ICOs are able to raise fund if it is promising and holds a potential future. However, it is next to impossible to determine fact from fiction. All ICO claim to be the new game changer and offer phenomenal returns. The investor is seriously at sea. Every other day a new ICO is being launched. Some of them had been able to raise exorbitant funds.
The problem is as an investor how do you ascertain the winnability of an ICO from almost a clutter. ICO ’S create hype using digital marketing and other tools. This may create a frenzy amongst investor. Many investors choose to invest in ICO rather than existing virtual currency expecting phenomenal returns overnight. The thumb rule of the game is that if there are many buyers the price of ICO will shoot.
To achieve this purpose ICOs hypermarket themselves making tall claims in the white paper. Nevertheless, the ICO market is Scam ridden largely because of being of being unregulated.
The white paper is the DNA of ICO. Nonetheless, the white paper is a tricky issue. It is rather difficult to understand the white paper, especially for tyro investor.
Undoubtedly, blockchain is a game-changing innovation. However, it is a taxing task to have a grip over the concept of the blockchain. The technical details can be a living nightmare for a prospective investor. Sometimes the details in the White paper bounce off your head.
Here comes the role of Rating Agencies.They are supposed to give an unbiased rating to different ICOs. Unbiased rating is apparently a relative and arbitrary term. This is because the rating may itself be motivated because of vested interest. It is common knowledge that these rating agencies take money from ICOs in form of fiat or cryptocurrency to give a favorable rating.
Hence the investor is left in a lurch. He/she simply have no clue what to believe and what to disbelieve. If an investor goes by a rating agency or tall claims of ICOs, each ICO should be a roaring success. But this is not true. Many ICOs are so pathetic that they are not even listed on the exchange.
The main problem is lack of credible rating agency as is the case with stocks, mutual fund, and other asset class. The need of the hour is world class rating agency that does their due diligence and gives authentic and reliable ratings.
Till such time that such a credible rating agency is created, an amateur investor must be cautious before being gung-ho on particular ICO. Deep and intensive research is the only way going forwards
