IEOs: What are the Pros And Cons

Asia Blockchain Review
June 20, 2019

The year is 2017. Bitcoin mania is at fever pitch, causing ICOs (Initial Coin Offering) to land a blockbuster opening. Everyone and anyone jumps on the bandwagon, wanting a piece of the golden, albeit digital, pie. The trouble is, there are no rules no regulations controlling the rising demand: A free for all, get your hands on what you can. Investors do not realise that the febrile atmosphere has created a rash of scammers simply waiting for their bait.

2018 arrives and with it the steep decline of the ICOs, the reason being that close to 80% of the offerings are deemed fraudulent.

From the dying embers of the much-maligned and untrustworthy ICOs rise the new IEOs (Initial Exchange Offering), a much more robust investment option enabling the investor to enter the digital ecosystem of cryptocurrency, with certain regulations.

Today, an IEO operates much like a stock offering with a crypto exchange administering the process.

Why Choose An IEO – The Pros

The cryptocurrency bubble may have long burst, but the smart investor will view the IEOs as an interesting opportunity that carries tempting potential. Here is why you should choose an IEO:

  •       Authentic Token Listing

The higher the authenticity of a token listing, the better it is for the reputation of the crypto exchange. The better the reputation of the exchange, the more it attracts investors. Token listings under IEO have vastly improved, enabling more trust and transparency in the system.

  •       User-Friendly Interface

Gone are the days when cryptocurrency was shrouded in mystery, much like a maze you had to navigate. The interface of IEOs are more intuitive and allow new users to gain a better understanding of the listings they may be interested in. The biggest gain for investors is that they can now interact directly with the trading platform rather then the token listing.

  •       Easier To Trade

Once an IEO is announced, the crypto exchange will then set a fixed time period where you cannot interact with the token listing. When the fixed period expires, the listing appears on the exchange with guaranteed liquidity. The trading process as compared to ICOs is much easier.

Why Stay Away From IEOs – The Cons

Cryptocurrency is still in its infancy when compared to traditional stock exchanges. Though there have been steps taken to regulate the IEOs, there persists valid concerns regarding its true value and return on investment. Here is why you should consider staying away from an IEO:

  •       Temporary Value

It is very easy for a group of investors to artificially pump up an IEO then dump it on the market, erasing any value that it held. An individual investor or a new user may find it hard to decipher whether a token listing has any vested interests behind it, and whether its value is just a temporary one.

  •       Minimum Investment

IEOs require a minimum amount to be invested in their token listings. The amount could act as a financial deterrent for a large section of the investors if the number of tokens required is high. The other issue here is that if that a majority of the investors cannot purchase the listing, the value could be driven up because of artificial scarcity, rather than the potential of the token.    

How To IEO – Three Easy Steps

Now that you are much more aware of what an IEO can and cannot do for you, the time has come to get a taste of the digital currency. Three easy steps are all that it takes for you to begin your journey into the crypto universe:

Step 1  – Research, Research, Research

Like any sound investment you wish to make, IEOs require your fair share of research. It is important to understand whether the offering is worth investing in the first place. Once you have done the research and get a clear idea on a listing’s true value, you can then take the next step.

Step 2 – Create Your Account

Create your account on a crypto exchange that you feel most comfortable with. Remember to carefully complete the KYC (Know Your Customer) details. Once you complete the details, double check which form of cryptocurrency is accepted on the exchange. If it is an Ethereum Blockchain, only ether will be accepted as payment.

Step 3 – Start Trading

You can now invest in the IEO you have carefully researched. Double check the date and time when the offering will go live on the exchange. All the best.

To IEO Or Not To IEO – Final Thoughts

IEOs offer an exciting new potential, despite its pitfalls, as an investment option. There are real risks here as well as real rewards. IEOs probably offer a glimpse into a bold new future for investors.


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Asia Blockchain Review

Gateway to Blockchain in Asia

Asia Blockchain Review is the largest initiative for media and community building in Asia for blockchain technology. We aim to connect all blockchain enthusiasts on a regional scale and facilitate the technological foundation of blockchain through a range of group discussions, technical workshops, conferences, and consulting programs.

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