Scam ICOs: How to Identify Scam ICOs and Cryptocurrency projects
Updated: Oct 25, 2019
If you are a cryptocurrency or blockchain technology enthusiast, you may know about ICOs and cryptocurrency projects. In the last two years, people have started to pay a lot more attention to these kinds of topics. Some earn a good amount of money by investing in these projects and some of them lost!
The fact is that every investor may lose money by investing in a new project. But when we’re talking about cryptocurrency and blockchain projects, you might face a different aspect which is called systematic scams!
This kind of project is scammy and fraudulent by nature. People who create this kind of ICOs, try to convince people to invest in the projects while they do not have any actual plan to fulfill it. They pretend that they have a new idea which would be revolutionary and will reach lots of success, but in fact, it is just a game to make a quick profit and dash.
In the ICO world, it is much easier for fraudulent individuals to create such ‘makeshift’ projects because technology always grows and evolves faster than rules and regulations. Since there are lots of dangerous scammy projects out there, we decided to prepare some instructions for our readers to be aware of these kinds of projects.
So let’s take a deep dive into how to identify scam ICOs and cryptocurrency projects...
Read the whitepaper Carefully
A white paper is the most initial part of every ICO. Project owners create white papers to introduce the project to investors. The most important thing for every investor is to know how the owner describes their project to them.
Keep in mind that every white paper is designed to grab your attention. So be careful and think how realistic the description of the project is. It might be a new concept that you do not have enough knowledge to analyze. In this case, you have to find someone more engaged in related technologies to give you an informed opinion about it.
The whitepaper for every project should describe the project’s background, goals, strategy, concerns, needs, road-map, and the timeline for implementation.
Check the website
Every project needs a well-designed website to present the project. Check the website to see how legit it is. How many websites refer to them? Ask a webmaster to tell you about the backlinks of the website and how trustworthy are the link sources. And finally, check the spam score of the website by using webmaster tools like MOZ or Majestic. Scam score shows how much the website has scam backlinks, which is a sign of doubt!
Also, try to check where the website is registered. Companies or legal website always register themselves in company or website directories. Here, people leave a review which would help you to get some useful information about the website.
How many tokens did they sell?
Every ICO provides a token system to facilitate the crowdfunding process. ICOs try to show potential investors the sale of the token to convince them to invest in the project. Check to amount of token sale and the progress during the time. Legitimate projects do not have the fear to show the token sale progress. If project owners make it difficult for anyone to chart the progress of the ICO, you should consider it as a red flag because it is kind of suspicious.
Do research and get to know the team
Who are the team behind the project? Who developed the idea? Who are the developers and administrative team?
One of the best ways to avoid scam ICOs or cryptocurrency projects is to have research about the individual team member of the project before you invest. Try to check the background of the team using their social media accounts. Also, check their previous projects, read the reviews of previous projects.
If you are unable to find much information about the team, it is a bad sign and you should be careful about it. In terms of social media account, checking LinkedIn account is a proper way to analyze how trustworthy the information about the person is.
Related article: all.me review
Pay attention to project feasibility
Every project (also cryptocurrency and blockchain projects) needs a fundamental structure to be successful. There were lots of projects that were widely talked about but that faded in a short period. Invest in projects which have an achievable, realistic and feasible set of goals. The road map of the project shows how the company is going to reach the goals set. So deep analysis of the road could help you to find out how feasible the project is and also helps you to avoid scam ICOs.
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