How To Buy ICO Tokens
The ICO sector is still largely unregulated, but even so, the listed tokens fall within the regulatory framework of their respective exchanges. Many have been unsure whether it is possible to trade ICOs on exchanges for some time.
It means that once an ICO token is listed on a regulated exchange, it falls under a specific law section. The success of ICOs has excellent potential to bring considerable returns to initial investors. Not only that, but it also brings enormous dividends to the companies, startups, and individuals that host it.
In this article, we’ll cover how to buy ICO tokens – a beginner’s guide for that. This article is part of a series of articles written about ICOs, including the basics of ICOs, the work of ICO tokens, and more.
What is an initial coin offering?
ICOs are basically fundraising ventures designed for companies to launch cryptocurrencies and blockchain environments. They are traditionally used by startups who need to raise money for something. By participating in ICOs, these companies will have access to funding to complete their projects and eventually launch. ICOs allow companies to complete their tasks and secure the necessary funds to establish the blockchain environment and cryptocurrencies they are designing.
Generally, there are two types of initial coin offerings. First, there is a private ICO. Only confident investors can participate in this type of ICO. Sales are often limited to accredited investors, such as large financial institutions and wealthy individuals.
Next, there is a public ICO where anyone can invest. Net assets and company size are not factoring that limits participation. However, it should be noted that public ICOs are not as typical as private ICOs, mainly because of regulatory concerns and the desire to maintain high initial investment requirements.
How to Purchase Initial Coin Offerings?
Investigate an ICO
This step cannot be thoroughly recommended because many investors do not conduct adequate research. Sadly, investors will suffer losses instead of profit. This step applies to cryptocurrencies and all investments (real estate, stocks, etc.). To avoid this, we strongly recommend:
- You read, listen, and study this topic as much as possible.
- Talk to other investors and people who are familiar with the situation.
- Understand and accept the risks.
- They don’t invest more than they can afford (the golden rule of investment)
Set up wallet
Since many projects are based on Ethereum’s smart contracts, most projects embrace Ethereum. MyEtherWallet, Cipher, and Trust are the most frequently used wallets to store your crypto moneys. Still, we recommend that you research enough of the selected wallet before you download and use it. Most exchanges have a vast remittance fee for sending Crypto tokens from the business to the desired wallet, so compare the costs before choosing. Once you’ve transferred the amount of crypto you need to your wallet, you’re OK.
Register for an ICO
Regular projects that raise funds in ICOs include a project website with details such as project objectives, goals, required funds, tenure, and minimum investment. The project website is basically where you register for an ICO. Most high-profile ICOs are mandated to register. Those who do not may be questioned for their legitimacy.
Many token sales involve the Know-your-customer (KYC) and Anti-money laundering (AML) processes and are typically restricted by certain rules, such as allowing only investments from certain countries. If you agree to the terms and conditions of sale and confirm that your country is not blacklisted, your registration will be approved. Once you’ve registered for the ICO, set up your funds, and are ready, you must send the crypto from your wallet to the campaign address on the ICO start date.
Reserve Purchase slot
If there is a lot of interest in the offer, the project usually places the target in the waiting room on the token sale date and assigns a random number to participate in the sale. When it’s your turn, you can log in and purchase. You can then buy a token and create the documents you think you need. Make sure you’ve completed your payment and save a confirmation from your exchange account or platform to confirm your payment and participation in the sale.
Get Bitcoins or Ether
Bitcoin and Isa are two popular cryptocurrencies required to participate in an ICO.
Bitcoin, the most dominant cryptocurrency, is accepted virtually anywhere in the crypto world. Ethereum offers a stable and convenient blockchain platform for developers to launch their projects, and it has come to be chosen as a platform for ICOs.
The minimum amount invested depends on the respective ICO and is usually indicated in the whitepaper published on the project’s website.
With ICOs, there are different ways to distribute purchased tokens. Typically, some distribute tokens that correspond immediately to the wallet address you provide when you register, while others split the tokens weekly/monthly if there is a lock-up period. In any case, once you have received all your purchased tokens in your wallet, the process is complete.
Receive ICO tokens at my address
Once the transaction is closed, your newly purchased token should arrive at your wallet address. It may not be received immediately, but please wait. Depending on the campaign, tokens may come quickly, but sometimes it can take weeks, months, or even longer. Many things are postponed during ICO transactions, and some deadlines could be further on the calendar. So, ensure you have the updated data and consider contacting and connecting with other investors on trusted platforms and forums.
When you receive a token, you may not be able to exchange it on the exchange immediately. It depends on the rules that manage a particular ICO. This information and the time you have to wait before receiving the token are usually presented on the investment project website or in the whitepaper document.
Partake in an ICO by transmitting your crypto to their address
The primary purpose of an ICO campaign is to get your money. So, they try to make the process as simple as possible. In most cases, the project’s website provides detailed guidelines on how to invest. However, they must be cautious in sending funds.
First, check your website address as often as you think you need it. There may be a fake ICO site that will appear as an ad at the top of the Google search results. They look the same as the actual website, but only one or two subtly different address symbols.
Once a token is listed on one of the cryptocurrency exchanges, it will be able to trade that token. For a while after listing, Bitcoin and Ether will be the only trading options, and if the demand for tokens increases, other trading pairs will be supported later.
In that case, they may remain invested for a while. You may lose big money quickly, or you may not be profitable for a long time. However, one day, the value of the token may suddenly surge. It may mean that the token’s value will continue to rise steadily, or it may be transient, and the value will be zero.
The Benefits of ICOs For Investors.
So why do people invest in ICOs? Here are some potential benefits for investors:
High growth rate returns can be expected
Many investors are attracted to ICOs because they have high growth returns that they “promise.” At the very least, you should first investigate the project’s foundations, teams, and business models.
Entry barriers are low.
ICOs also feature low entry barriers. For example, some investment opportunities in the United States require investors to be verified.
Verified investors must have a net worth of $1 million (not including primary residence) or an income of $200,000 each over the past two years.
On the other hand, ICO investments can jump in more or less anyone. The limitations to entry are low.
Mechanism of the initial coin offering
As mentioned earlier, ICOs are one of the ways to raise funds. Companies conducting ICOs need to develop business plans. You also need to provide marketing materials to determine what you want to achieve after you get the necessary funds.
Companies that make ICOs need to gather investors and, at the same time, create tokens that represent assets or utility in the appropriate blockchain environment of their currency. These tokens do not usually represent ownership. Instead, it means the ability to use the platform for its intended purposes later, which is like a reservation.
Companies attract investors and offer tokens in exchange for their initial investment. And with the necessary funds, companies can create and launch products and services and provide investors with a platform to leverage their tokens.
How to buy tokens after ICO?
Suppose the token period of the ICO ends and is successful enough. In that case, the token will eventually be listed on the cryptocurrency list, but the exchange will vary depending on the project. You can find the topic about a particular token by looking at the notification of the project itself or by referring to the altcoin section of the Bitcoin Forum. Also, CoinMarketCap lists most existing cryptocurrencies and exchanges where they can trade.
When a token is listed on the exchange, it is mainly traded against Bitcoin and Ether. Also, please refer to our detailed guide on how to sell Ether and Bitcoin.
Who can participate in an ICO?
There isn’t much you need to invest in an ICO. The starter pack includes active internet access and some Bitcoins or Ether. Blockchain technology allows investors to make investments almost anywhere in the world, usually within minutes, with a small fee.
However, this is a very important “but,” but make sure it is legal in your jurisdiction. ICOs are probably one aspect of cryptocurrency that authorities worldwide are most trying to regulate. Some countries, such as China and South Korea, have explicitly banned ICOs, while others have introduced or are trying to introduce specific regulations. For example, Russian regulators are strongly considering introducing a hard cap on the overall amount that a project can receive through an ICO and the amount that an individual can invest.
Final words: Buy ICO Tokens
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