Avoid ICO Scams - Tips And Tricks

In this article, you will learn the tips and tricks to avoid ICO scams.

Avoid ICO Scams Tips And Tricks
 
As the Crypto winter comes to an end and Crypto spring begins many people are turning their attention back to Initial Coin Offering (ICOs) as potential investment opportunities. Investing in a new Blockchain or Cryptocurrency can either be lucrative or too risky. ICO scams are something that plagues the Cryptocurrency world. This is the reason why some Governments have restricted ICOs within their territories.
 
80% of the ICOs that were conducted in 2017, turned out to be scams and only 8% were able to fully launch. This massive indicator made people completely avoid ICOs, meaning that the chances of a new coin succeeding, drastically lowered. Although some ways were developed to avoid ICOs, there are people who still fall for them even today.
 

WHAT IS AN ICO?

 
ICO stands for Initial Coin Offering, which is when a company creates and sells its own cryptocurrency to the general public. This is done to generate some revenue for the company so it can invest in the future development of the project. ICOs are basically Blockchain crowdsales and the Cryptocurrency version of crowdfunding. ICOs are notorious for illustrating the principle that "ideas are cheap" and that building a successful cryptocurrency is easier said than done. Critics talk about the legality of tokens and challenges for these types of financial ventures.
 

WHY BAN ICOs?

 
To understand the reason why the Government would ban ICOs requires knowing some history. ICOs were once popular in 2016-18 when the most recent Crypto bull market was at its height. Bitcoin had surged to record-breaking highs and investors were looking for new crypto coins hoping to make 10x, 100x gains. At the same time, some corrupt people took advantage of the opportunity and created scams, either ICOs that were doomed to fail or ICOs that were simply counterfeit. Many people were exploited by these scams and some Governments felt the need to get involved.
 
Since the initial ICO craze, many investors took a beating and people called this the “crypto winter.” But now it looks like the season is gradually changing into the “crypto spring” which means that investors will once again be investing in the next cryptocurrencies but it is important to avoid getting scammed. Therefore, let me show you some handy tips and tricks you can use to oust a scam ICO and save yourself from the trouble of losing your funds.
 

READ REVIEWS WRITTEN BY OTHERS

 
No matter how much you know about Cryptocurrencies, it is always useful to read what other people have written on the projects you are thinking of investing in and for that there are countless websites and blogs that specialize in reviewing ICOs. Reading multiple reviews enable you to gain multiple knowledge and help you decide cautiously.
 
But it is important to put this advice in context. ICO reviews have some disadvantages as well because there are websites which get paid by companies to review their ICO very positively or the website just make a negative review by themselves, then approach the company and ask for money in exchange for making the review positive.
 
So, you just read the reviews, see if you missed anything when doing your own research and use them as a way to confirm your initial research and not a way to find a conclusion to your thoughts.
 

RESEARCH THE COMPANY

 
It is necessary to research the company behind the ICO before you make a good investment decision. The fact is that every ICO has a cryptocurrency behind it, every cryptocurrency is a project, and every project has a company working on it. Therefore, we need to get to the root of it all - the company and its business plan. Researching the company does not mean just looking at the technical aspects of the project but also the business plan and past experience of the team behind the company. A solid business plan and a team with an established track record are good signs to have a successful future.
 
The couple of points you need to focus on are,
  • Where is the company located (This helps to determine if they can be licensed and if the local government will not interfere)
  • Visit the profiles of the staff of the project to determine if they are real.
  • What is their 5-year plan?

THE WHITEPAPER

 
A Whitepaper presents the overall vision and structure of a project and details about the token, hence it is a crucial document for any blockchain project. The Whitepaper is basically the holy grail of information about the ICO. Never forget to read each and every detail of the project as well as about the team members of the company.
 
Main points to look for when reading whitepapers include,
  • Why the project is being made? What function/service(s) will it provide and to whom?
  • Is the coin or token associated with the project necessary to the purpose it is being made for?
  • The timeframe and structure of the ICO
  • How the funds raised from the ICO will be used by the company
Furthermore, be sure to check if the White Paper is an original document. Some scammers copy other successful ICOs and try to defraud people through that. Other warning signs comprise of grammatical mistakes, broken links, and copied content. There are many ways you can check for plagiarism on the internet.
 

CONCLUSION

 
There is a lot of profit potential in ICO/IEO investing, but it is also highly risky. Lots of people have lost lots of money through misguided ICO investments. I hope these tricky tips I have mentioned above help you avoid ICO scams and guide you to invest in original ICOs.