Interested in finding new cryptocurrency offerings before the masses have invested? At Fund Wisdom we focus on innovative investment offerings and portals that help with the sourcing process. At the time of writing there has been 6800+ Initial Coin Offerings (ICOs) or Secure Token Offerings (STOs) in 2022 according to Cryptotem.
Are you looking to get a piece of the action? Sure, buying Bitcoin on a platform like Coinbase or Circle is a start, but what about new blockchain projects just starting out? In this article we review innovative and new offerings as well as how to invest.
What is Blockchain and Cryptocurrency
If you don't have an understanding of blockchain technology or cryptocurrency check out BlockGeek. The most common form of data stored on a blockchain are ledgers for transactions, as explained by Investopedia with their guide to Blockchain. The decentralized approach ensures that no single person has control, distributing it amongst the participants and creating a unique approach to ownership.
Initial Coin Offerings
An initial coin offering (ICO) is a path for a group of people, or company, to gain funding. There are some similarities to an initial public offering for large corporations. According to Harvard Business Review ‘blockchain startups raised over $5 billion in 2017 through ICOs and over $12 billion through the first three quarters of 2018. Several itererations of this fundraising process have been built out, from Secure Token Offerings (STO) and Initial Exchange Offering (IEO). IEOs are very similar to an ICO in almost every way, the major difference being investors who can participate in the sale are limited to users on the associated exchange.
New Cryptocurrency or Startup Equity?
Do you invest in a high growth company's equity or a coin tied to a new blockchain project? Each options has seen life changing returns for a select few. When comparing the two, it’s important to distinguish a few key differences. First up, volatility. Any crypto investor is aware of the sudden spikes and drops a cryptocurrency can experience within a matter of minutes. What’s more, in the stock market the SEC provides assurances to investors that they should have access to a fair bid and offer price across exchanges they regulate. That’s not the case for crypto, where investors have to hunt for the best bid themselves.
Whether a company is raising money through coin offerings or equity, this capital can provide strong network effects to enable first mover advantages. and generating publicity in order to gain some feedback on early stage products. These investments all come with inherent risk, not due to poor execution but simply the fact that startup failure is a natural part of the economy. Cryptocurrencies offer liquidity makes it easy to buy and sell, something certain equities, particularly startup investing through venture capital might not be able to provide at all times.
When it comes to setting my investment strategy and which way I go I consider a few factors. I look at my appetite for risk at this moment in my life and when I may need the money. There is the potential to lose everything we put in in these very high risk asset classes. I also factor market conditions, how long I intend to hold the investment. It also is smart to speak with your registered investment advisor.
Seemingly more banks and institutions are backing cryptocurrencies, despite it’s notoriously volatile nature. A few key studies to point out found that 74% of tech-savvy executive teams surveyed by Deloitte said they believe there’s huge business potential in blockchain technology, suggesting the technology is gaining traction amongst key company authorities. What’s more, a study by Reuters stated that Blockchain could help banks save up to $12 billion per year. Not only this, but so called financial market experts like Bill Miller who served as chairman of Legg Capital Management spoke of crypto currencies in a positive light, claiming that the currency will only get stronger. Clearly, blockchain and cryptocurrency is going to become a large part of the global economy, it’s merely a matter of when. I wrote another piece on a list of Blockchain Funds and my process to selecting the fund that is right for me.
Securing your Coins
A method of increasing the security of the storage of your crypto is a hardware wallet. Similar in concept to a physical wallet for cash, several companies like produce these connected devices. There are many wallets on the market currently, here at Fundwisdom we opted for a Ledger and wrote a review of our experience and relationship. The process is simple, you buy the hardware set up the account, access your wallet and place your cryptocurrency in for safe keeping.