In light of the recent situation about Bitconnect and other "seemingly legit" ICOs, it pains me to see people losing their hard-earned money. Oh my sweet summer child, I am here to tell you even due diligence can sometimes be not enough. This article will give you a taste of reality if you still intend to make money off of ICOs; how you can develop your own gut feeling, your own sense and intuition when it comes to gauging whether an ICO is legit or a scam.
Take this guy for example:
We see many scams in the crypto-space. We see them in the form of ICOs and Blockchain in general. With these scams, we might just get what we've always been asking for, a "trustless environment". I feel the obligation to share my views and some key aspects whenever I evaluate and validate ICOs or Blockchain projects and the things that truly put me off whenever I see these red flags in my very own ICO venture. Scams are ever growing because of several reasons:
Open-source software (OSS) is computer software with its source code made available with a license in which the copyright holder provides the rights to study, change, and distribute the software to anyone and for any purpose. Open-source software may be developed in a collaborative public manner.
Blockchain source code has been made ready for everyone including the perverted minds and there are already a ton of how-to's to setup your own blockchain. If you are in the Ethereum network, you can start your own ICO in measly seconds. I don't think scam artists will say no to such value proposition.
Though governments are starting to step in (in the wrong way), without regulations it will be harder to crack down these scam ICOs. Ponzi schemes and scams have long been there before blockchain ever existed, anonymity just makes it all the more easy.
Though it may hold true for some people, it didn't come without their due diligence. CryptoCurrency adverts left and right does not help. All of them portraying how easy it is to make money off of Bitcoin or Ethereum. Millennials and youngsters alike with the instant gratification mentality will always fall victim to these schemes.
Too many investors who are not aware what is blockchain, or what is cryptocurrency. They don't really understand how it works. They are still in the process of learning but they are interested so they try their best. Oh look! An ICO promising 1000% returns. They read a little about it, convinced, and there goes their hard-earned money.
And of course if you are knowledgeable and experienced in investing it is harder to trick you. However, if you are just starting out in CryptoCurrency, we know the learning curve can be quite steep. As steep as the parabolic curves the pump and dump cryptos make. You will be vulnerable to scams just because of the lack of knowledge that is needed in order to be more vigilant and prepared. It is only natural. Everyone has been new to a field at one point in time but it is extremely important to educate yourself before diving in to these ICOs.
One of the "reddest" and easiest to check among the red flags is if the company divulge information about the team working on the project. Another form of this is a "fake" team. They put out people's faces in there and add some random names, but in reality when you actually Google search the names, they either come out as wrong person or unsearchable. If they are truly legitimate, why are they afraid to show these basic information. You should be able to find their LinkedIn profiles, as well as find interviews of the CEO, CTO, or developers off of YouTube. You may also try to reach out to the team. Try to get them to respond to you on Skype or Telegram and try to talk directly to the founders. It is one thing to read about the project, but it is a whole new level to actually be in touch with them and be able to talk to them. If you are finding it hard to do these things, then it, most assuredly, is a scam or a project that just won't fly. Transparency is important. They are raising millions to fund their project after all. There is no reason why they should not share these information.
The kind of whitepaper that almost always looks good if not better. If you are not careful, it will sound good to you and be able to convince you. I say, be critical and look for details. Give it a closer look. If you'll find it extremely vague as though it were purposely misleading you, if it reads more like an advert instead of the showing technical details, then most definitely a red flag. If you don't see in-depth explanation of how the technology works or how the project is going to be implemented, it is a bad whitepaper. It is important to realize that not all scam artists are engineers. They rip off their own copy of blockchain source code in GitHub and merely rebranded everything. They do not care about furthering the blockchain. They do not care about competing against Bitcoin. They do not care about innovation. What they care about is how they can make everything look so good and real that you will put your faith and your money onto them.
If the founders are not only anonymous but also no community, it is a huge red flag. Whereas a project that has a huge following and many people asking questions, engaging with the founders, adding value to the company, it entails that there is no way for this company to hide their tracks. They will be constantly bombarded with critics and followers. And it is your job to listen to both sides. Also, even if the founders are not anonymous but there is no people following them, it is also a red flag. Unless the project is really THAT good and undervalued, you may be in for some losses.
Scam artists don't usually spend so much time on doing commits to their source code. It has already been made ready right from the start.
Their social media page have hundreds of thousands of likes but their own posts contain only a few likes and shares. Some of the posts may have thousands of likes too, but you'll find not all of the posts have this big numbers.
Ponzi or pyramid schemes are the ones that promises attractive daily, weekly, or monthly returns. But the key symptom is that you need fresh new blood from people to invest their money for you to earn more money via referral commissions.
Do you have questions or want something for me to talk about? Please let me know in the comments.
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BTC: 1GNqY5CsYrkHvDf9Jj3bwSXhHogbvmXBmF
ETH: 0x6c2F7128363332965b92A6c71eee0276FF27E0cD
LTC: LbLb9DcNvKzp2ywtYCctiv5NfpzvSwg7Ve
Legal Disclaimer: Everything in this post is of my personal bias. Make of it what you wish. It is not an advice nor recommendation to buy or sell anything. It is meant for informative and entertainment purposes only.
