# The Risk of Initial Coin Offering (ICO)

I would like to discuss the risk with ICOs. I have never participated in ICO's because I can't see how the eventual profit of maybe 500% will exceed the risks. 

### **There are multiple risks:** 
**1.** You pay for a whitepaper, there is no source and no guarantee there ever will  be. 

**2.** Even if the developers will try to create the currency they might fail, either by not being able to create the actual 
currency or by not being able to live up to expectations or promises.

**3.** Let's say they succeed with the currency but fail to live up to all expectations or promises, the risk of not gaining a profit that exceed the risk is huge. 

**4.** If they succeed with everything, they live up to every promise and all seems good there is still a risk that the price will drop instantly because of people dumping. That will leave you with a loss or a very small profit if you're not there the first hours.

### There are also a couple of possibilities:
**1.** You find a development team with experience in business and competens when it comes to running a company. A well educated team that consists of marketing teams, core development, finance team and a community team. This means your invested money will be in good hands and the possibility that they keep their promises is high. They will be able to keep a high price for a long time and develop the coin over time.

**2.** You find a development team that succeed to keep their promises, your investment is at risk but the risk/reward-ratio is low. You're active enough to be able to catch the first pump where you get to sell off your coins at a high profit. 
This is more luck than skill though. 

### Conclusion:
I would only invest in an ICO-project if it's a well-known Development Team with great experience,multiple departments and if their identities are public. I would never invest more than what I would be okay with to lose, I'd say maybe 15% of my current capital.
This would lower the risk/reward-ratio. 

**Never, ever, no matter what, invest more than you are fine with losing. Also, always consider the risks versus the reward. If it seems too good to be true, it probably is. Risk/Reward-ratio is a very common used investment "strategy" and is worth using in any part of life**

http://i.investopedia.com/dimages/graphics/180977510.jpg
Thank you for reading, if you think differently you can just comment!