In the ICO sphere, there are typically four types of ICO projects:
- Organic — These are the “original” ICOs — new projects that wouldn’t have been possible without their use of blockchain and crypto technology. The easiest way to identify this type of ICO is to ask, “is this project completely impossible using a traditional web tech stack?”
- Artificial — A crypto project’s “Artificial” ICO is often a traditional equity round in disguise, with a white paper in place of a financing deck. It’s only natural for companies — particularly those struggling to find capital through established channels — to seek novel ways to finance their businesses. But these are weeds growing in the crypto garden, and they will eventually be eliminated from the market as buyers become more professionalized and savvier.
- Synthetic — A “Synthetic” ICO is when an established, traditionally funded company that has built a sizeable audience plans to make the leap to the crypto economy. In the “CPG-ization” of the web, an ICO can be a way to escape the shadows of Amazon and Facebook. For companies that are #2 or #3 (or #10) in a space, shaking up the category can be a smart strategy.
- Scams — How to identify scammy ICOs? Read their whitepaper. How do you feel after reading it? Do you feel the FOMO (fear of missing out)? Scam ICOs play very strongly on that concept. If you feel consumed by fear after reading the white paper, it is very likely that you have been emotionally manipulated by the wording and structure of the paper. Most likely, the team who wrote the white paper would have been capitalizing on your greed to push you to make the purchase. Legit ICOs tend not to focus on this fear, but on the core unique selling point of technology, solutions, and problems that they are solving.
Dear readers and investors, now you know what types of ICOs exist and how to spot fake ICO projects. Before investing in any project, always do your research thoroughly and never invest more than you are willing to lose!