what you call "the basics of crypto"?

I am interested in why do you think ICOs go against the basics of crypto and what are the basics of crypto to you.

I am not saying I support any kind of ICO and I am expecting some kind of change in the current scenario to help prevent people from falling for scams and solve other ICO issues, but "the basics of crypto" for me is about decentralization and allowing anyone in the world to get access to investment and participation in different projects and technologies they support, no longer relying on big corporations, regulators and government to do so.

I think that, problems apart, the ICO model was a big disruption in traditional investment model but now some malicious people are trying to take advantage of it. Besides, I don't think that this problem (of scams and people trying to take shortcuts to big profits) is unique to ICOs.

ICOs are by definition premined coins which are therefore centralized. There's no decentralization with premines/ICOs/airdrops/bounties/etc at all and while it might not be the government issuing them, a couple of anon devs doing it still makes it centralized.

Premining all or just a significant partion of the supply is a form of control regardless of what the coins are used for.

And when you have someone being in control of these funds or you're hoping they'll develop what they promised, you introduce trust while crypto should be trustless.



If a group needs funding they should use their own money if they're confident (if not then why bother) or get it from the outside, not tied into the project via coins or tokens.


And if they want ongoing funding, they should use the model which automatically transfers a set percentage of each blocks' reward to a dev address.

[stoniestfool]

MY ABUNT SUPPLY OF MONEY IS ANNOYING TO KEEP TRACK OFF. FIGURE I SHOULD SHARE MY PROBLEMS WITH OTHERS.

[affandi]

The answer is simple, they (investor) invest in ICO for expecting a profit. Investors or traders know that behind the profits there will always be losses that haunt them all the time. This is a risk, and I'm sure all fund investors have understood it.

[Brama Jasa]

I like your question, this is an interesting question, Before an investor invests ,he first learns about the vision and mission of the coin if he sees progress on the coin then he invests in an ico .. that's my opinion guys

[SonyEricSon]

I rarely invest in ICO, but I often invest in pre-ICO, the chances of getting a lot of advantages in pre-ICO is bigger, pre-ICO is amazing, they give very big bonus

[Herdirfauzi]

Perhaps they are investing by looking ahead to their project, and maybe there are also teams who participate invest by using a pseudonym .. if seen they use instinct about the courage to be invested in his poject.

[Herdirfauzi]

Because we believe that we will earn a huge profit from the project. Most of the ICO always get a good price after it is listed on an exchange

I often see in ico with a discount coin for pre-ico and does not rule out investors interested in investing in it, not only discount investors to see from the success of the project and also from the crowd about the project.

[pey]

Most people invest in ICOs to sell tokens for higher prices after the ico or to be able to get tokens at the lowest price. Ultimate goal of both is profit.

[piebeyb]

I think those who are investing are the ones who do hold a big bag of ETH, so I think that might have happened when many investors pushed ICO really successful