After the volatility in the crypto markets, are Initial Coin Offerings (ICOs) a viable investment option?

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Q: After the volatility in the crypto markets, are Initial Coin Offerings (ICOs) a viable investment option?

Yes - Naeem Aslam is chief market analyst at ThinkCoin.

ICOs are both a viable investment option, and the future of investing.

In exchange for capital, companies sell tokens. Even if the token has no value on its surface, it unlocks the services companies provide. If ICOs aren’t creating new utility, people simply won’t invest. The crypto market purges itself.

The future of blockchain and cryptocurrencies is paved, as regulators and firms are standing up to stop investors from losing money to scam ICOs. A lot of ICOs fail, true, but so do a lot of startups. Only one in 10 startups eventually become profitable.

ICO sceptics fail to understand its value beyond the surface of utility tokens. In this new era, ICOs can be seen as an alternative method for raising capital. Denying ICO success is denying the potential of startups, and, by extension, being pessimistic on innovation and improvements.

My view is that the bear market is going to bring the best of ICOs for investors, cementing their position as a viable investment option.

No – Fiona Cincotta is senior market analyst at City Index.

With the recent increase in volatility in cryptocurrencies, there has been a resurgence in interest from investors. But before jumping into an ICO, make sure you are fully aware of what you are getting yourself into.

As indicated by the name, with initial coin offerings investors are often buying coins or tokens for a project that doesn’t even fully exist. While there will usually be a plan at the very least, there is no certainty that the project will ever lift off or be completed, potentially leaving you with nothing.

However, without a doubt, the biggest reason to say no to ICOs is because they are unregulated. This means that if anything goes wrong with your investment, you will not have any protection. While regulation is increasing over more traditional investments, ICOs leave the investor totally vulnerable.

ICOs are an unprotected gamble at best, which is not the basis for any worthwhile investment.

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.

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