The cryptocurrency industry has proven to have solid investment vehicles over the years. From Bitcoin dominating as one of the best assets to invest in for the 2010s to the hundreds of new projects that hit the market at any given time, there is no shortage of investment opportunities.
But with all these opportunities comes a bit of confusion for investors. More specifically, many find themselves at a crossroads of whether to invest in the tried and trusted tokens or take a chance on a presale. Both have their pros and cons, and we’ll be exploring them in this article.
What is a Presale?
Within the crypto industry, a presale refers to a token sale that happens before the asset is released to the wider public. Typically, when a crypto creator develops a token, they organize both a presale and a public release. In the private presale, investors get the chance to buy the token and in the public release, the token is put up for sale on centralized exchanges, DEXs, and so on.
The appeal of a presale is that you can get your hands on the token before anyone else and could make a profit from your investment. Presale tokens are typically sold at a lower rate and if the token is a hit once it reaches the wider market, those who invested in it could make a significant profit. Presales also tend to come with extra perks like merchandise, access to a private community, Q and As with the team behind the token and so on.
Because of all of these, many investors seek out presales of promising tokens and rush to get their hands on them before others have a chance.
Pros
- Cheaper: Presale tokens are offered at a cheaper rate than when they are listed on exchanges. This not only means that you save money but could make a profit if the token is successful.
- Access to the community: Those who join in on token presales often have access to a private community of investors and this can mean making new connections. Some presales also offer the chance to vote on new developments within the project and can be a great way to participate.
- Merchandise and other perks: Some presales give merchandise and other perks to presale investors.
Cons
- No guarantee of success: Because presale tokens are so new to the market, there is no guarantee that they will succeed. There is a significant risk that the project might fail once it hits the market.
- Rug pulls: Some presales in the past have been found to be rug pulls – scam projects that run off with investors’ money with no actual token being delivered. This is why you should always do your due diligence should you invest in one.
- Lack of liquidity: Newer projects tend to have less liquidity so if there is not a significant uptake in the token once it hits the market, you might struggle to resell your presale tokens.
What is an Established Token?
While presales tend to be associated with new tokens that are just trying to find their footing in the market, established tokens are those that have existed for a long time now. More specifically, established tokens are those that have remained profitable for a significant amount of time and through the ups and downs of the crypto market. This means that they have earned investors’ trust and are seen as a ‘safe’ option when it comes to investing.
A prime example of this would be tokens like Bitcoin, Ether, and Dogecoin. These tokens have been in the market for years at this point. Not only have they been in the market, but they have remained profitable despite several crypto winters, industry setbacks, and much more. This is what sets established tokens apart from others in the market: they have a track record and investors feel comfortable buying into them.
Pros
- Tried and Trusted: These tokens have been in the market long enough that they have proven themselves to be solid investments. As such, they are less risky investments because we know that they are not scams.
- Easier access: Buying into an established token doesn’t require you to sign up for the project’s official website, and you can typically buy these tokens on popular exchanges.
Cons
- Fixed price: There is no discount for buying into an established token the way there is for a presale.
- Less chance of additional profit: Because you can’t get Bitcoin or Ether at a discounted price, you can’t expect to take advantage of an early access price to maximize your earnings.
- No additional perks: If you’re buying an already established token, its creators will not likely offer merchandise and other perks to draw in investors.
What’s the Difference?
Now that we understand what established and presale tokens are, it is worth understanding what the differences between the two are.
- Length of Existence: The clearest difference is the fact that presale tokens are newer tokens within the industry while established tokens (as the name implies) have been in the industry for a longer time.
- Profitability: Established tokens have proven their profitability in the industry over several years while presale tokens have not. This makes the latter a riskier investment.
- Additional perks: When you buy into a presale, you get perks for doing so like lower pre-token cost, merchandise, and so on. Established tokens do not need to offer any additional perks to investors and so, do not come with this benefit.
- Accessibility: Presale tokens are typically only available on the project’s official website while established tokens can be bought on exchanges, DEXs, and other mainstream crypto trading platforms.
Which to Choose?
Ultimately, the choice of whether you should invest in a presale token or an established one comes down to your level of comfort when it comes to risk and your personal preferences. Consider the pros and cons of both before you make a choice.
