Eternity Law International — News — Investment in Cryptocurrency

Investment in Cryptocurrency

Published:
November 19, 2018

INVESTMENT IN cryptoCURRENCY – MINING OR ICO?

The cryptocurrency and ICO market today allows the business environment to take part in successful business projects of the digital modern economy.

How is it possible now to apply existing prospects in the most competent way? And where is the best place to invest money – in the ICO market or in mining cryptocurrency? To understand the difference and advantages, in order to clearly understand the essence of the issue, it is necessary to examine each of these options separately.

Investment in ICO

In order to understand the main prospects for depositing money in an ICO, it is worthwhile to understand the basic elements and the main sub-steps of building this process.

Investment in Cryptocurrency – WHAT IS ICO?

ICO – is the equivalent of an IPO (initial public offering). Only when ICO on cryptocurrency exchanges instead of shares issued tokens tied to cryptocurrency.

Its most important advantage is that the cost of ICO will be ten times smaller than the traditional IPO (10-20 thousand dollars against the minimum 200 thousand dollars per IPO). In this case, both can be equivalent, in fact, the results. And although bitcoin did not have ICO, investing in bitcoin is still prestigious among depositors.

As a rule, through IPO, large firms with a stable return flow into the stock exchange. And start-ups, which have embarked on the path of big money and large, successful entrepreneurship, resort to ICO more. For them, it’s like crowdfunding.

But newcomers need to find at least some way to tell about themselves. That is why, initially, an announcement is made from firms.

Somehow you need to declare yourself, so the first thing the company makes an announcement.

Stage one is the announcement. Initially, a company that wants to pass an ICO places a small announcement on Internet resources, where members of the cryptocurrency community are usually present. For example, on the portals BitcoinTalk, Reddit and others.

To accomplish such tasks, they prepare presentations with descriptions of the tasks and ideological thoughts of the ICO for investors. The latter on these web resources are looking for themselves, as a rule, curious startups. When the project has been discussed, some kind of correction is needed in the business model and the second stage is launched.

Stage two – offer. Startups model offers. Here the investor is looking for the most attractive start-ups. After discussion on a business project, most often, adjustments are made to its business model and the next stage begins.

A startup creates an offer – this is a partnership offer for an unlimited number of people or a specific person. In this proposal, as a rule, all the features and conditions are prescribed – from the amount of contributions to the project terms.

A mandatory item in this regard is an exchange traded object. For example, these may well be cryptocurrency tokens, which are special digital assets. Their cost is determined by the project organizers. As a rule, they are tied to one or another cryptocurrency.

As a rule, it is Bitcoin or Ethereum – then the price for a token is very rigidly tied to the rate of Bitcoin or Ethereum. They may also have reinforcements in the form of fiat currencies, up to gold.

Stage three is an advertising campaign. When all the offers have already been signed, it is extremely important that information about ICO be distributed to as many people as possible in order to attract additional money from the outside.

That is why startups traditionally turn to the services of advertising agencies, because it is extremely important for them to get an adequate degree of awareness. At the third stage, the focus is primarily on the entrepreneurial group. When the ad campaign ends, the startup goes directly to ICO.

Stage four is, directly, the ICO itself. The company entering the ICO now has the right to launch personal tokens. For example, collect the minimum necessary amount of money, which was determined by the offer. Then produce personal tokens and it is equivalent to redistribute them among those who invest funds.

Alternatively, tokens can be produced in advance. After that, their further resale will take place on several or on a single exchange platform for cryptocurrency trading. This model is very similar to the IPO model.

When all sales are completed, the issuers undertake to begin to fulfill their direct functions. And at this moment there can be risky moments for investors.

Investment in Cryptocurrency – POSSIBLE RISKS

We have determined what the ICO really is, what stages this process may have. Now we must assess the likelihood of risk. Investors should clearly understand that the CIS countries are not the only countries where a decree has not yet been adopted on how to regulate the activities of ICO.

As in the CIS countries, in most world states there are no such regulatory mechanisms. And this is a great “loophole” for fraudsters who, after collecting a very large amount of money, as a rule, quickly disappear.

That is why people who want to invest their financial resources in an startup’s ICO should make personal analytics and maintain utmost care. And the deeper the analytics, the better.

It is important to understand and study the activity of the company, to understand how it occupies a position on the trading platform, what offer it has and what state of financial apparatus it has.

Also, there are special agencies that publish ratings on the reliability of organizations that plan ICO. For example, of these, ICORating stands out.

She specializes in checking the relevance of business modeling and team experience, examines the stability of finances and analyzes competing organizations that are planning ICO.

Experts call another effective method for the safety of investor money. It is important to monitor the activities of companies attracting third parties to collect money – independent agents. Then the funds will be credited directly to the multi-signature wallet, and only independent agents have the right to dispose of the latter.

Upon completion of the ICO, they will issue the minimum amount of funds that a startup needs, and will control that startups fulfill their commitments.

If the work is carried out clearly, correctly and correctly, the terms of the contract are not violated, then the agents will issue the next part of the due amount of money. Otherwise, they are forced to block the activity of the startup – no other transaction will find support. And the remaining money will be transferred back to investors.

Investment in Cryptocurrency – MINING CRyptocurrency

Mining is another possible option to invest in cryptocurrencies, for example, in Bitcoin or Ethereum. Mining is a special term for a procedure for producing digital currencies. In the public domain, you can find devices that have a “sharpening” for specifically specific currencies.

Why don’t you just buy one or a couple of such devices then? It seems that everything is too simple. But this is only a deceptive ease of the whole process. As in any other business activity, it will be extremely important to make an estimate in advance of costs and potential benefits.

And for this you should know the main conditions that can affect the amount of cryptocurrency produced.

Investment in Cryptocurrency – BASIC information

The underlying variable is the hash rate, or the calculated equipped power. This is precisely the speed with which the mining machine finds answers to the tasks for the extraction of cryptocurrency blocks.This speed is measurable in hashes per second: MH / s, GH / s, TH / s – the larger its value, the more cryptocurrency can be obtained.

If we talk about Bitcoin, do not neglect the fact that the solution of a mathematical problem can form a strictly specific number, which is two times less than every two hundred and ten thousand blocks – that is, every four years (approximately).

Today, the reward for one unit is twelve and a half bitcoins. At the next stage, already in 2020, it will be equal to only six and a half bitcoins.

The difficulty of the mining process can also have an impact on the acquisition of cryptocurrency funds. The greater the number of miners in the network, the more time-consuming cryptocurrency production will be. In addition, to start in the mining, you need to start to join the pool – one of the miners’ associations.

And each pool has its own commission percentage. Please do not forget that the cost of electricity consumption is important, because mining devices like to spend it in huge amounts.

The Bitcoin rate itself has a direct impact on how much money the miner will make. The level of profit will be determined by the price of electricity. In addition, it is worthwhile to realize that the mining equipment is capable of overheating and may require additional cooling system.

Large mining farms are equipped with cooling technologies. Remember also about the fact that any equipment has a tendency to break. Also consider the fact that mining is a very complex process.

It is unrealistic to anticipate this process for a year or even just one month in advance, because it is impossible to predict how many more people will connect to get digital currency. Any calculator will only show the probability, an approximate figure. And how it will be in reality – time will tell.

Consider, please, the “splash” of the activity of miners – today this picture is widely observed in society. Taking this moment into account, I would like to say once again about the utmost caution in investing money in bitcoins and other cryptocurrencies of the world.

FINDINGS

It’s clear that investing in mining and in ICO has its undeniable advantages. One thing is obvious – before making a deposit of your money in any direction, you should clearly assess the full extent of the benefits and risks. Therefore, the most key toolkit that is worth connecting is the knowledge that will help you make the right choice.

For investment assistance, contact Eternity Law International experts.

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