How to Invest in an ICO as a US Citizen
2. Coin invest
This term existed long before Bitcoin’s appearance; however, it became more popular with the invention of blockchain. In the good old times of centralized architectures, there were a lot of money transfer systems which had their own accountable units. Usually, they were the equivalents of real-world assets – USD, EUR, troy oz, and others. They were truly digital because they mostly existed in the form of computer records and were issued and accounted for with information systems. Some of them are still alive; for example, Webmoney or Perfectmoney.
Everything changed when blockchain technologies arrived. It was the first time in history that a new kind of currency could be created – one without any central control entity, yet independent and verifiable nonetheless. People called it ‘cryptocurrency’ because its functioning was based on cryptographic laws. Nowadays when you hear about digital currencies, usually cryptocurrencies are the implied meaning. They are digital because they exist in a digital form and they are currencies because they have their own units of value that can be transferred or stored.
A single cryptocurrency unit is called a ‘coin’, transferring its meaning from the traditional money world. However, the question of whether we can really call blockchain-based digital currencies ‘crypto money’ is very controversial. The main issue is that cryptocurrencies don’t have all the money attributes according to the classic economic meaning. In any case, investors and speculators don’t care about the words; mostly, they care about the profit. Buying a coin at a low price and selling at a high price can sometimes generate profits of thousands of percent. If ethereum stock existed, for example, it could make you rich by turning your $10 at the ICO into approximately $9,000 today. However, ethereum stock doesn’t exist; there is only ETH coin, or ‘token’, as it is more commonly called. While the ETH price was $0.311 for ICO participants, its price at the time of writing is about $280. As you can see, many people would have made the decision to invest in ethereum in 2014 if they had known what its price would be today. At that time, there were no limitations on the ethereum ICO participation of US citizens. Everybody having BTC could purchase some ETH.
It’s smart to always keep in mind that everything crypto-related is experimental, unexplored, and mostly unregulated. That means that Initial Coin Offering (ICO) investments are highly risky for you as an investor. On the other hand, the risk level for ICO organizers is relatively low. They can always say ‘I failed this time, my business model was not successful,’ and that’s it. If you carefully read some ICO’s Terms and Conditions, you will never find the ‘investment’ word there. Instead, it will be ‘donation’, ‘gift’, or the like. Contributing money to an ICO essentially means you donate your funds without any obligations on the part of the second party.
Everything is balanced in our world, and high risks imply high rewards. If you decide to invest in ICO in spite of the risks, diversifying your investment by selecting more than one project can help mitigate potential damage.
Studying some blockchain basics is highly advisable before taking any ICO investment practical actions. You should be familiar with private and public keys, wallets, and blockchain principles. Pay special attention to cryptocurrency use security measures. Always create backup private keys because if lost, they can’t be recovered. This way, you’ll avoid the typical beginner’s mistakes and will not lose your crypto assets due to lack of knowledge. Don’t be afraid to ask questions on forums or Reddit. There are many cryptocurrency enthusiasts who are ready to help with explanations or sound advice.
From the technical side, making an ICO investment is not a difficult task. You only need some crypto in your wallet to spend. And of course, you need to know how to use your crypto wallet. Any altcoin ICO support team will gladly answer your questions and guide you through the whole process.
Total freedom and anarchy means freedom for criminals, too. That’s why regulation and censorship are sorely needed. The quality and level of regulation form either a friendly or hostile environment for any new industry. If you want to be free but protected, regulation is unavoidable. Many ICOs restrict the list of the allowed jurisdictions because of conflicting features of individual national legislation. Speaking of the US, there are some restrictions on selling securities to US citizens, and many ICO projects would rather avoid opening that legal can of worms, which is both difficult and resource-consuming. For example, an ICO team will have problems if their tokens are considered securities and they sell them to US residents without proper licenses. If you are a US citizen or US resident and wish to participate in an ICO which includes the US on the list of restricted countries, there, unfortunately, is no legal way to do that.
However, the investment door to US citizens is not entirely closed. The STO and IEO offer accredited investors that chance to purchase tokens of selected projects.