The investment strategy we are about to outline is a particularly popular one among ICO investors – and indeed within the cryptocurrency universe more generally. It goes something like this…
- Set aside an amount of money that you are prepared to lose – we’ll refer to his amount as X
- Choose a fixed number, N, of ICO investment opportunities that you want to invest in
- Invest X / N into each of those investment opportunities
- Sit back and wait – or, as the jargon has it…Hold On for Dear Life (HODL)
The reasoning behind this strategy goes something like this…
- The crypto-currency universe has witnessed several cases of exponential, almost explosive increases in value – Bitcoin, Ethereum, Zcash, LiteCoin and Monero are but some examples.
- It is likely – at least many of us think so – that we are close to exhaustion with seeing more of these kinds of exponential increases for classic crypto-currencies – i.e. crypto-currencies which function as simple stores of value
- On the other hand, we are now witness to the newly emerging ICO phenomenon which represents an explosion of opportunities to identify tokens that have inherent, functional value that which may then send their prices soaring at a future date in a manner similar to that which we have witnessed with some of the early crypto-currencies.
If (3) in the list just above holds true, we are likely to be witness to at least one bag in the months and years to come. A bag just means the big one, the bullseye, the home run, or the dinger-linger as one friend of mine refers to it.
The bag will be the Blockchain equivalent of Apple, Google, Facebook or Amazon. It’s the investment(s) that, five to ten years down the line, give(s) you a x-1000 return on your initial stake and which means, that even if your other investments prove ultimately to be unsuccessful, your overall return from the bag has made the whole enterprise worthwhile.
Let’s not beat about the bush, we all dream of a bag.
Pros and Cons of Spray and Pay
There’s always a catch. And in ICO-land – naturally – there’s more than one. We’ll begin by listing these…
- The US currently bans its citizens from investing in ICOs. Other major countries may soon follow suit
- China currently bans ICOs. Other major countries may soon follow suit
- Crypto-currencies and Blockchain technologies are still waiting for their MAB (Mass Adoption Breakthrough) moment – there is no guarantee that this will come (we disagree with the view that it is inevitable)
- Many ICOs are opportunistic, token-issue tribute acts that are nothing other than get-rich-quick schemes for the charlatan project teams that head them up
- Even if you bag the bag, so to speak, you may end up selling your tokens long before they hit their peak. Most people, when they see their investment rise five or ten-fold, simply cash in.
If either (1) or (2) hold true for the near future, the number of bag opportunities is more or less limited to the promising ICOs that you see out there on the market today.
If (3) continues to hold true, then the number of potential bags is again limited.
If (4) holds true – and it does – then it diminishes your chances of bagging the bag unless you perform due diligence in determining the legitimacy of an ICO. View our tips on identifying charlatan ICOs here.
If (5) holds true – and it does – it simply means that, even if you have the bag – or even a few bags – you most likely won’t register the full benefit.
Let’s work from the assumption that the investment climate of ICOs remains relatively favourable for the foreseeable future – for at least a year, say, which is enough time for at least one of the major ICOs out there to develop its business into something with the potential for mass adoption.
Presumably (and there are lots of presumablies in ICO-land, you may have noticed), our associated token should then experience an exponential increase in the token value that goes with it.
Even if, for example, a year from now someone makes the empirical observation that 80% of ICOs have been either frauds or outright failures – this is likely not an inflated figure – and most governments subsequently rush to ban ICOs, that still means that there are two dozen or so ICOs from the last eighteen months or so that qualify as bag potential.
Of course, going for the bag is not the only legitimate – and potentially rewarding – investment strategy. So make sure to follow up on some of these which are also discussed on our site before deciding on a single strategy – assuming that a single strategy is your intention.
— Edit 01-Oct-2017: You may also want to follow our statistical analysis of the performance of the Spray-and-Pray strategy for ICOs which first appeared back in 2016 and which you can find here.