What are ICOs?
We see dozens of crypto-currencies launch every month. These coins come through a series of ICOs, an acronym for Initial Coin Offering; generally, a popular fundraising strategy used by companies and startups. These companies or organizations raise money to create a new coin. Investors look to invest in this kind of ICOs for the purpose of profit as some ICOs have yielded huge profits in the past. This attracts a lot of scammers into the space and they want to illegitimately take money away from these investors. There are many fake and fraudulent ICO’s going around and an investor should be careful.
Even the most experienced investors get caught in these kinds of ICO’s because they look so real from the outside, but below are some steps you need to take before investing in any ICO.
Get To Know The Team
A good and successful project is the crafting of an excellent and well-experienced team. The first thing you can do is check the team behind that ICO and the people on that team. Then search the history of the member associated with that ICO and most probably you will get the answer right here.
You need to see if this is their first project or they have done something good in the past as well. If in the whole team you find new faces then this is a red flag. Also, you need to verify whether the mentioned team is really part of that project or not.
Check The White Paper
Checking that lengthy white paper can be quite boring. But you are investing your money in that, so you must do this all. Cryptocurrency white paper is basically the foundational document of that project. You must go through it and check whether it includes all the information about the project and whether it looks genuine to you or not.
Among things to check are background, goals, strategy, concerns, and timeline for implementation for any blockchain-related project. If you read the whole white paper you probably will not need to do more research as it will certainly clear out most things to you, if you just apply a little common sense. When dealing with fake companies, surely you will find a lot of mistakes in the white paper of that ICO ranging from small spelling mistakes to the absence of clear goals will give a clear indication that the project is definitely a fraud.
You may even find some companies which won’t even have an ICO and would clearly indicate to avoid that ICO.
Any ICO is dependent upon a token or currency system in order to facilitate the crowdfunding process. Legitimate and trusted companies develop the system and ensure transparency in the progress of the token sale is easy for potential investors to view. Watching token sale figures for the ICO over time will also give an idea of whether other investors are investing in this ICO and if they trust the ICO or not.
Due to the lack of regulations in this cryptocurrency world, there are a lot of scam ICOs going around. Believe me, there are more fake ICOs in the market than real ones. So care must be taken before investing precious money in them. Go through all the points mentioned above and guaranteed, it will help you identify those ICO scams.