How to Avoid Scam ICOs
Scams date since the early days of the Internet. Just a brief Google search will bring you millions of results. And while some people make mistakes, there are others who make huge amounts of cash off it. Where there’s money, there are scams. And with the recent ICO hype — more so than ever.
Currently, there are over 1,000 ICOs and to conduct due diligence on each of them would be incredibly time-consuming, even for an experienced analyst, let alone a novice investor. And while nothing beats high-quality due diligence, being aware of several immediate red flags to steer clear of bad ICOs or scams can be really helpful.
Anonymous Team or Team that Has Little or No Experience
Getting to know the team behind an ICO is probably the most crucial element when you’re doing your due diligence.
A definite red flag is a completely anonymous team. If that’s not the case, you should also be cautious about the team’s leadership and whether they have the experience required to run a project in that specific domain.
LinkedIn is regarded as the #1 professional platform, so every investors should contact every team members directly.
Bold Claims and Unrealistic Goals
Scam projects typically have unrealistic goals and are characterized by extremely bold claims about their core product, even though the said projects have nothing new or disruptive to offer.
Avoid ICOs that promise to tackle things like ending poverty, bringing a fix to global warming, or even replacing Bitcoin. If the ICO in question has that potential, its developers will never promise such things. They’ll just let you know about the project’s potential, and that’ll be it. No serious development team will ever predict its token price or claim to fix world issues.
No Code Repository
Some regard this as “Code Is Law”. Be it Github or Sourceforge, the ICO project should provide a link to its code. If there is none, that’s an immediate red bell ringing in your head. Even if there’s a link, make sure it’s genuine and not merely a clone of another project with just a few cosmetic changes in the code lines.
A Referral Program with Levels in Place
As soon as you see a referral program that has a pyramidal structure with different levels, that should be an instantaneous sign that something’s stinky. Steer clear of ICOs that have this kind of referral program. Most probably that’s a scam.
Real Working project(MVP)
If there is working MVP(Minimum Viable Product) project already, investors can believe that team’s performance and their ideas.
