New crypto currencies and tokens are being created each week. There are lots of opportunities to get in on the action early. Choosing your cryptocurrency investments at the right time will increase your likelihood of a higher return. Unfortunately investing right at the start means that there is also a greater risk.
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ICO’s (Initial Coin Offerings) or ITO’s (Initial Token Offering) are definitely worth considering if you want to try this high risk form of investment. Websites like the Coinmarketcap ICO Calendar, Foundico blog and ICOShock are useful sites if you are trying to ‘get in early’.
The safer investments are made once the coin or token is better established. These, of course, are likely to be less volatile and more likely to be profitable. Unfortunately, they are less likely to provide the largest returns. There are some exceptions, but generally, as with stocks, the riskier the investment, the greater the profit – or loss.
Lets look at some of the riskier opportunities:
Cryptocurrency Investments – ICO’s and ITO’s
These are the very earliest stages of investment. Typically they allow investors to ‘get in’ before the product has even been developed. At this point your cryptocurrency investment is in the team, an idea and its perceived likelihood of becoming successful.
An ITO’s team, if things go their way, can earn huge returns for their investors and if the ‘use case’ is robust enough, send the value of the tokens and coins to unimaginable highs. I’ve seen returns double, triple and increase by factors of over a hundred making initial investors very rich. The big investors and venture capitalists will spend most of their time checking out the team behind the project. If they believe in the team, the project is 80% towards achieving their funding goal. It is by far the most important consideration when researching your investment options.
The use case is usually published in the form of a whitepaper from the project website. Going through this very carefully and checking and corroborating each sentence if possible, will help you understand the project and how credible it is. And, importantly, how will your investment be re-couped? What is the likelihood that you will see a return on your investment?
You should always remember that ITO’s can provide some of the biggest returns and the biggest losses. Some are downright fraudulent in fact, some of the biggest frauds ever mounted were Cryptocurrency Initial Coin Offerings (ICO’s):
| Scam Name | Amount Lost($) | |
 |
Pincoin | 660,000,000 |
 |
Onecoin | 350,000,000 |
 |
Plexcoin | 15,000,000 |
 |
Bitcard | 5,000,000 |
 |
Ebitz | 2,900,000 |
 |
Bitconnect | 700,000 |
 |
Confido | 375,000 |
 |
REcoin | 300,000 |
 |
Ponzicoin | 250,000 |
Some experts believe that up to 80% of all new coins and tokens are either scams or just don’t have the necessary use case, management team or technology to succeed. Personally, I would call them ‘Chancers’, groups of developers that are simply ‘having a go’ at putting together a project and encouraging investment based on platitudes and lofty ideals but no real substance.
A few years ago, it was very easy to do this and people were so frightened of missing out (FOMO) on a seemingly sure-fire investment opportunity that they would take a chance and hope for the best. Most cryptocurrencies just faded away. These token and coin offerings are sometimes called ‘Shitcoins’.
Cryptocurrency Investments – The Prodeum Scandal
Other Token offerings as a cryptocurrency investment are brazen and ruthless. Prodeum.io for instance:
This group raised a huge sum in ETH tokens and engaged legitimate team members – they even paid freelancers from Fiverr to pose with their name on parts of their bodies:
The project was to help manage fruit and vegetable distribution more effectively using the blockchain. Then, suddenly, one weekend, the Prodeum project ‘pulled the rug’. They closed social media accounts and left investors with a single-page on their website….
A lot of people get hurt by making poor cryptocurrency investment decisions and for many people, investing in digital assets is like staking a new frontier of personal finance. Many reputable organisations wouldn’t invest in cryptocurrency – even if you paid them to – because it suffers such a poor reputation – as did internet in the 1990’s.
Some professional investors simply see this is a better opportunity, they have the opinion that only fools would invest in a cryptocurrency if they hadn’t properly researched it – all it needs it a little bit of extra research:
“Such people deserve to be ripped off, it is they who give cryptocurrency a bad name.”
“Who in his right mind would give their hard earned cash to a stranger that said ‘gimme all your money and I’ll make you millions’ without at least checking it out first?”
Alas, some cryptocurrency projects are very persuasive and thousands of people have been taken in. Some of those people have lost fortunes! If you are one of those, please remember that money can be made back, even when you feel that you have lost everything – such things have happened to people who are now millionaires. And, no matter how dark things get, speaking to someone about it really helps, truly!
Cryptocurrency Investments – Conclusion
It can be argued that if you follow basic principles of investment and carefully negotiate the safe avenues of due diligence and risk management (and frankly, demonstrate some common sense), you will be ok.
Recognise that you will be your own worst enemy when it comes to investment in crypto. Being an emotional investor is very easy because we want to achieve success. We are more likely to make allowances for something we want so much at a time when we should be the most sceptical. You therefore need to ensure that you are being as objective as possible when deciding the crypto you want to invest in or the investment amount – typically, the higher the risk, the smaller the investment.
These comments are based on my own cryptocurrency Investments experiences, this is basically what I tell myself when I look to invest in crypto. It looks easy to do as I write this, experience tells me however, that cryptocurrency investments are actually quite difficult to get right. Before you invest, make sure you undertake your own Due Diligence and Tokenomics research – don’t trust anyone else.
Which brings me on to the next section where we will go into a more detail. Section Ten: Investment in Cryptocurrency – Due Diligence
This article is copyright 2022 by Tony Fawl, CryptoNET.
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