By Steven Krohn · October 22, 2017
At this very moment, someone just doubled their initial investment in an ICO. Yes! There it is again. Most traditional investors are still looking at Bloomberg reports and patting their backs for a mere 10 – 25 % per annum return.
However, there’s an “unseen” marketplace that is growing at an exponential rate. The participants in these markets are potentially doubling their initial investment in mere days or weeks.
What we are talking about is Initial Coin Offerings or ICOs. You may be thinking, “I’ve seen this a million times before – a so-called gold rush where only the sellers of the shovels get rich.” We understand your skepticism and encourage you to be a cynic.
However, what if it’s a legitimate opportunity? Will you forgive yourself for not jumping in? If we can have a moment of your time, consider this illustration that might change your mind.
Have you heard of Initial Public Offerings, more commonly known as IPOs? To better understand IPOs and ICOs, consider the following scenario.
What if you own a company and you need more capital for growth? You basically have two options.
The first is borrowing money from the bank. Obviously this means that you will have to repay the bank, over time, plus interest. This is probably not the best option to pick. A growing company needs to focus all the cash it can acquire for their expansion.
A second option is to conduct an IPO. An IPO is basically selling a company’s shares on a public stock market for the first time. If someone buys the shares, the money goes to your company’s coffers without the burden of debt, and it’s associated interest.
You must consider that you’d be giving up equity. That may not be a big deal IF you don’t lose control of your company. Notwithstanding, 51% ownership of a $100 million company is still an abundance of money. When given these two options, it’s likely that you’d prefer the IPO route.
IPOs are notoriously difficult to deal with. First, you’ll need an army of lawyers to sort through all of the legal issues and details. Next, you’ll need to spend a lot of time and effort to get approval from the various regulatory agencies and commissions. Consider also that it may take years in the making before you can finally hold an IPO.
Let’s recap a bit.
We know that an IPO is the best method available for a company to raise the necessary funding levels for growth. IPOs are notoriously difficult to run by nature.
That said, what if there was an easier way for companies to conduct an IPO? Well now there is, it’s called an Initial Coin Offering.
ICOs are a product born to solve one big problem, to get a company funded efficiently and effectively. ICOs bypass all those difficult regulatory agencies and commissions.
When using an ICO, companies with great ideas, have an excellent shot at raising the capital they need. Thus, they can turn their vision into reality. ICOs are not only beneficial for companies, but they are good for you.
* Easier To Start – if you want to buy shares of a company look for an IPO. Most often you will have to open an account with a stockbroker. You could be looking at depositing thousands of dollars to open an account. Then you can start buying stocks at “retail” prices, which are naturally higher.
An ICO is different because there’s no such thing as a “broker account.” You simply buy tokens with your Bitcoin, Ethereum or other cryptocurrency. These tokens already represent the equivalent of company shares.
You’ll also bypass having to pay “retail” prices for your coins/tokens. The result is that you’ll have a much simpler path to benefit. You’ll also have less expensive transaction costs.
* Accessible – IPOs are usually locked geographically. What that means is that an Australian can’t purchase IPOs of an American-based company without jumping through lots of hoops. ICOs, on the other hand, offer anyone from around the world the chance to participate.
* High Profitability – We can say the potential for profits with ICOs is a lot higher than the traditional IPOs. Why? It’s simply easier and less expensive for companies and investors. More investors and sellers result in more demand thus driving prices higher.
So, at some point in history, the automobile was invented, revolutionizing how humans travel. Then along came the computer and the Internet, which drastically changed how we live our lives.
Similarly, we could be at the initial stages of a huge revolution with cryptocurrencies and ICOs. There is an inherent risk in being early, but the potential large returns tend to offset the risk.