Token Issue Differences on Initial Coin Offerings

April 13, 2018 by Adrian Thorpe

When you decide to buy into any initial coin offering, there are going to be two different ways that the tokens associated with each of them are going to be issued to you.

When you take part in most ICO’s that for example are built onto the Ethereum blockchain you will find that the smart contract that is built upon that blockchain for most ICO’s are not going to issue the tokens you wish to purchase until either the time period of the initial coin offering has been achieved or when enough funds have been achieved.

If the goal has not been achieved regarding the ICO then your invested funds will be returned to you, however some smart contracts will be written in such a way that the tokens will still be issued to you even if the funding goal has not been achieved.

Some other blockchains such as the WAVES blockchain for example can issue tokens once you have chosen to buy any of them, and as such you will not have any guarantees that your invested funds will bear fruit if the concept behind any initial coin offering does not proceed if the required funding goal is achieved.

As such you do need to think long and hard regarding just which initial coin offerings and token generation events you buy into, and the ones that only issue the tokens once the funding goal is achieved or returns your invested funds to you if not are probably the best ones to invest in.

Concepts That Go Ahead with or without Funding

You will be faced with having to pay up front for your coins and tokens no matter which initial coin offering or token generation event you do decide is the one for you to invest in, but you do have guarantees if the tokens or coins are only issued if the funding goal is achieved.

Those guarantees though are often written into the smart contract if you are buying into an ICO that is built onto the Ethereum blockchain, and as such you are going to be able to view the smart contract to see if your initial investment will be returned if the funding goal is not achieved.

That is sadly not something you are always going to be able to do, however most initial coin offerings or token generation events will give you the link to their smart contract, and as such you will be able to read through it to determine in just which way it has been compiled.

That does however mean that you are going to have to get your head around the way that smart contracts are designed and written, and that is going to take you some time to learn, but in my opinion for anyone who is going to be investing in such schemes should set aside the required time to learn how to read and possibly even write smart contracts so consider doing so!

Consider Spreading the Risk Around

Anyone who does have the time and effort to studying as many different initial coin offerings and the business concepts behind each of them will also be best advised to consider spreading the risk around so to speak regarding just which ones they do invest in.

For by doing so you are then not going to run the risk of losing everything that you have invested in you choose to just invest in one single initial coin offering.

You will also find that by being one of the early investors in any ICO you can also claim bonus coins and tokens too which if the coins or tokens do become sought after and increase in value will then see you locking in an even bigger profit.

The cost of the coins and tokens you will be buying once an initial coin offering or token generation event has started will also be just a fraction of the price you will pay for them after the ICO has run its course but that will only be the case if those coins and tokens to increase in value.

What you are going to find is that those business planes and concepts that are going to be successful or have a very good chance of doing so will already have a lot of investors’ money invested in them, so try and find out how much has bene invested in any initial coin offering before you invest in any of them too.