What is Pre-Sale? | CryptoWallet.com

What is Pre-Sale?

A pre-sale (or Pre-ICO) refers to the selling of tokens of a new crypto project to select investors or a group of investors before its funds are distributed publicly, such as an ICO (Initial Coin Offering). Typically, a community of investors are engaged via social media channels such as Telegram, WhatsApp, Reddit, etc., and pitched the idea of the new cryptocurrency project before the coin/token is made available to the general public.

The coins/tokens are sold at a discounted rate as an incentive for being early investors of the digital product, who provide the funds required to further the project to and beyond its ICO launch. These early investors purchase tokens with a promise of future returns when it is launched on an exchange.

Developers and blockchain/crypto start-ups run the risk of investors selling their tokens too soon after it’s listed on an exchange, which may drastically drop the price to levels lower than it pre-sales offering. Many a time, if the project developers garner enough funds, the ICO launch is deliberately skipped to mitigate this risk.

Are pre-sales worth it?

As with many cryptocurrency investments, pre-sales are regarded high-risk/high-reward investments. Investors run the risk of making little or no return on their investment ROI) should the project fail. Also, it is difficult to tell which crypto projects are real as pre-ICO and ICO events are a major territory for scams and fraud.

However, pre-sales are primarily a good idea for start-ups/blockchain projects that are not backed by a sustainable source of funds or simply require funds to hire experienced personnel to further the project.

In summary, being on either side of a pre-sale (investor or start-up) has its associated risks and rewards, so it is recommended that comprehensive market research is executed before making investment decisions.