- Total Loss: ICOs are a high-risk investment, a total loss of the invested amount is possible. Hence, be very careful when you invest.
- No Regulations: A number of ICOs are conducted in a totally unregulated environment, assuring no security to the investors. Stay away from those!
- Insufficient Information: There are ICOs that do not offer complete information to the investors. This lack of clear picture can result in fraud and bad investment decisions.
- Technical Risk: An investor lacking extensive technical knowledge about the ICO may be more vulnerable to risks than someone with more knowledge of the technicalities involved.
- Project Risks: There are chances that the project or product (for which ICO is being conducted) is still in early-stage, and may not be sustainable in the long-run.
What to Do?
There are a couple of simple things that investors should do, in order to protect themselves against the risks involved.
First, educate themselves about the ICO guidelines (by the regulator), the team behind ICO, the project/product involved, and domicile.
Secondly, get in touch with some ICO consultants or investment professionals who could advise on whether to invest in a particular project or not.