Most investors are steady, careful people who seek out the best possible advice before they act. They spend a lot of time trying to understand the investment environment, and have a good sense of the risks associated with any given trade. But investing in the constantly-churning cryptocurrency market presents its own risks and redefines boom and bust, thus requiring prospective investors to be even more diligent than they might otherwise.

The Mighty Fall, Then Rise Again

Here’s a quick example: In terms of individual units, One bitcoin is about $2,136 right now. One ether is $175.

However,  there are a lot more ether out there than bitcoin, so despite the former's lower price, its share of the total cryptocurrency market is nearly 30%.

That's a pretty big jump from just 5% at the beginning of the year. It reached 30% in June, then crashed over this past weekend to a low of $140 an ether. It has rebounded somewhat since then.

Bubble, Bubble, Toil and Trouble

Ether has done well largely because it is part of a broader initiative called Ethereum, which seeks to develop new uses for the blockchain technology that underlies all cryptocurrencies.

But it has also benefited from a general rush to cryptocurrencies in the last three years in the form of initial coin offerings (ICOs).

An ICO is a way to crowdfund the release of a new cryptocurrency. When a cryptocurrency startup firm wants to raise money through an ICO, it sells "tokens" for dollars or bitcoin that can be exchanged for the new currency at some date in the future. Generally, tokens for the new cryptocurrency are sold to raise money for technical development before the cryptocurrency itself is released.

Acquisition of the tokens, however,  does not grant ownership in the company developing the new cryptocurrency.

Ethereum is an example of a successful ICO project that was profitable to early investors. In 2014, it raised $18 million in bitcoin, or $0.40 per ether. The project went live in 2015, and in 2016 ether rose as high as $14, with a market capitalization of over $1 billion.

New on The ICO Scene

Though the company was founded back in 2014, CannaSOS and its cryptocurrency PerksCoin are currently in the midst of an ICO public presale. The buzz around this concept comes from the fact that the company has geared its currency toward helping the burgeoning cannabis industry create a secure financial paradigm. Right now they’re stuck with cash only, which is causing all kinds of problems from the manufacturers to the stores themselves.

The model consists of the decentralized blockchain currency itself, a transaction platform, and an online marketplace with secure sales features such as arbitration and feedback mechanisms built in.

With the increasing legalization of medical and recreational marijuana, this cryptocurrency definitely bears watching.

Tread with Care

While there are undoubtedly valid and even game-changing cryptocurrencies out there, the unregulated nature of the ICO space means you’re going to have to be extra careful with whom you invest. This includes doing things like making sure the team behind a given currency is actually who they say they are, scouring the whitepaper or business plan, and doing your best to determine that the funds you invest will really go toward the development of the cryptocurrency or underlying infrastructure. This involves doing your homework perhaps more than you would for a typical investment, but a little research can go a long way toward ensuring you’re backing a winner – or at least you’re not being taken in by a team of fraudsters.