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If you want a shot at making fantastic gains, there's a form of investing that you should consider if you haven't already.
An initial coin offering, or an ICO, differs from investing in an initial public offering (IPO) in a few major ways.
For one thing, you probably can't get insider stock with an IPO. But with an ICO, you are absolutely an insider. With an ICO, it doesn't matter what the "project" you're investing in does, makes, or sells. It's not a company, and it doesn't exist in any traditional entity form.
And when it comes to the value of the newfangled cryptocurrency coins or "tokens" you get for your investment, their value can rise exponentially.
Here are the glories and the dangers of getting involved with ICOs and how to know if it's right for you…
How ICOs Explode
An ICO is like an IPO in one way: It's a means to raise money to fund a new venture.
However, while IPOs are highly regulated and deal with investors, ICOs are unregulated and deal with supporters or contributors.
ICOs are more like a crowdfunding event. But they differ from crowdfunding in that the backers of crowdfunded companies are motivated by a prospective return on their investments, while the funds going into an ICO are basically donations.
That's why ICOs are often referred to as "crowdsales."
Projects can be almost anything, but most of them are technology platforms that have something to do with blockchain, distributed ledgers, and decentralized organizations.
If someone's got a hot project that they want to raise money for and they "crowdsell" it through an ICO, contributors who throw in get a newly created cryptocurrency as opposed to stock.
They pay for the new cryptocurrency with an established cryptocurrency like Bitcoin or Ethereum.
They don't usually get any equity ownership in the project, though that's possible. They may have use of what the project does, and sometimes for a cost that might have to be paid for in another cryptocurrency the project issues to contributors (for a fee). Or they get nothing but the coins or tokens issued through the ICO.
As an aside: Cryptocurrencies are digital. They are called coins or tokens, but nothing is minted as coins or tokens by the project creators creating digital cryptocurrencies out of thin air. However, there are actual coins made by some people (think of the gold coins with a "B" dollar sign on them pictured alongside articles about Bitcoin) that have digital addresses embedded in them that can be followed and lead to a ledger where there's an amount of some cryptocurrency. But the physical coins and tokens of digital currencies are few and far between.
One of the reasons Bitcoin and other cryptocurrencies have exploded lately is that buyers of new cryptocurrencies issued via ICOs must pay for them with bitcoins or ether, most of the time. That increases demand for cryptos and, of course, their price.
That's where the potential for explosive gains comes from.
The Odds Are Stacked Against You, but the Winnings Are Grand
About the Author
Shah Gilani is the Event Trading Specialist for Money Map Press. He provides specific trading recommendations in Capital Wave Forecast, where he predicts gigantic "waves" of money forming and shows you how to play them for the biggest gains. In Zenith Trading Circle Shah reveals the worst companies in the markets - right from his coveted Bankruptcy Almanac - and how readers can trade them over and over again for huge gains. He also writes our most talked-about publication, Wall Street Insights & Indictments, where he reveals how Wall Street's high-stakes game is really played.