The number of ICO scams is growing rapidly and proportionally to the amount of money that is stolen. However, not every ICO is a scam, and it’s still possible to find a gem in the vast sea of fraud. Since a lot of people are reaching out to us at AssetRush to seek our professional opinion on different tokens, we’ve decided to share with you five telltale signs that will help you avoid getting taken in by a Ponzi scheme.
1. The landing page
Start with the conspicuous: the landing page. The kind of information that is presented there can already tell you a lot. If you see a good description of the company, their project and vision, then it’s something worth your attention. Good examples would be Wanchain and Bancor, whose websites primarily focus on technology and architecture. If everything you see on the landing page is about a token sale and is supported by the phrase “make money”, then you should probably stop wasting your time and close a tab. Always keep in mind the infamous Pincoin which promised its investors up to 40% in monthly profit before turning out to be one of the biggest scams in the crypto history.
2. The product
Critically evaluating the product is the next step you should take. The first question to answer here is if this project really needs blockchain. Very often we read descriptions of products that are working well enough without the new technology. If a startup wants to use blockchain for no particular reason, not to solve a specific long-standing problem or fill in some gap in the market, its founders probably don’t have a strong idea of what exactly they want to do.
The second question is about the company’s technical documentation. Do they have a white paper? Is it well written and properly structured? Does it contain technology-related information? White papers of most ICO scammers beat around the bush using ambiguous complex sentences and Wikipedia-style definitions.
3. The team
When examining an ICO team, you should pay attention to two things as well. First of all, do they have accounts on some major social media? If so, do they constantly post something or are those accounts abandoned? An unrepresented and inaccessible ICO team, like in the case of the aforementioned Pincoin, is a cogent reason to smell a rat.
Second of all, take the time to learn more about the people who are working on the project and their backgrounds. This is very important because if you find out that at least one team member has a track record of being involved in some sort of scam, you’d better not take the risk.
4. The media
Another item to consider is the official media channels of the ICO. What matters here is not the number of followers (it may be most impressive), but how lively discussions are and what people are talking about. Inactive communities of 60000 members always look suspicious, and so do utopian conversations about how much money people will make by investing in this token. Bots instead of real people and paid promoters promising untold wealth are a major red flag that you’re looking at a scam.
5. What others have to say
We’re lucky to be living in the time of online reviews and tweets which can spread and blow up the Internet in a matter of seconds. Therefore, we suggest you don’t neglect such valuable resources. From Bitcointalk to websites like Is This Token A Scam to hashtag search on Twitter, use the Internet to the fullest to learn from others’ experiences. Even one or two negative reviews are a warning sign that should encourage you to keep doing painstaking research into a token before investing in it.
When it comes to plowing money into ICOs, no one can be fully protected. However, there are some signs that will help you detect a scam:
- Nothing about ethos, but a lot about an attractive return on your investment
- A product with poor technical documentation
- No core team represented or a team member who’s been involved in fraud
- Large, but inactive community
- Negative reviews on various Internet platforms
If you have any questions, reach out to us at AssetRush.
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