New threats appear on the market in the crypto and blockchain industry. Due to the immense popularity of ICO projects and the volatility of the prices in the market also climb, going through an ICO, makes you nowadays an easy target for hackers and other criminals trying to steal your incoming funds.
Not only ICOs are vulnerable for scams, but also the communities supporting them. The issues in the industry go from hacking attempts, to impersonating persons in your team etc. There really are an endless amount of possibilities to extort people out of money, without returning their investments.
This article will deal about how you can set your startup above that and evoke the necessary empathy and trust to rise your ICO to the next level. You can ensure your investors to trust in your ICO by following these 7 steps in establishing a legitimate ICO your community can rely on.
The first step into creating trust in your team and project and not being deemed a scammer is to create a complete transparency in both your project and in your communications.
Be upfront about what the money is being used for and how you are using it. Keep your community up-to-date in terms of developments within your ICO during every step on the road.
We are talking about investing someone else’s money in your project. It goes without saying people will ask questions and they want to be treated with a lot of honesty and respect. It’s therefore important that you always be sincere about what the money will be used for. The more information you get to the community, the better. Keep the community up-to-date with all your new developments and evolutions.
Providing your community with insight about your startup and your goals, is a very important step in building up confidence towards your ICO. One of the key elements to consider when assessing a potential ICO scam, is the story about the startup and the individuals behind it. If a team is unwilling to identify themselves, it’s very suspicious to possible investors.
Instead, offer a detailed breakdown of your team. The more information you can provide the better. Let the founder of the project talk about how he or she started it all, what the difficulties were that he or she has faced, why your project needs money and what you will be using it for. Make sure that you dispose of every sense of anonymity. Your community should know who you are and what you stand for. By providing an in depth introduction of the team and the company you can ensure that people will have the necessary trust in your project to invest in it.
In order to gain this trust, always make sure that you link everyone’s social media accounts, most notably LinkedIn, to their profiles on your website. This way people can conduct the necessary research about why they should or should not invest in your ICO. Previous working experience is therefore of high importance, never hide essential details to your persona, they are the key elements to understand to what projects are worth it or not.
As mentioned before, offering transparency is really important. Make sure that you tell your community about what channels you are using in terms of communicating your ICO to them.
Telegram, Twitter, Reddit, Facebook, Medium and Slack are all very important and popular channels in doing so.
Especially having a Telegram supergroup is of high importance to keep everyone up-to-date with the necessary news updates. It’s important to find a group of community managers to help you with onboarding and maintaining this channel. They need to translate good customer support in great customer experience by offering 24/7 support. Moreover, the community manager can also be on the look out for spam, bots and impersonators.
Ensure that you list your official channels on your website, so that people can easily get access to the accurate information about whether that group of your ICO they just joined is a fraud or not.
Within these channels it’s of uttermost importance that your community is always aware of the possibility of being scammed. Raising awareness is thus an important step into distinguishing your ICO from the vast amount of scams. But how do you raise such awareness?
By establishing and employing certain guidelines and rules within your channels to reach out to your community, you can decrease the amount of scams. For instance, provide a pinned post on your channels where it says how to reach out to you and warn your community about the dangers of scams and the nature of their criminal activities. For example, state clearly that admins would never direct message you themselves, they wouldn’t reach out for money to you personally and would always ask or answer questions directly in the group. Alternatively you can state the (user)names of the admins, so that everyone is aware who is who in the group.
You can raise even more awareness about the problem by reminding your users to keep their account information always private. Tell them that sharing their information in the blockchain and cryptocurrency industry never means caring. Never let them reveal their private keys or any other personal data. By letting your community know about these security dangers, you will build a great amount of trust between you and them.
Not only the community should be aware of scammers, but also you and your team. You can contribute yourself by always staking out for possible scammers and threats. Look out for fake websites, report any activity that seems out-of-the-ordinary and make sure that you are aware of people impersonating you.
Listing websites also often include spam ICO projects, where you can easily check from whether the project you have been interested in is a scam or not. These scam listings often have been researched thoroughly, so they are not based on only accusations. In comment sections you can often find real accusations and proofs of the scams, as well as some testimonials from users that have lost their money because of them.
The best way to keep an eye on what might be a scam or not, or if someone is pretending to be you, is to Google. Google them, but also Google yourself. Especially forums like Bitcointalk and Reddit, have a lot of opinions on different projects out there.
The most prominent sign of an ICO being a scam is the use case for the token. It’s of high importance that the developers can clearly articulate a valid use case for their token. In any startup’s platform, the token is essential.
An ICO means also an indication of a brand new coin for a given project. It is therefore very valuable to consider and evaluate the type and innate purpose of the tokens being issued. Is there a clear cut value proposition of the token being issued? What value does it add to the project? That goes hand in hand with a realistic hard cap. Imagine you are trying to raise funds for a very local product, a hard cap of millions would not only be unrealistic, but also very suspicious.
Another important thing to consider when it comes to ICOs, is to evaluate whether the project in fact has a hard cap on the supply of tokens. This is important because this means that the tokens also will actually be worth something on the exchange markets. If new coins keep getting created and added to the economy of the ICO, the coin will decrease severely in value.
A white paper is one of the most important elements into any ICO. It’s here after all where the startup will present their goals, shed light on technical aspects of the platform and provide more perspective into their token economy.
That means that it’s of high importance that there is in fact a white paper at place for everyone to read. If an ICO doesn’t have a white paper, it’s not legitimate.
On the other hand when it is clear that a white paper is either plagiarized or has an definite unrealistic development schedule, it’s good to keep in mind that the ICO could be a scam.
Within the blockchain and cryptocurrency industry, ICOs have gained a lot more popularity. It’s no surprise that because of the volatility of the prices, more and more threats come to the same market.
This also means that you need to distinguish your ICO as a project that your potential investor can rely on. On the other hand it is also important to protect your community of investors from these issues in security. You need to make sure that you disclose your community with complete transparency, communicate with them through defined channels, raise awareness, provide the community with insight and expertise about your product, keep an eye out on scams, make sure your token has a clear use case, have a realistic white paper in place and on top of that a realistic hard cap.
Do you have more concerns related to how to recognize scams, gain more trust in your project or would you like to get more insight into how to do cost-efficient ICO marketing that will make your ICO stand out? Download our guidebook with useful tips here.
This blog post originally was posted on our Medium account, visit the blog post on Medium here.
