Nowadays, blockchain is not just a mere trend. It is a factor that affects established economics. An increasing number of startups are pivoting to Initial Coin Offerings (ICOs) in hopes of attracting funds and thousands of cryptocurrencies are being traded on various platforms. Yet only a few players are earning well. Why is that so?
The cryptocurrency market is a stormy gold rush. It captures the attention of a great deal of retail investors who have no knowledge of basic investment principles. The ensuing language barriers, high volatility, and floating regulations add to the difficulties of inexperienced operators who enter the market looking to make a quick buck. As a result, investors get in trouble and so does the cryptocurrency market.
World leading ICO expert Nik Evdokimov gave a short interview where, among other insights, he stated that education should be considered one of the most important factors in the development of the token economy.
Nik, not everyone understands the difference between venture capital investment and ICOs…
— Unfortunately, not everyone sets their own goals cleary and understands where they stand as an investor. But these are the important factors defining preferred investment approaches.
But isn’t it so that one can plan something one day and tomorrow the situation might change radically for the token economy?
— Yes, that’s right. I entered this market when only a very few startups were about to launch their ICOs, and they were all getting a great go-ahead. So, there was nothing to worry about. Yet, other budgets and investment methods were used in 2017.
Figuratively speaking, being a venture capital investor, you were buying substantial interest in startups and earning from ROI and the outcome of the project. Be it the company going with an IPO or your exit from the project at stake. You just knew that there was a timeframe to stick with and certain financial expectations to justify, should the project turn out a success in months or years.
Being a token holder and taking part in an ICO, you have to rely on your ambitions for success, yet also consider a whole lot of new factors such as the news, general state of the cryptocurrency market, and so forth. Each of these factors can be crucial when it comes to the decision-making process.
All of it sounds rather scary for a beginner.
— It might very well be so. On the one hand, ICOs are very advantageous compared to venture investment. Most of all, they’re concerned with a low market-entry threshold. You can go on and invest as little as one hundred dollars. There is no need to invest hundreds of thousands in that process.
Flexibility matters too, as you can exit the deal at any moment and at a nice price. That is, change to fiat or expand your investment portfolio.
But still, it is very important to protect investments. This matter depends on making the right choice. One should understand what to invest money in and how safe it is.
I, by the way, keep explaining some simple criteria to consider when choosing startups of interest, so that people can earn money instead of losing it. As of today, ICOs are a very convenient and practical investment tool, but they require certain skills and experience.
What do you think is the main task of an ICO investor?
— The goal of an investor is to distinguish which are the most promising and safe startups that are about to launch an ICO. There are few basic criteria to consider.
First, it is about the market need for a product offered by the startup. It is all about whether it will be useful in real life or if the ICO is being done merely for the sake of doing an ICO.
Second, it’s all about the cause, business model, and economy of the startup in question. And, of course, the startup should have a team that’s able to make the mechanics beneficial for everyone. This is the key factor defining the nature of businesses, so ICO mechanics don’t differ much from traditional ones.
What is the most important criteria in this matter?
— I personally think that it’s all about development. What innovation can a certain startup inject in a blockchain? These startups are not beneficial if they can be realized without blockchain. As an investor, I only value the projects which enrich blockchain with something new.
Only then do such startups have a high potential on the market and can attract new blockchain users, evoking great interest and increasing the amount of cryptocurrency investors. Should blockchain be implemented in the very core of the business to make it work, then only this way it will all make true sense.
I talk about this matter on my Youtube channel. I have an educational idea of some sort, and I am trying to realize it now. Using layman’s terms, I will explain what to invest in and how to succeed in that. Believe me, I know everything about it.
Watch Nick’s YouTube channel
Visit Nick’s website to learn more.