Common Questions by the Newbie Crypto Investor: Are ICOs a Scam?

With the surge in ICOs, there is a tendency for ICOs schemes to be associated to fraudulent activity. A recent study prepared by ICO advisory firm Statis Group revealed that above 80% of initial coin offerings (ICOs) conducted in 2017 were identified as scams:

• >70% of ICO funding (by dollar volume) to-date went to higher quality projects, although >80% of projects (by count) were identified as scams.
• Total funding of coins and tokens in 2017 amounted to US$11.9 billion. In total, US$1.34 billion (11%) of ICO funding went to scams, where the majority went to three large projects; Pincoin (US$660 million), Arisebank (US$600 million), and Savedroid (US$50 million), which together equal US$1.31 billion.

Basic points to look out for:

• No website — although candidly scammers are much smarter these days. Counter-intuitively — be wary of websites that look too professional, but keep changing information when you check back.

• No white paper, or an unclear one with usage of fluffy buzzwords — the best white papers are concise, easy to understand and straight to the point.

• No community or board, or unknown individuals fronting the ICO team and development team — do not just take their bios on the site at face value: do your own online sleuthing by checking out their Linkedin profiles as well as their previous roles in other organizations.

• Guarantees that price of issued tokens will rise.

[All screengrabs from https://www.howeycoins.com/index.html]

At the end of the day, retail investors should arm themselves with solid information on any new ICOs that enter the market. This is what the EurekaPro community is for — an informed platform where we have crowdsourced intelligence on evaluating ICOs.

Originally published at learn.eurekapro.com.