Cryptocurrencies: ICOs and NFTs

Cryptocurrencies were created as an alternative to traditional money, also known as fiat. And in 2022, mass adoption of cryptocurrencies is just around the corner. Cryptocurrency transactions are becoming more common, with more and more people willing to accept and receive cryptocurrency payments.

Not surprisingly, cryptocurrencies are now used all over the world and may take the place of fiat currency in all financial transactions shortly. One of the best examples of this rapid adoption of cryptocurrencies is crypto credit. Yes, best crypto lending platform has become a reality as more and more people believe that digital money is a safer and more secure investment than traditional money. Before we understand whether crypto can be used as collateral for a loan, let’s take a look at ICOs and other useful aspects of the crypto market.

ICO (Initial Coin Offering)

What is Initial Coin Offering? It is an initial cryptocurrency offering to raise money. A startup company or startup does it. Almost the same as an initial public offering by a company (IPO). Initially placed coins are called altcoins.

Successful ICOs:

• TRON. A decentralized, app-based platform that provides access to entertainment content. In 2017, its creators raised about $70 million in ICOs. In May 2022, the platform ranked third in DeFi Llama’s decentralized projects ranking, behind only Ethereum and BNB Chain.
• Tezos. Software blockchain platform and the record holder among ICOs: $232 million was raised in just nine minutes. After that, the company was embroiled in court battles and protracted scandals. However, in 2018 the project still managed to stay afloat, and in 2021 the developers launched the first version of bitcoin on the Tezos blockchain – tzBTC.
• UNUS SED LEO is a token of the Bitfinex decentralized exchange based on Ethereum. In May 2020, the company successfully conducted an ICO – and since then, this token has been among the top 20 cryptocurrencies by capitalization.

By 2022, the price of altcoins had dropped several times. This arose because of projects that raised significantly more money than they needed for development and marketing. For example, a domestic startup raised $42 million at the ICO: they had to increase the number of tokens and reduce their value – because of this (and because of changes in the Ethereum exchange rate), investors received less than they had planned.

In 2020, a more transparent version of the ICO became known – IEO – an initial public offering of cryptocurrency, but under the control of the exchange. The risk of falling for fraudsters is lower: now it is not development teams that are looking for money, but the platform selects promising teams and looks for funding for them.

The most notable projects from this area: are the Engage2Earn platform with the E2E token at just $0.05 or the Blockchain-based Stone-Scissors-Paper game (BlaBlaGame) with the BLA token at just $0.1.

• Why invest in it: you can support a promising startup, you can quickly make a large sum of money, you can become an investor in a future major company
• What are the disadvantages: high risk of getting into a scam startup, need to constantly monitor the market and what kind of projects offer the primarily placed coins
• Recommendation: spend not more than 5% of your portfolio on HFT, ICO, NFT, and “HYIPs”.

NFT is a non-mutually exchangeable token

It is a digital asset created on a blockchain. It can be in the form of digital artwork, character cards, things in games, photos, videos, and more. It is essentially a token created on the blockchain, guaranteeing the uniqueness of the item and the ownership of it from the owner.

How it works: A digital artist, the author of a meme or a tweet, creates an NFT work on a blockchain, which serves as the database for all transactions. The blockchain guarantees the originality of the non-interchangeable token.

Anyone can check the history of a particular NFT through the blockchain. By purchasing an NFT, the user receives a certificate for that work, tweet, or meme. It is this certificate that confirms that the owner has received the original copy of the object and is entitled to it.

NFT is most often mentioned after an artist sold several digital paintings and became a millionaire, or a digital copy of the world’s first SMS was auctioned off for tens of thousands of dollars. In 2021, technology was everywhere, from Prada, Lamborghini, and Nike to Coca-Cola, Visa, and the NBA.

After the wave of interest in NFT subsided in 2022, the technology began to be criticized. Mostly for the large number of projects where users invested millions, and they turned out to be fraudulent and shut down. As the market grew, attackers used other ways to defraud customers: fake NFTs that looked like popular ones, phishing, and bid-rigging scams.

Criticism of NFT

NFT has also been criticized for harming the environment. Most NFT tokens are implemented through a platform that is proof-of-work. This means that computing for transactions requires expensive equipment that consumes a lot of electricity. Because of the large carbon footprint, some digital artists have already started to abandon technology.

• Why invest in it: a trendy way to make money selling art, you can make a lot of money selling one NFT, and you can support independent authors and artists
• Cons: high number of scam projects, high risk of losing money because of illiquid NFT, environmental damage
• Recommendation: use no more than 5% of your portfolio for HFT, ICO, NFT, and “HYIP Coins

Can you borrow against your cryptocurrency?

Yes, most lending platforms allow you to borrow other tokens or fiat money from them, as long as they are your wallet providers. This way, you manage your risk without hindering the growth of your cryptocurrency.

Which coins to lend?

Once you understand how cryptocurrency lending works, the next question you might want to ask is, “What coins can you lend?”.Despite the thousands of launched tokens, only a few dozen can be borrowed or lent. Stablecoins make up the majority of tokens that can be lent, but some others, such as Bitcoin or Ethereum, are also available on some platforms.

Before choosing which coins to lend, it’s important to consider your expected market returns, your risk tolerance, and current market conditions. Are there a few tips to consider before engaging in cryptocurrency lending?

How cryptocurrency lending works

Security is crucial – the first thing to look at on a cryptocurrency lending platform is not how much yield or how many people get caught up in the hype but how safe your funds are. It’s important to check for red flags and make sure your private keys are safe. Remember, the first rule of investing is capital preservation. Make sure you are working with proven platforms – check developers and their past projects before allocating your tokens to them. Any dubious information should not be trusted.

How does cryptocurrency lending work? On trust. Always remember that scammers are always looking to take advantage of this as quickly and efficiently as possible. In traditional finance, the higher the dividend you expect to receive on a stock, the riskier it is considered.

The world of cryptocurrency is the exact opposite. Stablecoins with less volatility have higher yields than crypto tokens. Due to different market cycles, the price of tokens fluctuates, but stablecoins stay true to their name (they remain stable). Before choosing which credit platform you want to use, there are a few things you should consider. Let’s take a look at the best cryptocurrency lending platforms and what makes them unique.

Conclusion

CoinLoan is an international fintech project founded in 2017 and based in Tallinn. The company offers adequate lending terms and helps to earn from cryptocurrency deposits. Everyone who has cooperated with this project speaks positively about the experience received.