Since cryptocurrency took the world by storm, many new tools were invented and developed to keep up with it and to make it easier on its users, developers and investors. One of these new developments was ICO. It made the news in 2016, when Ethereum founders raised about 20 million dollars in 42 days using ICO.
What is ICO?
The initial coin offering (ICO) is fundraising using cryptocurrency as a type of crowdfunding. Startups use it to get the funding they need from investors by offering them virtual “tokens”. When the startup gets successful and its value gets higher, the investors gain profit from their tokens. It is a rapidly growing industry that has revolutionized crowdfunding.
How to manage your ICO tokens?
Whether you’ve already invested in ICO or you’re planning to, here we have a few of tips on how to manage your tokens:
Do your research
Before you dive into the ICO world and invest in tokens, you need to make sure that the development team you are funding is fact checked. If they are anonymous, do not have cryptocurrency experience, or you notice any other red flags, do NOT invest. Do not take part in anything if you do not understand it, if it sounds too risky or too sketchy. Keep checking social media and Bitcoin/Blockchain related pages for any news or announcement about the ICOs. If you found the team trustworthy enough to invest in them, you should also read the white paper thoroughly before making any transactions.
Make sure your tokens are secure
The newer the technology, the smarter and more determined hackers are. This is unfortunately also true when it comes to ICO. Hackers will try everything in their power to steal money and information from cryptocurrency users, so you should make security your highest priority when investing in the ICO or in cryptocurrencies. Any strong virtual security measures you know can be applied to your token investments, including using different passwords for your online accounts, two-factor authentication etc. You should also store your tokens in one of the more secure major wallet services, like the official Ethereum wallet service MyEtherWallet or a hardware wallet.
Get legal help
When it comes to cryptocurrency, laws change overnight. So to stay on the safe side, consult a legal advisor specialized in cryptocurrency laws before investing in ICO. Additionally, ICO rules and regulations are different between one country and another with ICO being even banned in China and South Korea altogether. Getting legal advice will also help you with understanding the white paper better.
Stay up to date
The most important thing you need to do after investing in tokens is to stay up to date. Keep track of any news or updates concerning ICO. Follow experts on websites, blogs or social media to learn about any developments, risk factors or new investments available. Also, get advice from professionals about your investment and if you are feeling too lost, you should find customized enterprise blockchain solutions by getting help from cryptocurrency specialists.
Taxes apply to ICO tokens
Taxes apply to all types of income, including profit from ICO tokens. Taxes will be applied to the total income of your profits. In most cases tokens act as securities, which are highly regulated by tax laws. Many aspects are still uncertain when it comes to ICO taxes, so do not wait until it is too late and consult your legal or tax advisor to understand ICO tax regulations and laws in your country better to avoid any problems.