Crypto Frontline

The Main ICO Vulnerabilities

The Main ICO Vulnerabilities

The Main ICO Vulnerabilities
June 26
07:12 2018

We have talked many times about the positive aspects of Initial Coin Offerings. Even though under certain circumstances investing in an ICO could be a good decision, we want to also emphasize some of the vulnerabilities of this kind of crowdfunding operation, so any of you wanting to invest can be fully aware of what they are dealing with.

It is reasonable to start by saying that the main source of these vulnerabilities is the lack of regulation from the industry. This issue could be solved in the near term, since we have heard the CBOE President talking about it, but until then you must take precautions.

The numbers don’t lie

According to cryptovest.com, around 10% of all the funds raised by ICOs in 2017 had been subject to hacking. By August 2017, the numbers were located around $225 million and most certainly there had been an increase ever since.

Security features

Nothing is safe on the internet and where there are money hackers and thieves are very likely to step in. A company initiating an ICO is simply raising a flag and tells that there is a lot of money at stake.

There had been many hacks and thefts in the last few years which is enough to prove our point. You must make sure that in your research you take into account and invest in ICOs that take measures in order to prevent these situations.

Paper promises vs. actual results

When you invest in an ICO you are actually hoping that all the things you read in the white paper are going to materialize after the company manages to raise the desired funds. However, that does not happen all the time and some of the companies do not manage to deliver.

You need to understand that there is a long way between the paper promises and the actual results. As we have mentioned in our article about what makes a successful ICO, it is important to spot companies that have experienced people, with previously proven results in other projects.

By doing this you have higher chances of investing in a project that could deliver its promises at a certain time in the future.

Don’t forget that even with these details taken into account, there is no certainty of success and you are taking risks. Make sure to manage risk in a proper fashion in order to protect your capital in the long run.